How bank recovery and resolution frameworks can provide a blueprint for transition planning

The unfolding climate crisis is triggering the emergence of new regulatory tools to support banks in the management of risks related to policy, technological and customer behaviour change in the transition to a sustainable low-carbon economy. These, especially transition plans, seek to improve the ability of banks and supervisors to identify, mitigate and manage the short-, medium- and long-term risks associated with climate and environmental risks at the individual institution level and the financial system as a whole. This report draws on the parallels between recovery and transition planning to identify lessons relevant for policymakers and regulators working on bank transition plans, focusing on internal bank governance, supervisory processes and cross-border coordination in the European Union.