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Baker McKenzie’s newest sustainability briefing focuses on the hot topic of transition finance, which is relevant to lenders and borrowers in commercial and syndicated lending.

As background, green and sustainability-linked bonds and loans have been the pioneer products in this space. Following their evolution over a number of recent years, they are now well-established financing products commonly used to finance the energy transition. However, transition finance is emerging as the requirements for green and sustainability-linked financing products are often not met in the context of high-emitting, hard-to-abate sectors looking to reduce emissions. The essential foundation to transition finance is the development and agreement between the parties of a detailed, credible and testable long-view transition plan to engender confidence that the activities being financed are meaningfully contributing to the net-zero target. The underlying nature of transition finance inevitably brings with it greater legal, regulatory and reputational risks around which we can provide advice and guidance.

In the context of publications by industry and standard setting bodies such as the Glasgow Financial Alliance for net zero and our own experience in the market, the briefing discusses:

  • What is transition finance? 
  • What makes a credible transition plan?
  • Risks and challenges
  • What progress the market is making

In the EU, the European Commission has now published by way of practical guidance, recommendations to both businesses and the financial sector to support the adoption of transition finance. We have therefore created a briefing update which discusses this EU publication and the most salient points for financial institutions as they support their customers transition to net-zero emissions.

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Transition Finance Briefing Update

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Author

Eva-Maria is a partner in our Austrian corporate / M&A group and a member of our global sustainability practice. She acts as global lead sustainability partner for our financial institutions industry group, heads Baker McKenzie's capital markets practice in Austria and is a member of our EMEA steering committee for capital markets. Eva-Maria is a dual-qualified lawyer, admitted to practice in Austria and New York. Prior to joining Baker McKenzie's Vienna office in 2008, Eva-Maria worked in the New York, Paris and Frankfurt offices of a well-known US law firm.

Author

Andrew Zaw is a principal in the Finance & Projects Practice Group of Baker McKenzie Wong & Leow in Singapore. He has more than 12 years’ experience representing sponsors, lenders and government in energy and infrastructure projects in Asia, Africa and Europe. Andrew is recognised as one of Asia's 40 outstanding lawyers below the age of 40 by Asian Legal Business' 40 under 40, 2019, and one of Singapore’s most influential lawyers aged 40 and under by Singapore Business Review, 2019. He is also recognised as a Next Generation Partner for Banking & Finance: Singapore by Legal 500 Asia Pacific 2019 and 2020 and a rising star in Project Finance by IFLR1000 2019.

Author

Richard Powell is Lead Knowledge Lawyer for Baker McKenzie's Financial Institutions Industry Group where he is responsible for legal content projects, training and knowledge initiatives. Previously he was a member of the UK Financial Conduct Authority's Enforcement Division where he advised on regulatory cases. He has also been an editor of Bloomberg Law's UK Financial Services Law Journal.

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