What makes a transition plan credible: Considerations for financial institutions

This briefing by the Climate Policy Initiative (CPI) provides a framework for financial institutions to evaluate the credibility of climate transition plans from their counterparties. It emphasizes that because the vast majority of financial institutions' emissions reside in their portfolios, active engagement with counterparties is essential to achieve real-economy results aligned with the Paris Agreement and Sustainable Development Goals.

• The vast majority of emissions associated with financial institutions are found within their portfolios rather than their own internal operations, meaning real-world climate results depend on the actions of counterparties and active engagement from financial institutions.
• Climate transition plans are defined as time-bound action plans designed to shift assets, operations, and business models to align with ambitious climate science. These plans should include a theory of change for the real economy, address governance and organizational process changes, identify capacity building needs, and consider the entity's impact on the climate alongside financial risks.
• CPI's Framework for Sustainable Finance Integrity advises financial institutions to create and publish detailed policies regarding their relationships with counterparties that do not implement credible transition plans, while also advocating for standardized climate reporting.
• The briefing proposes a set of elements for evaluating counterparty transition plans that go beyond emissions mitigation targets to include just transition, climate adaptation, and broader sustainability goals. These criteria are designed to be applicable across various sectors, sizes, and geographies.

APA

Climate Policy Initiative (2022). What makes a transition plan credible: Considerations for financial institutions. https://www.climatepolicyinitiative.org/publication/what-makes-a-transition-plan-credible-considerations-for-financial-institutions/

Chicago

Climate Policy Initiative. What makes a transition plan credible: Considerations for financial institutions. 2022. https://www.climatepolicyinitiative.org/publication/what-makes-a-transition-plan-credible-considerations-for-financial-institutions/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=What makes a transition plan credible: Considerations for financial institutions |date=14 March 2022 |url=https://www.climatepolicyinitiative.org/publication/what-makes-a-transition-plan-credible-considerations-for-financial-institutions/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2022what, author = {{Climate Policy Initiative}}, title = {{What makes a transition plan credible: Considerations for financial institutions}}, institution = {Climate Policy Initiative}, year = {2022}, month = mar, url = {https://www.climatepolicyinitiative.org/publication/what-makes-a-transition-plan-credible-considerations-for-financial-institutions/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }