Recognizing global momentum of financial institutions developing their transition plans towards net-zero or low carbon society, the Financial Services Agency (FSA) held a virtual roundtable, “International Roundtable on Understanding Credibility of Transition Plan” on November 6 and 10, 2023. The roundtable intended to promote financial supervisors’ better understanding on the way to prevent greenwashing and the relationship between transition planning/plans and risks and opportunities of financial institutions.
Overview of the Roundtable
Third-party evaluation providers and researchers that assess financial institutions' transition planning/plans gave presentations on the current state on financial institutions' transition planning, the evaluation methodologies of their progress toward climate goals such as the Paris Agreement and net-zero targets, and challenges for collecting relevant data to conduct such assessments. Presentations were followed by active discussions among roughly 25 participants.
◆ The 1st Session (November 6, 2023)
- Main Theme:
-
Presentations:Japan Credit Rating Agency, Ltd. "Climate Transition Finance Evaluation Methodology and Examples"Morningstar Sustainalytics "Sustainalytics Approach towards Transition"
- Summary of the Discussion:
Participants discussed what supervisory authorities should focus on in assessing and judging transition risks, credibility of financial institutions' ;transition planning/plans, and greenwashing concerns, in the absence of sectoral and regional pathways.
◆The 2nd Session (November 10, 2023)
- Main Theme:
-
Presentations:The Grantham Research Institute on Climate Change and the Environment
"Understanding the Elements of a Credible Transition Plan"
Transition Pathway Initiative Centre "Monitoring and tracking progress towards a low carbon economy"
- Summary of the Discussion:
The participants discussed the assessment of transition plans as well as metrics to evaluate their credibility, that include not only GHG emissions trajectories, but also other indicators such as appropriate governance and relevant financial plans that contribute to the emissions reduction. The discussion also focused on which aspects of transition planning/plans would be relevant in the context of micro-prudence supervision.
