Basel Committee publishes international voluntary climate risk disclosure framework for banks

On 13 June 2025, the Basel Committee on Banking Supervision (the primary global standard setter for the prudential regulation of banks) published its framework for the voluntary disclosure of climate-related financial risks. 

At a high level, the framework is intended to guide banks across jurisdictions on disclosing their climate-related financial risks. It includes both qualitative and quantitative guidance on how banks can report their exposures. 

The framework is voluntary (a departure from the original proposal to make some elements mandatory). Implementation will only become mandatory where required by national supervisors at a jurisdictional level.

The framework comprises both qualitative and quantitative disclosure requirements, including:

• Qualitative information on climate-related financial risks (governance, strategy and risk management): This disclosure should describe the governance processes, controls and procedures used to monitor, manage and oversee material climate-related financial risks. It should also cover how identified risks affect the bank’s business model, strategy and decision-making.
• Qualitative information on climate-related financial risks (transition risk, physical risk and concentration risk). This template is designed to set out the bank’s governance arrangements for overseeing these specific climate-related financial risks.
• Transition risk – exposures and financed emissions by sector.  Banks are expected to disclose their gross carrying values by sector, along with associated financed emissions, credit quality and maturity ladder.
• Physical risk – exposures subject to physical risks.  This requires a breakdown of the bank’s gross carrying values subject to climate change physical risks (including both chronic and acute events), typically split by relevant geographical region or location.
• Transition risk – real estate exposures in the mortgage portfolio by energy efficiency level.  Banks should disclose gross carrying values in the mortgage portfolio differentiated by the energy efficiency of the underlying collateral.
• Transition risk – emission intensity per physical output and by sector. This disclosure provides data on the bank’s financed greenhouse gas emission intensity per physical output for those sectors where the bank has established climate-related targets.

In its press release, the Basel Committee acknowledged that the accuracy, consistency and quality of climate-related data continue to evolve. As such, a reasonable level of flexibility has been built into the final framework. The Committee also recognised that a comprehensive understanding of banks’ exposure to climate-related financial risks may require multiple quantitative metrics and qualitative information, and so users of these disclosures should assess the information holistically, recognising both its strengths and limitations.

The Committee has also indicated it will continue to monitor developments, including the implementation of other reporting frameworks and disclosure practices by internationally active banks and jurisdictions globally. In particular, the EU has already incorporated extensive ESG requirements into its prudential framework for EU credit institutions through recent reforms to the Capital Requirements Regulation and Capital Requirements Directive. These regimes require detailed information on ESG risks being included in institutions’ Pillar 3 reports, including both qualitative and quantitative data on fossil fuel sector exposure and integration of ESG risks into the institution’s business strategy, management and processes.