1、Navigating corporate transitions:a tool for financial institutions Climate Bonds Initiative 1Prepared by the Climate Bonds InitiativeNAVIGATING CORPORATE TRANSITIONSA tool for financial institutions to assess and categorise corporates by their transition credibility and maturityNavigating corporate

2、transitions:a tool for financial institutions Climate Bonds Initiative 2Current situationCapital allocation to effectively transitioning corporates is critical to enable the real economy to transition to net zero.It is also critical to enable financial institutions to address their current transitio

3、n risks.1 Recognising this,many financial institutions have joined networks including the financial sector-specific net-zero alliances that make up the coalition of the Glasgow Financial Alliance for Net Zero(GFANZ),2 and the Institutional Investors Group on Climate Change(IIGCC).Banks have made com

4、mitments to achieve net-zero emissions by financing and facilitating ambitious climate action to transition the real economy to net zero by 2050.Similarly,investors have made commitments to decarbonise and align their portfolios with net zero.Overall,financial institutions are increasingly reporting

5、 the volume of sustainable finance and forward-looking decarbonisation targets.3 To deliver on these targets,financial institutions may adopt a variety of strategies to decarbonise.Depending on the type of financial institution and the nature of its activities,this might include amending lending pol

6、icies and covenants,portfolio construction,strategic asset allocation,engagement,selective divestment and/or policy engagement,given the interdependence of corporates and financial institutions and policy makers.41.BackgroundThis paper proposes a methodology to classify corporate transitions,based o