ACCA welcomes the opportunity to respond to the consultation from the Transition Finance Council (TFC) on the draft Transition Finance Guidelines (the Guidelines) and Transition Finance Implementation Handbook (the Handbook). We commend the TFC for its leadership in seeking to develop a coherent, credible, and practical framework to support the growth of transition finance in the UK and beyond.
Transition finance is essential to delivering the UK’s Modern Industrial Strategy and enabling an economy-wide transition to a low-carbon, resource-efficient and resilient economy. It also has an important role to play in supporting the UK Government’s Financial Services Growth and Competitiveness Strategy, including the ambition to maintain the UK’s position as a global leader in sustainable finance. Transition finance is particularly critical for supporting real-economy entities - especially those in emissions-intensive or hard-to-abate sectors - where decarbonisation pathways may require sustained investment over time and the entities would be ineligible for green finance.
ACCA supports the objectives of the TFC and its work to improve confidence and consistency in the transition finance market. Greater transparency in reporting and a more consistent approach to transition finance are essential to delivering the roadmap and recommendations of the Transition Finance Market Review and to supporting the UK’s ambition to position itself as a leading centre for raising and deploying transition finance. We believe that the current proliferation of taxonomies, labels, and transition finance approaches risks undermining trust and inhibiting the efficient allocation of capital. Greater coherence, interoperability, and international alignment is vital to mobilising the scale of finance required to reach net zero. In this context, we strongly support the Council’s emphasis on principles-based guidance that can be applied flexibly across sectors, jurisdictions, and entity types, while remaining grounded in science and credible transition outcomes.
ACCA emphasises that sustainability-related information should be fully connected with core business activities and strategy, recognising that material sustainability risks and opportunities must be integrated with governance, strategy, risk management, and performance measurement to support decision-making, resilience, and value creation. We believe that for this to happen, widespread application of integrated thinking by entities[1] as well as integrative thinking by finance professionals[2] are necessary, where information connections lead to quality decision-making and sustainable value creation[3].
We particularly welcome the following aspects of the Guidelines and Handbook:
- A common, principles-based framework for transition finance
The use of a shared, internationally applicable set of guidelines should help reduce fragmentation and prevent entities seeking or servicing transition finance from having to navigate multiple, potentially conflicting scopes, definitions, and expectations. We commend the care taken to align the Guidelines with existing international frameworks and standards, including those relating to transition planning, climate disclosure, and sustainability reporting. ACCA encourages the TFC to continue to prioritise alignment and interoperability, as the proliferation of competing labels or approaches risks confusing market participants and slowing the growth of transition finance rather than accelerating it. We also strongly support a ‘comply or explain’ approach rather than prescriptive requirements without any flexibility or consideration of proportionality - this is especially important given the current maturity of the transition finance market.
- A strong focus on credibility and action
ACCA has consistently highlighted that credible transition planning is a cornerstone of effective climate action and capital allocation. We welcome the emphasis on assessing transition planning in relation to the ambition, strategic coherence, governance, and evidence of implementation and impact. The ability to assess the credibility of transition planning is essential if transition finance is to deliver real-world emissions reductions and avoid greenwashing.
- The provision of an implementation-focused Handbook
The inclusion of a practical Handbook alongside the Guidelines is a significant strength of the TFC’s approach. Translating high-level guidelines into operational decision-making remains a key challenge for preparers of information, finance providers, and advisers. The Handbook’s practical guidance and illustrative case studies should support more consistent application of the Guidelines across different sectors and organisational contexts.
- Integration of nature and just transition considerations
ACCA strongly supports the acknowledgement of nature and just transition considerations within the Guidelines and Handbook. Climate transition planning cannot be treated in isolation from biodiversity loss, ecosystem degradation, and social impacts. Integrating nature alongside climate reflects the reality that resilient economic activity depends on healthy natural systems, while attention to just transition considerations is essential to maintaining social licence and long-term economic stability. We believe that integrated thinking and reporting – including the connection of material sustainability-related risks and opportunities – is critical for informed decision-making and sustainable value creation.
Overall, ACCA believes the draft Guidelines and Handbook represent an important step towards building a more credible, scalable, and trusted transition finance market. We look forward to continued engagement with the TFC as the framework is refined and implemented, and we would welcome further dialogue on how accountants can support high-quality transition planning and a well-functioning transition finance market.
To read the response in full, please download the consultation document found on this page.
[1] Invisible threads: communicating integrated thinking | ACCA Global
[2] Integrative thinking: the guide to becoming a value-adding CFO | ACCA Global
[3] Making information connections for sustainable value creation | ACCA Global
