The Basel Committee on Banking Supervision has released a new framework designed to support banks in disclosing climate-related financial risks, as the sector continues grappling with mounting regulatory and market pressure to address climate change exposures.
This new framework, which includes both qualitative and quantitative disclosure guidelines, is voluntary. Individual jurisdictions will decide whether to adopt and implement the framework domestically. The Committee stressed that the flexible nature of the framework reflects the evolving quality, accuracy and consistency of climate-related data currently available across the global financial system.
Given the still-developing state of climate-related financial information, the Basel Committee emphasised the importance of allowing sufficient flexibility for banks. The framework permits a variety of quantitative metrics and qualitative data points, acknowledging that a comprehensive view of banks’ climate-related risks may require a blend of different types of disclosures. Users of these disclosures are encouraged to interpret the information holistically, taking into account both the strengths and any inherent limitations of the data provided.
The Basel Committee will continue to monitor progress as financial institutions implement other reporting frameworks and adapt disclosure practices, particularly among internationally active banks within its member jurisdictions. The Committee has also indicated that it may consider revisions to the framework over time, depending on developments in the broader disclosure landscape and the ongoing evolution of climate-related financial reporting.
This voluntary approach reflects a pragmatic step as regulators, banks and stakeholders balance the urgency of addressing climate risks with the challenges of data availability, comparability and quality.
Elsewhere, the European People’s Party (EPP) has recently unveiled proposals for even sharper reductions to the European Commission’s Omnibus initiative, which seeks to simplify the EU’s sustainability reporting regulations.
According to ESG Today, Jörgen Warborn, Parliament’s Omnibus rapporteur from the EPP, published draft amendments that could significantly lower the number of companies subject to reporting obligations.
The European Commission initially presented the Omnibus proposal in February, aiming to ease compliance burdens under key regulations such as the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the Taxonomy Regulation, and the Carbon Border Adjustment Mechanism (CBAM). A central feature of the proposal was raising the CSRD threshold from 250 to 1,000 employees, exempting roughly 80% of companies from mandatory sustainability reporting.
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