Transition planning in German banks is no longer a niche topic—it has become a strategic must. A new empirical study by Nextra Consulting, based on interviews with more than 20 banks, shows how far implementation has actually progressed, where the key levers lie, and why a lack of data is becoming a systemic risk. For sustainability leads in banks, this means: the time for conceptual debates is over—now it’s about operational implementation.
Why transition planning is now becoming a mandatory discipline
Regulatory requirements—from the CSRD and CSDDD to the EBA guidelines on managing ESG risks and BRUBEG—have put transition planning on every bank’s agenda. But the study shows that regulation alone is not the strongest driver. Market pressure, customer expectations, and competition for sustainability-oriented portfolios are also pushing banks forward. Institutions that treat transition planning merely as a compliance exercise will fall behind—behind competitors, behind demanding corporate clients, and behind regulatory expectations that will continue to tighten in the coming years.
Particularly insightful: the depth of implementation varies significantly by institution type. Large universal banks have built extensive governance structures, while smaller savings banks and cooperative banks rely on more pragmatic, proportionate approaches. There is no single best practice—what matters is fit with your own business model.
The three levers of effective transition planning
The study identifies three strategic levers that effective transition planning focuses on:
- Climate targets and sector pathways: Banks must define clear, sector-specific decarbonization pathways and align them with their lending portfolios. Without measurable interim targets, transition planning remains abstract.
- Customer dialogue and transition support: The most advanced institutions view transition planning as an advisory task—they actively support corporate clients in developing transition plans and see this as an opportunity to deepen customer relationships and place new financing products.
- Organization and governance: Transition planning requires clear internal responsibilities. Successful institutions have not concentrated ownership solely within the sustainability department, but integrated it into credit, portfolio, and client management.
Lack of data as a systemic barrier
As an overarching challenge, the study clearly identifies the lack of reliable emissions data and transition plans from counterparties. Banks can only manage their own portfolios as well as their customers report—and there is a significant gap here. Many corporate clients, especially SMEs, have neither systematic CO₂ accounting nor fully developed transition strategies.
Adding to this: the European Commission’s Omnibus initiative significantly restricts CSRD reporting obligations—a step that relieves companies in the short term, but reduces the flow of information to banks in the medium term. The accompanying guest contribution by Eurosif in the study highlights this dynamic: less reporting means less data availability—and therefore greater uncertainty in credit risk assessment. Banks must therefore develop their own data collection strategies instead of waiting for regulator-driven transparency.
Recommendations for bank decision-makers
The study results suggest that banks that embed transition planning strategically now will gain a measurable advantage. Four areas for action are particularly urgent:
- Operationalize sector pathways: Translate overarching climate targets into concrete, portfolio-relevant sector pathways with measurable milestones for the next 3–5 years.
- Structure customer dialogue: Develop discussion guides and assessment frameworks to systematically integrate transition planning into the credit process and client support—not as a one-off request, but as an ongoing dialogue.
- Clarify governance: Define clear responsibilities for transition planning—not only in the sustainability department, but embedded in credit, risk, and sales.
- Build a data strategy: Don’t wait for regulator-driven customer data. Develop your own methods to estimate and collect emissions data for your lending portfolio.
- Use proportionality: Smaller institutions don’t need to copy complex large-bank systems. Pragmatic, scalable approaches that fit your business model are often more effective.
Transition planning is not a project with an end date—it is an ongoing management task that continuously evolves with regulatory expectations, market conditions, and customer realities. The Nextra study makes it clear: banks that invest now in robust processes, clear responsibilities, and a reliable data foundation will not only manage this task more efficiently—they will be able to use it as a strategic competitive advantage. Transformation pressure in the banking sector will not ease. The question is not whether, but how well your institution is prepared.
Read the study now: Transition Planning – A new Management Task for Banks
