Enabling policies for transition finance

Transition finance has emerged as an approach to financing companies and activities that are not yet aligned with environmental goals but are pursuing credible transition pathways. This paper examines how enabling policies shape the mobilisation of transition finance and the credibility and economic feasibility of corporate transitions. Drawing on case studies of Japan, the European Union and the United Kingdom, a structured review of 167 academic and institutional studies, and a 2026 OECD survey of 121 financial institutions and non-financial companies, it provides new evidence on the conditions under which credible transition pathways can become commercially viable and financeable. The analysis assesses how specific policy instruments and broader features of the policy environment, including policy direction, durability and implementation, interact with sectoral pathways and real-economy factors such as technology costs and maturity, infrastructure availability, market demand and expected revenues. It also considers how cross-border differences in transition-related policy and regulatory frameworks form part of the wider conditions shaping investment and financing. The paper is relevant to policymakers, financial institutions and companies involved in transition-related investment, planning and financing.