NGFS publishes two notes relating to transition plans on climate target setting and climate scenario analysis

As climate change is intensifying, central bank and supervisors worldwide are working to ensure the resilience of the financial system. The NGFS notes provide actionable insights to support the effective use of transition plans, which have the potential to support the complex shift towards a resilient and low-carbon economy.

Climate Target Setting and Transition Plans focuses on how financial institutions can set robust climate-related targets within their transition plans and how these targets align with broader business strategies and risk management frameworks. It also provides guidance for micro-prudential authorities to understand and assess these targets in the context of financial institutions' safety and soundness.

Interactions Between Climate Scenario Analysis and Transition Plans explores the synergies between climate scenario analysis and transition planning, identifying how scenario analysis can inform strategic planning and risk mitigation, and how transition plans can in turn provide valuable input for scenario design and application.
Both notes reflect the NGFS’s continued efforts to support the assessment of climate-related financial risks. They aim to assist financial institutions in developing forward-looking, actionable transition strategies and provide micro-prudential supervisors with tools to better understand the implications of these plans on financial institutions' business models and risk profiles.

Sabine Mauderer, Chair of the NGFS, and First Deputy Governor of the Deutsche Bundesbank:
“Robust transition planning is essential for managing climate-related financial risks. The new NGFS notes offer practical guidance for financial institutions and supervisors on how to design and implement transition plans. These insights will help financial institutions to develop strategies to navigate the challenges and seize the opportunities of the shift towards a low-carbon economy.” 

Donald Chen, co-Chair of the NGFS Workstream Supervision and Executive Director of the Hong Kong Monetary Authority:
“Financial institutions including banks play a pivotal role in the net-zero transition.  Transition plans have emerged as a key forward-looking and enabling tool for financial institutions in this journey.  Building on the NGFS’s works on transition plans over the years, the two notes published today dive deeper into this topic by looking into the context of climate target setting and climate scenario analysis.  They demonstrate the commitment of the NGFS to lead the way in contributing to the development of climate risk management in the financial sector, and would provide an important resource for supervisors and financial institutions.”

Alberto Casillas, co-Chair of the NGFS Workstream Supervision and Senior Advisor to the General Director of the Banco de España:
“These reports mark a milestone in consolidating transition plans as key tools for financial stability. By integrating climate targets and scenario analysis, we strengthen the financial system’s ability to anticipate and manage climate-related risks. This interaction enables financial institutions to translate climate uncertainty into concrete and measurable strategies”

About the NGFS
The Network for Greening the Financial System (NGFS) was launched at the Paris One Planet Summit on 12 December 2017. It represents a group of central banks and supervisors, which are willing to share best practices and contribute to the development of environment and climate risk management in the financial sector, and to mobilize mainstream finance to support the transition toward a sustainable economy. The NGFS brings together 145 central banks and supervisors and 23 observers. The NGFS is chaired by Sabine Mauderer, First Deputy Governor of the Deutsche Bundesbank, with the support of the Vice Chair, Fundi Tshazibana, Deputy Governor of the South African Reserve Bank and Chief Executive Officer of the Prudential Authority. The Secretariat, headed by Yann Marin, is provided by the Banque de France.

For more details, visit the NGFS website, LinkedIn account and X account or contact the NGFS Secretariat at the Banque de France: sec.ngfs@banque-france.fr
Press Office at the Banque de France : +33 (0) 1 42 92 39 00 / presse@banque-france.fr