CBJ Regulations No. 2 of 2025 require climate risk management, not a transition plan. CBJ has signalled one for later. What a bank in Jordan owes its regulator today.
A question worth asking before committing budget: is a climate transition plan actually required where you operate?
For Jordan the answer today is no, though the Central Bank of Jordan has said it may not stay that way. The reason the question gets confused is worth understanding, because the same confusion appears across the region.
What CBJ Regulations No. 2 of 2025 require
The Central Bank of Jordan’s Regulations No. 2 of 2025 require climate risk management. They do not require a transition plan.
That is not a technicality. The two obligations point in opposite directions.
Climate risk management is inward-facing. How do climate-related physical and transition risks affect this bank? What is the exposure, how is it governed, how does it feed into credit assessment, capital planning and the risk appetite framework? The subject is the bank’s own vulnerability.
A transition plan is outward-facing. What does this bank intend to do about its own contribution to emissions? What targets, over what horizon, with what actions and what financing? The subject is the bank’s own impact.
A bank can have rigorous climate risk management and no transition plan, and be entirely compliant. It can also have a polished transition plan and weak climate risk management, and be in difficulty with its supervisor.
We have covered the CBJ requirements themselves in more detail in Jordan just made climate-risk management mandatory for banks and the Article 11 six-month deadline.
What CBJ has said about transition plans
The Central Bank of Jordan has not required transition plans, but it has said it intends to consider doing so. Its Green Finance Strategy 2023 to 2028, issued on 10 November 2023, says that in the medium and long term CBJ “will consider introducing a requirement for FIs” to prepare and implement low-carbon transition and adaptation plans (Executive Summary, page 25).
The strategy comes back to the point in three places:
- Its list of target actions includes gradually introducing a requirement for financial institutions to adopt low-carbon transition and adaptation plans.
- Its milestone prioritisation (Figure ES.17) places financial institutions adopting those plans in the lowest of its three priority groups, and CBJ notes that some actions will be implemented beyond the strategy’s five-year period.
- It ties a planned, proportional requirement for financial institutions to publish carbon footprint reports to the future transition plan requirement, with footprint reports gradually becoming progress reports on the plans.
Three things follow. “Will consider” is not “requires”: no CBJ instrument has made a transition plan mandatory, and Regulations No. 2 of 2025 do not. The signal is for the medium term, with no date attached. And CBJ pairs transition plans with adaptation plans, which a Jordanian bank should not drop when it builds one.
Source: Central Bank of Jordan, Green Finance Strategy 2023 to 2028, 10 November 2023.
Why the conflation matters
Two failure modes follow from mixing them up.
Building the wrong deliverable. A bank told that “the regulator requires a transition plan” commissions one, and then discovers at examination that what was actually required was risk management integration it has not done. The transition plan does not answer the supervisor’s questions because it was never designed to.
Overstating compliance. Telling a regulator, a lender or a board that a requirement has been met when the requirement was something else is a credibility problem that is difficult to recover from.
The regional picture
Across the GCC, regulatory expectations are generally framed around climate risk management and disclosure rather than mandating transition plans. The UAE, Qatar, Saudi Arabia, Kuwait, Bahrain and Oman have each moved at different speeds and with different instruments, and we have mapped the differences in GCC central banks on climate risk and sustainable finance, compared.
The honest position is that these requirements are moving, and a statement about any of them has a shelf life. Verify with the relevant regulator rather than relying on a general regional claim, including this one.
Note also that IFRS S2 does not require an entity to have a transition plan either. It requires disclosure of a plan if one exists, at paragraph 14(a). So neither the disclosure standard nor, in Jordan’s case, the prudential regulator is the source of the obligation people often assume.
So who is actually asking?
Usually one of these, and it is worth identifying which:
- Development finance institutions and international lenders, which increasingly attach conditions to facilities. These are specific, testable, and assessed by people who read the plan properly.
- Indices and rating methodologies, which score the existence and quality of a plan.
- Correspondent banking relationships, where questions about climate governance have become routine.
- Parent groups and major shareholders, often the most demanding audience.
Each produces a different document with a different test of adequacy. Naming the driver at the outset is the single most useful thing a bank can do before starting, and it is the first step of the eight-step build process.
What to do
- Confirm the requirement with your own supervisor. Do not rely on a summary, including this one.
- Separate the two workstreams. Climate risk management and transition planning share data but answer different questions and face different audiences.
- Meet the actual regulatory requirement first, then build the transition plan for whoever is genuinely asking for it.
- Do not tell the board a transition plan is mandatory unless you can point at the instrument that makes it so.
- Plan for the CBJ signal. If CBJ follows its strategy, a transition plan and a financed emissions footprint will be asked for later. The data work behind both takes longest, so it is worth starting before the requirement arrives.
How ESGweise helps
We separate the regulatory obligation from the commercial driver at the scoping stage, so a bank builds what it actually needs rather than what it was told the market expects. See our ESG strategy and sustainability reporting services, and our banking and financial services practice.
To establish what you are actually required to do, talk to us.
Related guides
Frequently asked questions
Does Jordan require banks to have a climate transition plan?
Not today. CBJ Regulations No. 2 of 2025 require climate risk management rather than a transition plan. CBJ has signalled that this may change: its Green Finance Strategy 2023 to 2028, issued on 10 November 2023, says that in the medium and long term CBJ will consider introducing a requirement for financial institutions to prepare and implement low-carbon transition and adaptation plans. Until CBJ issues an instrument that requires it, that is a direction of travel, not an obligation.
When might the Central Bank of Jordan require transition plans?
CBJ has not set a date. In the Green Finance Strategy's milestone prioritisation, financial institutions adopting transition and adaptation plans sits in the lowest of three priority groups, and CBJ says some of the strategy's actions will run beyond its five-year period. CBJ also intends a proportional requirement for financial institutions to publish carbon footprint reports, tied to the future transition plan requirement.
What is the difference between climate risk management and a transition plan?
Climate risk management is inward-facing: how climate-related physical and transition risks affect the institution's own balance sheet, capital and operations, and how those risks are governed. A transition plan is outward-facing: what the institution intends to do about its own contribution to emissions, with targets and actions. A bank can have thorough climate risk management and no transition plan, and the two are supervised differently.
Do GCC regulators require transition plans?
Regulatory expectations across the GCC are generally framed around climate risk management and disclosure rather than mandating a transition plan. Requirements differ by jurisdiction and are moving, so verify with the relevant regulator rather than generalising across the region.
If it is not required, why would a bank build one?
Because something other than the prudential regulator is usually asking. Development finance lenders make it a condition of facilities, indices and rating methodologies score it, correspondent banks ask about it, and parent groups require it. Those drivers are real even where the regulator is silent, and they define what the plan has to contain.