Financing the Grey Zone: Transition Capital Moves to Center Stage

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.