Transition finance in Asia

Publication Type

Book Chapter

Publication Date

1-2026

Abstract

Addressing climate change and mitigating its impact are urgent concerns around the world. The financial sector should not only support green activities but also work toward transforming existing carbon emitters. While sustainable finance has focused on directing capital toward green businesses and away from brown businesses, there is an increasing recognition of the importance of providing financing to brown businesses to help them transition to low-carbon business models. This new approach, called “transition finance,” includes financial products and services offered to industries with high carbon emissions to support their decarbonization efforts. Transition finance is crucial in the global fight against climate change. The Glasgow Financial Alliance for Net Zero defines transition finance as all “investment, financing, insurance, and related products and services that are necessary to support an orderly real-economy transition to net zero”. Following this definition, this chapter emphasizes the importance of transition finance, the goal of which to facilitate the rapid decarbonization of hard-to-abate sectors and achieve a 1.5°C decarbonization pathway for the entire economy. It aims to provide an overview of transition finance as a new and effective method for accelerating the transition to a low-carbon economy, particularly in Asia. To this end, it discusses the limitations of traditional carbon pricing mechanisms in achieving the targets of the Paris Agreement and COP28 in 2023. Furthermore, the chapter provides an overview of governmental efforts in the Asian region to support transition finance and discusses the role of private sector investors in providing capital for high-emitting sectors and businesses. With the rapidly increasing demand for innovative sustainable finance solutions and the lack of research and education in the emerging field of transition finance, this article can serve as a guide for instructors teaching transition finance in a business or economics program.

Keywords

Sustainable finance, Finance education, ESG, Responsible investment, Climate finance, Sustainable development, Business education, Teaching pedagogy

Discipline

Asian Studies | Finance and Financial Management

Publication

Pathways to teaching sustainable finance

Editor

BELINGA, Rachelle; GOND, Jean-Pascal; MORSING, Mette

ISBN

9781032843100

Identifier

10.4324/9781003512172-13

Publisher

Taylor and Francis

External URL

https://api.elsevier.com/content/abstract/scopus_id/105048239545

Additional URL

https://doi.org/10.4324/9781003512172-13

This document is currently not available here.

Share

COinS