Prudential transition plans: A supervisory tool for climate risk management.
Misalignment with climate objectives, exposes the EU banking sector to rising transition risk that threatens financial stability. A new SFL Policy Paper, written by Gerdie Knijp (SFL) and Hesse McKechnie (Sustainable Finance advisor and fellow to the Erasmus Platform for Sustainable Value Creation at Rotterdam School of Management, Erasmus University), explores how the new EBA guidelines on the prudential use of transition plans is an opportunity to strengthen the climate risk management toolkit. The paper provides eight recommendations for supervisors to enables effective implementation of these plans and avoid that they become mere paper exercises.
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