Every major UK bank now has a transition plan. Glossy, board-approved, publicly
disclosed. But ask the same bank for portfolio-level transition data on its SME lending
book, and the confidence disappears fast.
That gap just got harder to hide. Following the Prudential Regulation Authority’s SS5/25,
UK banks were required to complete an internal gap analysis against updated climate
risk expectations by 3 June 2026, with board sign-off on materiality assessments.
According to the Bank of England, SS5/25 explicitly raises the bar on data as one of its
core chapters, alongside governance, risk management and scenario analysis.
The Plan Is Not the Problem
Transition plans are strategic documents. They set targets, sector pathways and
financed emissions ambitions. Most banks can write one.
The problem sits one layer down, in execution. A transition plan is only as credible as
the data used to build, monitor and report against it. For most banks, that data simply is
not there at the granularity regulators now expect.
• Portfolio-level financed emissions data under PCAF methodology, broken down
by sector and revenue band
• Borrower-level transition indicators for SME clients who do not publish
sustainability reports
• Forward-looking, sector-aligned decarbonisation metrics that can inform
underwriting, not just disclosure
Without these, a net zero roadmap is a statement of intent rather than a working risk
management tool.
Where the Data Actually Breaks Down
SME clients sit at the centre of the problem. Large corporates increasingly disclose
under CSRD and TCFD-aligned frameworks, but SME transition data is fragmented
across websites, policy documents and informal disclosures rather than absent
altogether.
That fragmentation is exactly what makes PCAF-aligned financed emissions reporting
so hard to operationalise at scale. A relationship manager cannot manually chase
transition data across thousands of SME relationships, sector by sector, quarter by
quarter.
This is the layer where transition plans quietly stall. The board signs off on ambition. The
portfolio team is left trying to reconstruct transition data after the fact, usually under
supervisory pressure rather than as business as usual.
What This Means for Banks
SS5/25 has moved climate risk from a narrative exercise to an evidentiary one.
Supervisors will increasingly expect banks to show their working: the transition data
behind the transition plan, not just the plan itself.
Banks that can connect published targets to live, portfolio-level transition data will
move faster through supervisory review cycles and make faster, better-informed credit
decisions across their SME book.
This Is the Gap the Climate Action Platform Was Built to Close
This is the gap the Climate Action platform, developed and deployed by NatWest and
National Australia Bank, was built to close. Built on TDH’s underlying sustainability
intelligence, it gives relationship managers and sustainability teams structured, sector-
benchmarked transition data on SME borrowers, closing the distance between what’s
published and what’s actually known about the portfolio.
Talk to our team to see how the Climate Action platform turns transition ambition into
transition data.
