What to expect from the new ISO standard for transition planning in the financial sector: ISO 32212

We expect that it will be a critical addition to the existing body of work on transitions, complementing the GFANZ Framework for Transition Plans in much the same way as the Transition Planning Cycle complements the Transition Plan Taskforce Disclosure Framework by providing the dynamic iterative process that embeds transition planning within real economy organisations. This is especially so given the role the finance sector has in acting at the systemic level to drive the decarbonisation and adaptation across the whole economy in a fair and just way.

There is a tantalising sneak peek of the standard in PRI’s Towards Transition Intelligence, which was published in January. Page 9 Figure 2 shows a diagram by PRI of the planning process detailed in the standard. 

Given that the goal is to support existing guidance and frameworks, 32212 will probably be closely aligned with the Transition Planning Cycle. In essence, GFANZ created the first finance‑sector transition‑plan architecture, which with 32212, ISO will take, and using the Planning Cycle thinking, codify both into a formal, auditable, global standard. 

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According to ISO, 32212 is the “world’s first internationally recognised standard for transition planning in the finance sector”. It is a welcome addition to the suite of transition plan and planning guidance and frameworks developed by the Transition Plan Taskforce, IFRS, Accounting for Sustainability and others.

This is a very timely publication. The last year or so has seen a retreat from sustainability by business and the markets. The USA elections that saw a change in administration is often cited as the starting pistol for that. However, we would argue that the market was ready for it: there was significant framework and standard fatigue. Years of sustainability reporting acronyms, the ISSB consolidation process notwithstanding, and the CSRD’s version of the Charge of the Light Brigade, had created a compliance mindset around sustainability. Even those – TCFD and TNFD for example – that are in truth far more valuable as strategic than reporting frameworks, sat firmly in the “have to do” rather than “useful” bucket.

What is clear, however, for example, from a reading across the multitude of posts in LinkedIn is that organisations haven’t given up on what we called sustainability. There isn’t much or any of the public discussion of grand ambition; the focus has shifted to operational questions. With that we think (hope?) are coming a much better crop of questions around how climate, loss of nature or economic inequalities is affecting supply chains, procurement, customers. What risks and opportunities do they give rise to? How does all of this tie into commercial performance? How are information pathways consistent and joined up across the organisation? 

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ISO 32212 - A practical guide to transition planning?

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This is where we circle back to 32212. Looking at the diagram in the PRI publication, it will in all probability speak directly to this point: it won’t be disclosure driven. It will instead, we hope, be a practical guide to how a financial institution can develop the transition planning of its financing, investing, insuring and advisory activities. And this is so important of course because this will drive systemic change across the whole economy.