Transition finance is emerging as a top trend for hard-to-abate industries looking to slash emissions and improve energy efficiency, Bloomberg reports. Transition finance emerged on the scene on the back of concerns by banks and investors about greenhouse gas emissions from businesses they finance. These concerns have made companies in highly-polluting industries unable to access capital markets, which they argue blocks funds needed to use greener technologies in emerging markets. However, critics say transition financing could be subject to greenwashing or mislead stakeholders about a company’s environmental impact.

Who is leading the pack? The world’s top polluter China is creating a transition taxonomy for several sectors including steel and agriculture, while Japan is seeing a boom in corporate transition bonds, Bloomberg writes. Tokyo plans to issue JPY 20 tn (c. USD 154 bn) on sovereign transition bonds over the next decade. All in all, some USD 18 bn in transition bonds have been issued globally since 2019, thanks to China and Japan. Total issuance from Asia more than doubled in 2022 in comparison with a year earlier. The bonanza is also seen elsewhere, with Canada, whose top emissions sources are oil and gas, mulling a transition-financing label for investments in these sectors.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• Ghanaian clothes traders visited Brussels last week to lobby for EU legislation that would force the European fashion industry to stop dumping tons of textiles in the West African country. About 40% of the textiles of the 100 tons of clothing that arrive in Ghana’s second-hand markets are discarded as waste. (The Guardian)
• Rock powder — or “rock flour” — from under Greenland’s giant ice sheet can trap some 250 kg of CO2 per ton of powder and provide essential nutrients when applied to crop fields. Scientists calculated that 27 mn tons of CO2 could be captured if rock flour is used on all of Denmark’s farmland, which is roughly equivalent to the country’s total annual CO2 emissions. (The Guardian)
• A hall at Washington University has been built using mass timber as its main construction material, with an estimated carbon footprint that is 76% less than that of a traditional concrete-steel structure. (Bloomberg)