The adoption of transition plans by European private banks is surging, with mandatory requirements taking effect throughout 2025. Banks are increasingly disclosing strategies to align with net-zero targets and will soon need to embed transition planning into their overall strategies and risk governance under the revised EU microprudential rules (CRD6). Both credit institutions and supervisory authorities across the EU are intensifying efforts to ensure robust implementation. The critical importance of prudential transition planning within the Single Supervisory Mechanism (SSM) was underscored in Frank Elderson’s widely cited 2024 speech, "Failing to plan is planning to fail". Beyond the EU, jurisdictions like Singapore and Hong Kong are also exploring the potential of transition plans within their prudential frameworks.

At the individual bank level, transition plans aid in risk identification and mitigation, but their utility extends beyond this. At the systemic level, they may offer insights into macroprudential risks posed by misalignments between the banking system and net-zero pathways (Dikau et al., 2024). These insights could inform strategies to bolster financial system stability, such as increasing systemic risk buffers for specific groups of banks, sectoral exposures, or economic activities linked to geographical areas.

This online seminar, co-organised by the Florence School of Banking and Finance (FBF) and CETEx (LSE), will feature distinguished speakers from academia, policymaking, and the private sector to explore these critical questions:

• Why are transition plans relevant for macroprudential policy?
• What challenges and limitations exist in leveraging transition plans for macroprudential purposes?
• What can realistically be expected from the use of transition plans as a prudential instrument over the next 3–5 years?