Financing the Grey Zone: Transition Capital Moves to Center Stage

Schroders /

05-05-2026

Schroders argues that the next phase of sustainable investing lies not in “green” assets, but in financing the messy, capital-intensive transition of high-emitting sectors.

Transition finance targets hard-to-abate sectors, where decarbonisation is gradual and dependent on capital, technology, and policy alignment.
Credibility—not labels—becomes the key filter, requiring verifiable transition plans, execution capacity, and policy support.
Private markets are central, using active ownership, operational control, and incentive-linked financing to turn transition into value creation.

The easy capital has already been deployed into “green.” The harder question is who funds everything that cannot yet be.