Prudential Net Zero Transition Plans: The Potential of a New Regulatory Instrument

Dikau, Simon; Robins, Nick; Smoleńska, Agnieszka; van 't Klooster, Jens; Volz, Ulrich

Abstract

Net zero transition plans are a promising additional instrument for prudential supervisors to assess, address and bring distant financial risks into the present. To date, transition plans have primarily emerged as non-financial disclosure requirement and as such, their prudential application has been limited. In this article, we discuss the role that transition plans can play as a new regulatory tool in banking supervision. The article outlines steps towards incorporating transition plans into prudential policy, thereby enabling supervisors to effectively use transition plans as a forward-looking instrument to better manage and overcome some of the challenges associated with climate transition risks.

Citation

Dikau, S., Robins, N., Smoleńska, A., van 't Klooster, J., & Volz, U. (2025). Prudential Net Zero Transition Plans: The Potential of a New Regulatory Instrument. Journal of Banking Regulation, 26, 85-99. https://doi.org/10.1057/s41261-024-00247-w

• Journal Article Type: Article
• Acceptance Date: Apr 13, 2024
• Online Publication Date: May 15, 2024
• Publication Date: Mar 1, 2025
• Deposit Date: Apr 15, 2024
• Publicly Available Date: May 19, 2024
• Journal: Journal of Banking Regulation
• Print ISSN: 1745-6452
• Electronic ISSN: 1750-2071
• Publisher: Palgrave Macmillan
• Peer Reviewed: Peer Reviewed
• Volume: 26
• Pages: 85-99
• DOI: https://doi.org/10.1057/s41261-024-00247-w