Loan Markets Poised to Drive Climate Action: New Guide Offers Framework for Transition-Labelled Loans
16 October 2025Loan Markets Poised to Drive Climate Action: New Guide Offers Framework for Transition-Labelled Loans
The Loan Market Association announces the upcoming publication of the Transition Loans Guide
As the global economy intensifies its efforts to reach net-zero emissions by 2050, a new guide released today brings greater clarity and direction to the evolving field of transition finance, with a particular focus on the critical role of loan markets.
The Transition Loans Guide highlights how loan markets, with their ability to mobilise large-scale capital flows, are uniquely positioned to support the systemic transformation required across industries. As companies ramp up efforts to align with climate goals, lenders are responding with financial structures designed to support credible, science-based transition strategies.
“Achieving net-zero greenhouse gas emissions will require unprecedented investment and coordination,” said Gemma Lawrence-Pardew, Head of Sustainability at the Loan Market Association. “This Guide is designed to provide market participants with a common language and practical tools to finance decarbonisation in sectors that fall outside traditional ‘green’ categories.”
The Guide has been developed through a collaboration between the Asia Pacific Loan Market Association (APLMA), Loan Market Association (LMA), and Loan Syndications and Trading Association (LSTA). It is informed by a global taskforce of over 60 institutions, predominantly financial, that are actively engaged in transition finance markets. This effort was further supported by engagement with market-leading authorities across key jurisdictions, ensuring the Guide reflects global perspectives and emerging regulatory thinking.
Despite its growing relevance, transition finance faces several barriers, including fragmented taxonomies, definitional uncertainty, and difficulties in verification and reporting. The Guide responds to these challenges by:
- clarifying the distinction between transition finance and financing the transition;
- providing clear parameters for what qualifies as transition finance; and
- presenting — in exposure draft form — a voluntary, cross-jurisdictional framework for activity-level, use of proceeds transition-labelled loans.
This is not a standard, but a practical resource designed to support both borrowers and lenders navigating a complex and fast-evolving landscape. The Guide recognises that meaningful decarbonisation requires science-based, context-specific approaches — and that loan markets, with the right tools and alignment, can serve as a powerful engine for real-world climate action.
Comments on the Publication
Gemma Lawrence-Pardew, Head of Sustainability, LMA, commented:
Achieving net-zero greenhouse gas emissions will require unprecedented investment and co-ordination. This Guide is designed to provide market participants with a common language and practical tools to finance decarbonisation in sectors that fall outside traditional ‘green’ categories.
Chiva Lai, Senior Director, APLMA, commented:
This Guide, establishing a framework for transition-labelled loans, supports and encourages market participants to effectively shift towards a sustainable and resilient economy, balancing economic growth with environmental and social stewardship.
Elizabeth Yazgi, Assistant General Counsel, LSTA, said:
Transition finance represents an important opportunity for companies in hard-to-abate sectors to engage in projects that support their transition towards decarbonization and illustrates that lending can be a critical source of capital. LSTA is confident that this Guidance, drawing from best practices, will preserve flexibility while establishing a global, recognizable standard that promotes product integrity.