The Basel Committee on Banking Supervision has unveiled a long-awaited framework for climate-related financial disclosures, making its implementation voluntary in a concession to political resistance from the United States.
The new framework encourages banks to disclose how climate risks could affect their financial returns and overall risk exposure, considering both physical risks—such as flooding and extreme heat—and transition risks, such as policy shifts impacting sectors like agriculture. However, national regulators will decide whether these disclosures become mandatory.
While the European Central Bank and other global regulators have advanced climate risk as a supervisory priority, the U.S. under President Donald Trump has reversed course. In January, the Federal Reserve withdrew from the Network of Central Banks and Supervisors for Greening the Financial System (NGFS), and several major U.S. banks have rolled back climate targets.
Responding to industry feedback, the Basel Committee also dropped a key requirement that banks report carbon emissions linked to capital market and trading activities—known as “facilitated emissions.” The committee cited evolving data quality and a need for flexibility.
The framework marks a significant step in aligning global financial oversight with climate concerns, but its voluntary nature reflects the geopolitical divisions surrounding climate regulation. The Basel Committee said it would continue monitoring global disclosure practices and consider future revisions.
Swifteradio.com
