Key Impact Points:
- New voluntary framework targets disclosure of climate-related financial risks by banks.
- Designed with flexibility to reflect evolving climate data and reporting needs.
- Basel Committee to monitor implementation and may revise the framework over time.
Basel Committee Publishes Voluntary Climate Disclosure Framework
The Basel Committee on Banking Supervision has released a voluntary framework for disclosing climate-related financial risks, allowing individual jurisdictions to decide whether and how to implement it domestically.
Built-in Flexibility for Evolving Data
Recognizing the rapid evolution of climate-related data, the framework emphasizes flexibility. It combines qualitative and quantitative disclosures to give a holistic view of banks’ exposure to climate risk.
“The Committee acknowledges that the accuracy, consistency and quality of climate-related data are evolving, and therefore it is necessary to incorporate a reasonable level of flexibility into the final framework.”
“Users need to consider the disclosures holistically, understanding the strengths and shortcomings of the disclosed information.”
Global Monitoring and Future Revisions
The Basel Committee will monitor the implementation of this and other international reporting frameworks, and evaluate the disclosure practices of internationally active banks. It may revisit and revise the framework as necessary in response to global developments.
“The Committee will monitor relevant developments, including implementation of other reporting frameworks and disclosure practices by internationally active banks in member jurisdictions, and consider whether any revisions to the framework would be warranted in future.”
About the Committee
The Basel Committee sets global standards for prudential regulation in banking. It operates through consensus and has no legal authority but depends on the commitment of its members. Chaired by Erik Thedéen, Governor of Sveriges Riksbank, and reporting to the Group of Central Bank Governors and Heads of Supervision, led by Tiff Macklem, Governor of the Bank of Canada, the Committee’s ultimate aim is to enhance global financial stability.
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