Five-Minute Brief: Transition Planning Trends and Priorities for Financial Institutions in 2025

As 2030 nears, climate transition plans have emerged as a way for organizations to plan and communicate their efforts to achieve their climate ambitions. Transition plans are strategies for aligning business activities with the transition to a low-carbon, climate-resilient economy. Like any business strategy, they play a role in clarifying objectives, setting key performance indicators (KPIs) and outlining resourcing and accountabilities to inform broader strategies. Canada’s largest banks have all released their latest climate-related disclosures, detailing progress on their transition plans. Below are our key takeaways on the state-of-play of climate transition planning for Canadian FIs and our recommendations for how FIs can prioritize their climate efforts throughout the balance of 2025.

2025 Trends in Climate Transition Planning

Financial institution transition plans have historically drawn on guidance from the Glasgow Financial Alliance for Net Zero (GFANZ), and more recently, the UK-based Taskforce for Transition Planning (TPT).[1] In 2025, transition planning was influenced by several market factors, such as shareholder pressure for climate action,[2] ESG backlash in the U.S. and the Canadian regulatory environment.

Transition Planning in an Era of Compliance-led Disclosure

This year marked an anticipated shift towards compliance-oriented disclosure. In particular, Canadian FIs fulfilled mandatory disclosures under the Office of Superintendent of Financial Institutions (OSFI) guidance on Climate Risk Management (OSFI B-15). While the requirements include climate transition plan disclosures, timelines and specific guidance have not yet been established.

The 2024 amendments to the Competition Act (Bill C-59), which imposes financial penalties for unsupported environmental claims, also came into effect. Notably, the updated guidance issued in June 2025 identified “a concrete, realistic and verifiable plan” as a key to substantiating net-zero commitments and ambitions. This underscores the importance of a credible transition plan to support net-zero targets.

Renewed focus on climate risks and opportunities

In 2022, GFANZ’s initial view of transition planning anchored on how FIs are decarbonizing in alignment with net-zero emissions. More recent definitions from FIs suggest a re-centering on risks and opportunities in the transition (see BMO’s definition), particularly the role of sustainable finance as a mechanism for capturing those opportunities.

The increasing prevalence of extreme weather events combined with slow and uneven progress on climate mitigation have also increased the need for more sophisticated approaches to understanding physical climate risk.   

Client transition alignment

To manage risks and monitor progress against their financed emissions targets, more banks are developing proprietary assessment frameworks to determine whether clients are prepared for the low-carbon transition. International FIs have expanded on this approach, incorporating more complex criteria in their assessments (e.g. Barclays Client Transition Framework) and leveraging technology solutions (e.g. ING’s ESG.X platform and Assessment Framework) to conduct assessments at scale. Banks are continuing to refine these frameworks, scale them across priority sectors and integrate the findings into client engagement and lending decisions.

Sector-specific transition plans

For several years, international FIs have published sector-specific transition plans (e.g. Standard Chartered) to describe actions the bank will take to drive progress across its targets. Examples include financing specific decarbonization technologies, supporting specific policies that a sector will need to decarbonize, addressing cross-sector dependencies (e.g. grid decarbonization), engaging with industry partners and identifying financing gaps. While still an emerging practice in Canada, we view sector-specific transition plans as the next step for FIs moving from ambition to execution.

Accelerate Transition Planning in 2025

While the regulatory and disclosure landscape continues to change, here are six concrete actions Canadian FIs can take in 2025 to respond to and advance their climate strategies:

1. Closely monitor regulatory developments

We expect Canadian compliance obligations to continue having a strong influence on climate strategy and disclosure in 2025. In particular, OSFI B-15, C-59 and continued voluntary alignment[3] with the IFRS/CSDS climate disclosure standards[4] will inform climate priorities as banks prepare for the 2026 disclosure season. FIs should ensure their climate strategies address their unique risks and opportunities rather than being driven by prescriptive disclosure rules.

2. Build capacity in physical climate risk analysis

As FIs continue to focus on climate risk management, we recommend developing insight into physical climate risk exposure using approaches such as scenario analysis. We expect scenario analysis to further mature in 2025 as banks further refine their approaches. This can include an annual scenario analysis program covering a majority of an FI’s lending and a clear articulation of how the output supports credit risk assessments or decision-making. Progress in this area will also be important in meeting future OSFI B-15 requirements.^[5]

3. Identify real economy outcomes of sustainable finance activities

As banks face mounting pressure to demonstrate the credibility of their sustainable financing claims, developing clear methodologies for measuring the climate outcomes of these activities can help validate and support their sustainable finance approach. For example, if a Bank is allocating sustainable financing to decarbonizing energy-intensive sectors, understanding how certain activities contribute to GHG emissions reductions can help validate the approach.

4. Refine approach to client transition assessments

As credible transition planning guidance emerges, banks should refresh their client transition alignment criteria. Banks can draw on industry guidance tailored to the Canadian market, such as Climate Engagement Canada’s net-zero benchmark and forthcoming guidance from the Business Future Pathways. The findings of these client transition assessments should be integrated into transaction-level risk due diligence processes and decision-making.

5. Develop sector-level transition plans

Sector-specific transition plans can guide internal strategies to meet targets, help identify the appropriate levers to do so and drive insight into commercial opportunities that banks can seize. Importantly, sector-specific transition plans also help to identify how different business units can contribute to sectoral transition. As a first step, banks can conduct sectoral studies to understand key decarbonization levers, such as policies that will be required to support a sector’s decarbonization, or new technologies that will need to be developed. Doing so can be a powerful first step in understanding the opportunity landscape in each sector and inform internal prioritization.  

6. Enhance climate governance

As scrutiny on climate transition plans has increased, shareholders are increasingly paying attention to the role governance and accountability play in climate transition planning for FIs. This includes ensuring that the board’s climate competencies are independently assessed, directors are well-informed about how banks are addressing their material climate-related risks and opportunities, accountabilities for climate action are clearly defined and incentives are appropriately aligned, among many other considerations.

Build a Leading Approach to Climate Transition

Quinn+Partners offers tailored services to develop credible climate transition plans. We pride ourselves on delivering insights that are current, practical and anchored on our deep experience and knowledge of industry best practice. Please get in touch to learn more.

[1] TPT recommendations are now maintained and implemented by the IFRS

[2] In the 2025 proxy season, several shareholder proposals focused on climate governance, climate-aligned lobbying, climate metrics and climate strategy

[3] In 2025, the Canadian Securities Administrators (CSA) paused its consideration of a mandatory climate-related disclosure rule, however they also encouraged the use of CSDS standards, calling them a “useful voluntary disclosure framework for sustainability and climate-related disclosure that issuers are encouraged to refer to when preparing their disclosures.”

[4] The Canadian implementation of IFRS standards is overseen by the Canadian Sustainability Standards Board (CSSB).

[5] OSFI B-15 Disclosure Expectation Strategy c) “Describe the resilience of the FRFI’s strategy, taking into consideration different climate-related scenarios, including a scenario which limits warming to the level aligned with the latest international agreement on climate change, or lower.”