Climate change is one of the most significant challenges facing society today — but could also be one of the greatest commercial opportunities. Achieving a sustainable, net-zero future can build business resilience while unlocking transformative economic, social, and environmental benefits. According to the Climate Policy Initiative, reaching the goals of the Paris Agreement will require around $7.5 trillion in annual investments by 2030. Mobilising this capital at speed and scale is essential — and no sector is more critical to that mission than finance.
Financial institutions sit at the heart of the global economy. From banks and insurers to asset owners and managers, these organizations are uniquely placed to shift capital flows, price climate-related risks, and support clients in their transition to low-emission, climate-resilient business models. Their influence is vast; their responsibility growing.
But delivering on net-zero commitments takes more than ambition. It requires structure, consistency, and credible planning. That’s where transition planning and international standards come in.
Transforming the Real Economy Requires Transforming Finance
The journey to net zero involves more than just cleaner energy. It demands a transformation of entire sectors—including transportation, food systems, heavy industry, real estate, and shipping. Many of these sectors are still emissions-intensive, and yet they’re essential to society.
Finance acts as a critical lever to unlock this transformation. Investment, lending, and underwriting decisions will shape how these industries evolve. But financial institutions also face growing exposure to climate-related risks through their financing activities - as extreme weather events become more prevalent, as carbon-intensive assets become stranded, and as legal and regulatory expectations and consumer behaviour evolve.
Leading firms are therefore increasingly considering how setting strategic transition objectives – and developing transition plans to achieve them – can help them respond and contribute to global climate goals while also managing climate-related risks, capturing opportunities and building business resilience.
Core to financial services organizations transition strategies will be how they can help integrate climate concerns into their risk management and help their clients navigate the transition, and how they can help their clients maintain resilience to a changing climate.
As part of this, organizations are recognising the resilience benefits and the commercial opportunity – and the imperative – of scaling finance to support the global transition to a low emissions, climate resilient economy in line with the Paris Agreement.
The momentum is building—but the tools must match the ambition.
Standards Bring Clarity and Confidence
As sustainable finance grows, so too does the need for clarity. Fragmented definitions, diverging regulations, and a proliferation of Environmental, Social, and Governance (ESG) frameworks have led to confusion and concern. Concern about greenwashing has eroded trust.
Financial institutions can benefit enormously from consistent, globally aligned standards to assess and manage climate-related risks and opportunities. This is especially critical in emerging markets and developing economies, where regulatory capacity and data may be more limited.
This is where the international standards system can make a real difference. International Organization for Standardization (ISO) standards offer a globally recognized, consensus-driven approach that brings together voices from across the public and private sectors. They can provide financial institutions with a common foundation for planning, acting, and disclosing with confidence, along with the credibility that can come with independent assurance.
Built on five key pillars—global recognition, inclusiveness, independent assurance, policy relevance, and real-world adoption—ISO standards are designed to help align ambition with action while supporting interoperability and trust across markets.
“ISO standards bring clarity, structure, and credibility to a space that’s evolving rapidly. Without a shared foundation, it’s hard for financial institutions to navigate complexity or build trust with stakeholders.”
— Scott Steedman, Director-General Standards BSI
Reframing Sustainable Finance: The Role of Transition Planning
Leading organizations are increasingly considering how setting strategic transition objectives – and developing transition plans to achieve them – can help them manage evolving climate-related risks and capture opportunities.
At its core, transition planning enables institutions to go beyond high-level commitments and set out a clear, forward-looking strategy to adapt their risk management and financing activities – ̶̶across lending, investment, and underwriting — while playing their part in the transition to a low-emissions and climate-resilient economy. It provides a structured and strategic process for setting ambition, taking action and enhancing accountability, aligned to the goals of the Paris Agreement.
The growing focus on transition planning reflects a shift in mindset. It's not just about financing what is already green — it's about scaling finance to support the journey. By supporting clients to decarbonize and adapt, financial institutions are set up to capture opportunities, minimize future risk, and create long-term value for all stakeholders including regulators.
ISO 32212: A global standard for Financial Sector Transition Planning
Recognising the urgent need for a consistent framework, ISO is developing a new international standard: Net Zero Transition Planning for Financial Institutions (ISO 32212). Designed to be adaptable across jurisdictions, it applies to a broad spectrum of financial sub-sectors, including emerging technology-driven organizations.
Rather than replacing existing initiatives—such as those from GFANZ, TPT, the G20, UNEP FI, or the OECD—ISO 32212 integrates and elevates them within the global quality infrastructure. This infrastructure refers to the international system that ensures trusted climate action through standards, measurement, accreditation, and assurance. The standard adds value in three key ways:
- Embedding – ISO embeds leading guidance into a globally trusted management system. This can help institutions move from high-level statements to operational reality—integrating transition planning into day-to-day risk and financing decisions.
- Complementing – ISO connects the dots between the many existing tools—like OECD for credibility, ISSB for disclosure, SBTi for targets, and PCAF for measurement—by providing a consistent, implementation-ready foundation. It also complements – and, where necessary, aligns with – the forthcoming ISO standard on transition for real economy organisations, ensuring standardization across the whole economy.
- Supporting – By adopting ISO standards, institutions can demonstrate that their planning processes are structured, assurable, and credible. This can enhance transparency, build investor confidence, and support access to capital.
In short: ISO standards have the potential to turn guidance into action—with global credibility and operational rigour.
Overview of the main elements of the standard
This guidance provides a practical foundation for financial institutions to set net-zero objectives and develop credible, actionable transition plans. It covers seven integrated steps that consider transition planning as an iterative process:
- Identify and assess climate-related risks and opportunities
A critical first step is to identify forward-looking, organization-specific climate impacts, financial risks, and opportunities, as well as dependencies and levers for change. Institutions are expected to use scenario analysis to support their assessment of the implications of different transition pathways, and to understand risks such as stranding, as well as physical climate risks and the adaptive capacity of assets. - Develop an institution-specific transition pathway, objectives, and targets
Based on this assessment, institutions should define a transition pathway aligned with the Paris Agreement, drawing on national policies, sectoral roadmaps, and international initiatives. This pathway must include clear objectives and a set of supporting targets, including plans for managing any residual emissions. - Integrate into risk management and financing decisions
The outcomes of transition planning must be embedded into core risk and financing processes. This is essential for maintaining resilience and scaling transition finance. It also aligns with expectations already set by many financial supervisors regarding climate-related risk management. - Communicate transition planning outcomes
Institutions are expected to communicate transition planning information both internally and externally. This includes publicly disclosing the outcomes of their transition planning efforts and progress against previously disclosed plans. This guidance does not prescribe detailed disclosure requirements, recognising that transition plan disclosures are being addressed by the IFRS Foundation and initiatives such as the TPT Disclosure Framework. - Review and update performance
Effective transition performance review and update processes are essential controls that help ensure credible and continuous progress toward transition objectives and targets. Institutions are therefore expected to establish, implement, and maintain a transition-related internal audit programme, conduct effective management reviews, and assess critical factors such as data quality and coverage. - Governance, resourcing, and documentation
Institutions are expected to maintain robust governance processes and structures, with clearly defined roles, responsibilities, and remuneration arrangements. This includes establishing regular reporting mechanisms to senior management and the governing body, which holds ultimate ownership, oversight, and accountability for delivering the organisation’s transition objectives and targets.
Why Now?
With the world facing increasing climate risks and opportunities, the financial sector must evolve quickly. The decisions made today will shape resilience, emissions, and prosperity for decades.
The ISO standard offers a timely opportunity to:
- Align with emerging global regulations and expectations
- Build trust with investors, clients, and regulators
- Support transition efforts across the real economy
- Unlock innovation and access to new markets
For financial leaders, this is a chance to shape the future—not from the sidelines, but from the centre.
Get Involved: Public Consultation Open Until 12 September 2025
As the UK’s National Standards Body, BSI is proud to convene global expertise and lead on shaping ISO 32212. We invite financial institutions, regulators, civil society, and industry professionals to engage with the draft and contribute feedback.
This is a unique opportunity to shape a tool that will underpin the credibility and effectiveness of sustainable finance for years to come.
The consultation will commence shortly
We invite you to explore the draft standard, project overview, briefing materials, and FAQs via the landing page, and prepare to share your feedback once the consultation opens: https://bit.ly/3FMn4A8
Contributors
Mark Manning, ISO Convenor
Paul Pritchard, ISO Technical Project Lead
Daan van der Wekken, Head of Sustainability, BSI
