Transition Finance

Transition Finance method supports initiatives by companies that are working to steadily reduce greenhouse gas (GHG) emissions in line with long-term targets and strategies consistent with the goals of the Paris agreement, as part of achieving a low-carbon society. The lending can be structured either as use of proceeds instruments, which are transition loans with an established purpose such as green loans, or as general corporate purpose instruments, which are transition-linked loans with an unspecified funding purpose such as sustainability-linked loans.

These loans are in accordance with the International Capital Market Association (ICMA)’s Climate Transition Finance Handbook; the Basic Guidelines on Climate Transition Finance released by Japan’s Financial Services Agency, Ministry of Economy, Trade and Industry, and Ministry of the Environment; and other principles.