Banks’ transition plan dependencies: from risks to opportunities

01/07/2026

Authors: Chiara Fulvi | Agnieszka Smoleńska | Algirdas Brochard | Ákos Hajagos-Tóth

An important element of banks’ transition planning are factors that affect their ability to deliver on their strategic transition commitments, known as ‘dependencies’. They are also essential to assessments of banks’ risk management frameworks. Yet such assessments often underplay banks’ role as intermediaries that will channel finance across the economy over the course of the transition.

This policy insight explores new approaches to managing banks’ dependencies, with the aim of improving risk governance and providing a clearer view of transition-related opportunities. The authors focus on the new concept of ‘intermediated dependencies’, which arise where the delivery of a bank’s transition strategy depends on the behaviour, capacity or choices of clients and counterparties, and where outcomes are neither wholly external nor fully within the institution’s control.

Headline findings
A comparative analysis of 35 transition planning documents produced by 21 deposit-taking Global Systemically Important Banks (six US, six EU, three UK, three Japanese, two Canadian and one Swiss institution) shows that: 
  • Dependencies are assumptions that determine the credibility of transition plans and underpin the assessment of whether transition risks are being effectively managed. 
  • Banks’ distinction between internal and external dependencies is insufficient, as it fails to capture these credit institutions’ distinctive role as financial intermediaries. This is best captured by a new, third category: intermediated dependencies. Intermediated dependencies arise where the delivery of a bank’s transition strategy depends on the behaviour, capacity or choices of clients and counterparties, and where outcomes are neither wholly external nor fully within the institution’s control. 
  • Transition plan dependencies are sector-specific, shaped by banks’ business models and portfolio compositions, rather than uniform across the economy. Banks identify different constraints, enablers and assumptions across sectors, reflecting differences in technological readiness, client profiles, data availability, policy environments and transition pathways. 
  • Banks’ treatment of dependencies varies materially across jurisdictions. EU banks more often frame dependencies as factors to be actively managed through engagement, transition finance and client support, while US banks more frequently present similar factors as exogenous constraints. 

Policy recommendations
Banks should:
  • Consistently identify dependencies on which their transition strategy and risk management depend, and apply a structured taxonomy that also captures intermediated dependencies.
  • Identify dependencies linked to concrete management actions, including client engagement, lending criteria, product design, transition financing and sectoral approaches.
  • Treat intermediated and some external dependencies as potential commercial opportunities.
  • Explicitly link sustainable finance and climate solutions targets to identified dependencies rather than reporting them as standalone metrics.

Prudential authorities and policymakers should:
  • Integrate dependency assessment into the transition risk supervisory toolbox.
  • Assess how banks identify dependencies and whether they articulate credible levers for addressing them; and evaluate whether banks’ disclosed dependencies are internally consistent with other transition plan assumptions and targets.
  • Treat repeated references to common dependencies across banks as potential signs of regulatory or coordination gaps that require policy attention.

Access the insight here.



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