UK FCA findings from the transition finance pilot

The UK Financial Conduct Authority (FCA) has published a report setting out findings from its transition finance pilot exercise on barriers to scaling finance for UK climate solutions. The FCA focused on UK-led climate solutions and drew on extensive engagement with capital providers and climate solutions companies at different stages of maturity. The FCA found no material regulatory barriers but identified three system level challenges: (i) many climate solutions struggle to reach sufficient commercial maturity to attract private capital; (ii) capital is not always well matched to opportunities, despite strong appetite, owing to misalignment in the scale, tenor or risk-return profile of climate solution opportunities; and (iii) information and capacity gaps across the market create frictions, increasing costs and reducing confidence, particularly for small and medium-sized enterprises (SMEs). These barriers can be addressed through coordinated action across government, public finance institutions and market participants.

The FCA also sets out key takeaways separately for climate solutions companies, capital providers and insurers, alongside supporting resources to guide next steps. The FCA confirmed that it will use the findings to inform policy development and market coordination, and to continue its broader work on sustainable finance and SME access.

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