In climate, it’s easy to get lost in the nuance. Will a particular action help a country meet their carbon emission targets? Too often, the answer is – it depends.

That’s why I see the publication of recommendations from the Transition Finance Market Review – a major UK government-sponsored review of transition finance – on 17th October as a critical tipping point. I believe it is no less than than key to finally making progress on banishing the pox of greenwashing from the financial industry.

Over 133 pages, Vanessa Havard-Williams and her team lay out the required amount of funding for the green transition and how to unlock that finance. They seek to define transition finance – something many have struggled to do coherently; and they build on existing country-level and regional frameworks such as SFDR, the EU Taxonomy and UK’s SDR to build something more universal.

The right policies, pathways, and signals for investment through collaboration between government, investors, business, and civil society – it’s all there.

And while there’s certainly a Britian-centered nature to the report given who commissioned it, it is ultimately a powerful global reference point. This is especially true for the sector-wide transition of hard-to-abate sectors, where the transition has lagged behind.

Dr. Rhian-Mari Thomas of the Green Finance Institute said, “[the Review] highlights the importance of establishing a well-defined framework for transition finance, which helps investors and regulators alike understand what counts as green and what counts as transitional.”

The review is not only a policy paper but a communications blueprint. When a company volunteers progress in its climate action, it exposes itself to the court of public opinion, to greenwashing risk. Whether the action can be deemed greenwashing is strictly in the eyes of the reviewer, which leads to circular, frequently unproductive conversations.

The Review gives organisations operating in the transition finance – from banks to investors, to those operating in the real economy – a Rosetta Stone that allows them to talk in ways that attract finance and build confidence in their approaches.

How should sustainability and transition labels work for financial products? How much disclosure and independent validation is needed? What is adequate regulatory engagement? It’s all in this report in black and white.

When someone asks why a particular action is being followed, it’s now much easier to show how it aligns with the guidance laid out by the Review. This has the chance to meaningfully change the debate. We increasingly have heard that companies who are scaling back communications efforts or even cancelling carbon reduction programmes as they are afraid they won’t pass the sometimes-forensic approach to deal with scrutiny.

What we want to see next year is a virtuous cycle. New and existing market entrants will have more positive experiences communicating plans, making them more likely to continue down this path. And the good vibes will provide an overall brand halo that pushes more people into (or back into) the market.

This matters because transition finance is not just a buzzword – it’s a necessity. It is literally the finance that will transition the hardest-to-transition sectors and industries. Like coal, heavy manufacturing, mining and cement.

There’s consequences to the current inaction. BloombergNEF estimates that, globally, annual investment into the energy transition must rise to $6.7tn per year to reach global net zero emissions by 2050. We’re nowhere near this level and investor indecision is a major contributing factor.

But like many aspects of the climate transition, it can’t be a one-way street. State intervention is key. We hope that with a piece of work like the Review in place, it provides governments with foundations they can follow, to be bold in their signals.

While greenwashing risk isn’t going away in 2025, we hope that with reference points like the Review, companies and governments all have something to follow that ultimately encourages credibility and integrity in their actions.

Much work has been done in the field of integrity. To get firms to act and talk about climate action, not in a lip-service kind of way, but in a deep, tangible and transformational way. The TFMR does this in the field of transition finance. Now, it’s up to companies, financiers and governments to use it.

This article is adapted from “Five days that shaped the climate debate in 2024”, a new report from the Cognito Sustainability team. Charlie Morrow, a director based in London, is the team’s leader.