A new study by Finance Watch has revealed that a significant proportion of major European Union banks are failing to publish clear and comprehensive transition plans, despite the legal obligations set out under the Corporate Sustainability Reporting Directive (CSRD). The report shows that only 41% of the largest EU banks have disclosed transition plans that comply with CSRD requirements, and even fewer have developed strategies aligned with the goals of the Paris Agreement.
Key Findings at a Glance
| Metric Assessed | Result |
|---|---|
| Banks analysed | 64 major EU banks |
| Share of total EU banking assets | 75% |
| Banks with published transition plans | 41% |
| Banks that disclosed their plans publicly | 59% |
| Banks with emissions reduction targets | 86% |
| Banks whose scenarios align with Paris Agreement (1.5°C) | Very few |
| Banks that have submitted CSRD reports | 91% |
Limited Scope and Lack of Clarity
The analysis found that several banks have published transition plans covering only limited portfolios or specific activities, raising doubts about whether all material exposures—including high-emission sectors—have been fully assessed.
Despite 86% of banks having emissions reduction targets, just 59% have disclosed their transition plans publicly. This discrepancy highlights substantial confusion over CSRD requirements.
“There is significant confusion about what constitutes a CSRD transition plan and how the information should be presented,”
said Vincent Vandeloise, Senior Researcher at Finance Watch.
“The variation in clarity and detail creates challenges for stakeholders attempting to interpret and compare plans.”
Diverging Climate Scenarios
Finance Watch notes that some banks are using climate scenarios that project more than 2°C of global warming—far from the ambition of the Paris Agreement, which seeks to limit warming to 1.5°C. Only a minority of banks have aligned their transition plans with these stricter targets.
Vandeloise added:
“Banks that set emissions reduction targets must clearly articulate how their transition pathways align with the Paris Agreement. Greater transparency is essential for investors assessing sustainability and risk.”
Lack of Standardisation in Reporting
One of the report’s most prominent findings is the lack of uniformity in how banks present their transition plans. Formats vary widely:
- Some submit lengthy free-text disclosures
- Others rely heavily on graphs, charts, and tables
- Certain reports omit critical details altogether
This inconsistency makes comparative analysis extremely difficult, hindering efforts to evaluate which banks are taking meaningful action on climate-related risks.
Regulatory Context and Challenges
The study arrives at a time when the EU is preparing adjustments to sustainability reporting rules under its upcoming Sustainable Omnibus Proposal. While some companies may be excluded from future CSRD requirements, the major banks examined are expected to remain under its scope.
Finance Watch further observes that although 91% of the banks reviewed have already submitted CSRD reports, several EU member states—most notably Germany—have yet to fully transpose the directive into domestic law. Interestingly, the majority of banks that have not published transition plans are also based in Germany, which has had considerable influence on shaping the omnibus revisions.
A Call for Stronger Standards
The findings from Finance Watch underscore a pressing concern: EU banks are not moving fast enough or transparently enough in outlining their climate transition pathways. Inadequate disclosures, limited scopes, and inconsistent reporting formats all point to the need for:
- Clearer regulatory guidance
- Stronger enforcement mechanisms
- More standardised, comparable reporting requirements
As climate-related financial risks continue to grow, the study highlights an urgent need for the banking sector to adopt more ambitious and transparent sustainability strategies.