2 in 3 firms exploring transition finance: study

In APAC, 91% of companies expect stability or growth in the transition finance space.

Transition finance has clear momentum, with over 2 in 3 organisations surveyed by the Hong Kong Academy of Finance (AoF) indicating participation in the space.

Of 1,050 respondents across 18 markets globally, 60% said that they are already either active in or exploring transition finance developments.

Nearly 3 in 4 (74%) of respondents anticipate a stable or growing global transition finance market over the next three years.

In the Asia Pacific, 91% of respondents expect stability or growth in space.

Equity and fund investments, as well as debt instruments, were the most commonly used tools to channel capital towards transition projects.

Respondents also observed collaborative models, including blended finance approaches, that they said can draw in private capital by enhancing the risk-return profiles of investments in transition projects.

As the ecosystem matures, the AoF anticipates a gradual shift towards more specialised instruments.

The survey involved responses from international traditional financial institutions including banks, insurers, and asset wealth managers. It also involved multilateral organisations and philanthropic and non-profit capital providers, the AoF said.

Interviews were conducted with a diverse group of global market participants, including industry practitioners, rating agencies, and multilateral organisations, to learn about their insights and experiences in this field.

The AoF was set up in collaboration between the Hong Kong Monetary Authority (HKMA), the Securities and Futures Commission, the Insurance Authority, and the Mandatory Provident Fund Schemes Authority.