The Basel Committee on Banking Supervision has released a long-anticipated framework for climate-related financial disclosures, allowing national regulators to determine whether banks will be required to adopt the measures. The voluntary nature of the guidance reflects ongoing political and regulatory divisions, particularly following resistance from the United States.
The committee—comprising central bankers and financial regulators from G20 nations and beyond—acknowledged in a statement on Friday that climate data quality, consistency and availability continue to evolve. As a result, the framework has been designed to offer “a reasonable level of flexibility.”
Under the new framework, banks are expected to assess the potential impact of climate-related risks—both physical risks such as flooding and heatwaves, and transition risks such as shifts in agricultural policy—on their financial performance and broader risk profiles. Institutions are also encouraged to outline their strategies for managing such risks.
The move comes amid diverging approaches to climate risk across jurisdictions. European regulators, including the European Central Bank, have made the integration of climate considerations a supervisory priority. By contrast, the US has retreated from key climate oversight mechanisms. In January, the Federal Reserve formally exited the Network of Central Banks and Supervisors for Greening the Financial System (NGFS), and several major American banks have subsequently scaled back their climate commitments.
The Basel Committee’s final guidance reflects feedback from a public consultation on its initial proposal, which was published in November 2023. In response to industry concerns, the final version omits a previously proposed requirement for banks to report “facilitated emissions”—the greenhouse gases linked to their capital markets and trading activities.
Looking ahead, the committee said it would continue to monitor the adoption of climate disclosure practices and the evolution of global reporting standards. It signalled openness to revising the framework as data quality and regulatory consensus improve.
