This announcement from the Financial Services Agency reports the publication of two important documents on transition plans by the Network for Greening the Financial System (NGFS).
On July 16, 2025, NGFS published the "Note on Target setting and Transition plans" and the "Note on the Interactions between scenario analysis and Transition plans."
Note on Target Setting and Transition Plans
This document was created as guidance for financial authorities seeking to engage in dialogue with financial institutions about transition plans. Main contents include an overview of climate change mitigation and adaptation targets that financial institutions can set, explanations of specific actions financial institutions can take to achieve targets, and sample questions that financial authorities might present to financial institutions. This aims to promote effective dialogue between financial authorities and financial institutions and enhance the effectiveness of transition plans.
Note on Interactions Between Scenario Analysis and Transition Plans
This document provides detailed analysis of how climate change scenario analysis and transition plans interact and complement each other. It presents high-level recommendations that financial institutions should consider when developing scenario analysis and transition plans, demonstrating how integrated utilization of both enables more effective climate change risk management and strategy formulation.
Background and Significance of NGFS Initiatives
NGFS is an international network of central banks and financial supervisory authorities established to examine supervisory responses to climate change risks and promote green finance. The documents published this time provide practical guidance for climate change response in the financial sector, offering a common framework for financial authorities in various countries to evaluate and supervise transition plans of financial institutions.
Impact on Japan's Financial Administration
These documents are expected to contribute to qualitative improvements in transition plans developed by Japanese financial institutions. The Financial Services Agency is likely to develop supervisory approaches adapted to Japan's circumstances while referencing these international guidelines. In particular, they are expected to serve as important guidelines for advancing climate-related financial disclosure based on TCFD and promoting transition finance.
The article demonstrates that as the role of the financial sector in climate change response becomes increasingly important, efforts toward developing and implementing effective transition plans are progressing under international coordination.