Ten years after the Paris Agreement, financial institutions are facing growing expectations to demonstrate how climate commitments translate into business decisions. As climate-related risks become increasingly material, transition plans are evolving from disclosure documents into strategic management tools.

The urgency is clear. According to Swiss Re Institute, insured natural catastrophe losses reached USD 42 billion in the first half of 2026 alone. At the same time, market practice shows that many institutions are still struggling to move from ambition to implementation. While 34% of European financial institutions have SBTi-validated targets, 43% do not disclose an intention to phase out investments in oil and gas, and 20% neither report progress on transition plans nor indicate when they plan to adopt one.

What makes a transition plan credible?

A credible transition plan goes beyond target setting. It defines material climate-related risks and opportunities, establishes clear governance and accountability, translates ambition into concrete business actions, and enables measurable progress through indicators and reporting.

Based on EY’s work with banks, insurers and asset managers, institutions increasingly face three key challenges: identifying material climate risks across portfolios, translating climate ambitions into actionable business decisions, and embedding transition planning into governance, risk management and financial planning processes.

EY’s climate transition plan framework

EY’s climate transition plan framework helps financial institutions connect ambition with execution through three interconnected phases: defining strategy, accelerating action and enabling transformation. In practice, this includes materiality assessments, climate scenario analysis, risk quantification, target setting, governance design and stakeholder engagement.

As transition planning continues to mature, leading institutions are using it not only to meet stakeholder expectations but also to strengthen resilience, support capital allocation decisions and identify opportunities linked to the transition of the real economy.

Read the full article to explore EY’s climate transition plan framework and practical examples from financial institutions navigating the path from ambition to execution.

– Author: Cyril Motte, Partner, Financial Services Head Climate Change and Sustainability & André Kohler, Partner FSO Consulting, Head Financial Services Risk Consulting and Insurance Sector Leader, EY

– This contribution is brought to you by EY, a valued Silver sponsor of Building Bridges 2026.