The Carbon Trust argues that financing only companies that are already green will not get the economy to net zero. Most emissions come from steel, cement, chemicals, aviation, shipping, and fossil fuels. Selling those assets from portfolios does not cut emissions in the real world, it just moves ownership. The article makes the case for transition finance: directing capital to credible plans that help high-emitting companies reduce emissions substantially, even if their long-term role in a low-carbon economy is still uncertain. Credibility is central. Investors need transition plans, science-based targets, transparent governance, and measurable progress. Frameworks from ICMA and the Climate Bonds Initiative are meant to stop greenwashing while still supporting real change. For banks and investors, this is about financing change rather than rewarding perfection. The practical challenge is defining credible transition finance without slowing deployment, and managing the higher risk that comes with funding companies that are not yet green.
