Prudential pins two challenges in transition finance

It has also set aside $150m for KKR’s climate strategy.

Prudential identified two key challenges in financing the climate transition: the need to finance “brown-to-green” projects and the lack of a standardised definition for transition finance. 

Prudential’s recent two whitepapers emphasise flexibility in emerging markets, particularly in Asia and Africa, which require a tailored approach to their low-carbon transition.

The first whitepaper introduces a proprietary framework developed by Prudential, defining transition financing as investments aimed at accelerating the net zero transition. This framework is principles-based and designed to apply across different asset managers and asset classes. 

The second whitepaper, co-authored with Prudential's asset management arm Eastspring Investments, outlines how to construct a climate transition portfolio in capital markets.

Prudential’s framework has been endorsed by the Climate Bonds Initiative, an organisation that mobilises capital for climate action. 

In line with the launch, Prudential has committed significant investments, including $200m as a founding investor in Brookfield’s Catalytic Transition Fund, focused on clean energy in emerging markets, and up to $150m to a climate strategy managed by KKR, targeting energy transition projects in Asia. 

Ben Bulmer, Chief Financial Officer, Prudential emphasised Prudential’s commitment to blended finance and the role of such investments in facilitating the energy transition, particularly in Asia, which accounts for over 50% of global carbon emissions.