Practitioners’ handbook for banks to plan, develop and implement a climate transition plan

The report titled Climate Transition: A Roadmap for Banks in Emerging Markets is a timely and comprehensive guide for banks in emerging and developing economies (EMDEs) as they respond to the growing urgency of climate action. With climate-related risks becoming increasingly severe, both through physical impacts and the challenges of economic transition, financial institutions in these regions are at a critical turning point. The report offers a structured, step-by-step strategy to help banks align their business models with low-carbon development pathways, while recognising the unique constraints and opportunities within their national contexts. Its purpose is not only to reduce exposure to climate risks but also to support national climate objectives, unlock new financial prospects, and build long-term resilience.

The roadmap is organised around five central themes: Aspiration, Initiatives, Evaluation, Responsibility and Engagement. It begins by guiding banks to set clear and forward-looking climate ambitions that are realistic and rooted in a sound understanding of domestic policy landscapes, sectoral exposures and commercial imperatives. The report encourages banks to assess the risks of inaction, engage stakeholders meaningfully and develop a compelling internal case for climate alignment. A strong focus is placed on securing leadership commitment and ensuring that ambition is matched with institutional capacity and available resources, taking into account the local economic and regulatory environment.

The report then provides detailed directions on how to implement these ambitions, including the development of internal policies, exclusion criteria for high-risk sectors, carbon footprint assessments and the integration of climate considerations into credit and business strategy. It promotes the setting of science-based targets and the creation of financial tools such as sustainability-linked loans to assist both banks and their clients in transitioning towards a greener economy. Finally, the report underscores the importance of effective governance and sustained engagement with regulators, investors, borrowers and academic institutions. It calls for better regulatory clarity, standardised data and multi-stakeholder collaboration to overcome barriers such as limited institutional capacity and short-term investment horizons. With case studies, checklists and practical insights drawn from experience across regions, this roadmap offers EMDE banks a concrete way forward to play a leadership role in the global transition to sustainability.