Legal & Regulatory News
NGFS report on financial institutions' climate transition plans
31 May 2023On 31 May 2023, the Network for Greening the Financial System (NGFS) published a report, exploring the relevance and extent to which financial institutions’ transition plans relate to microprudential authorities’ roles and mandates and whether they should be considered within their supervisory toolkit and in the overall prudential framework.
The report includes the following six key findings:
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There are multiple definitions of transition plans, reflecting their use for different purposes. |
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There is merit in distinguishing transition planning (transition strategy) from a transition plan (transparency to a specific audience). |
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Existing frameworks address a mix of objectives, audiences and concerns for transition plans but predominantly relate to climate-related corporate disclosures. |
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Transition plans could help micro-prudential authorities develop a forward-looking view of whether the risks resulting from an institution's transition strategy fit with its risk management framework. |
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There are some common elements to all transition plans, which are relevant to assessing safety and soundness. |
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Micro-prudential authorities' roles need to fit in the context of the actions of other financial and non-financial regulators rather than acting in isolation. |
Looking ahead, the NGFS will take forward actions in two broad areas: (1) engagement with relevant international authorities and standard setters and (2) additional work to advance the discussion on the relevance of transition plans and planning to micro-prudential authorities’ mandate, supervisory toolkit, and the overall prudential framework.
Click here to view the full report.