Basel Committee Unveils Voluntary Framework for Climate Risk Disclosure

On June 13, 2025, the Basel Committee on Banking Supervision announced the release of a voluntary framework designed to enhance the disclosure of climate-related financial risks among jurisdictions. This framework aims to accommodate the dynamic nature of climate-related data and will be considered by various jurisdictions for potential domestic implementation.

The framework emphasizes a dual approach, encouraging both qualitative and quantitative disclosures. According to the Committee, the evolving landscape of climate-related data necessitates a flexible framework that can adapt to varying levels of data accuracy and consistency. "The disclosures should be viewed holistically, taking into account the strengths and limitations of the information provided," stated Erik Thedéen, Governor of Sveriges Riksbank and Chair of the Basel Committee.

The framework's voluntary nature reflects the Committee's understanding of the diverse regulatory environments across its member jurisdictions. The Basel Committee encourages its members to assess their own contexts when considering the implementation of this framework. In his remarks, Tiff Macklem, Governor of the Bank of Canada and Chair of the Group of Central Bank Governors and Heads of Supervision, highlighted the importance of aligning financial stability with climate risk management: "It is essential that banks worldwide acknowledge their exposure to climate-related financial risks and take proactive steps toward transparent disclosure."

The Committee will monitor developments in the implementation of various reporting frameworks and disclosure practices utilized by major international banks. This ongoing vigilance will allow the Committee to assess whether any adjustments to the framework might be necessary in the future.

The Basel Committee serves as the primary global standard setter for banking regulation and provides a platform for international cooperation on supervisory matters. Its mandate focuses on strengthening the regulation, supervision, and practices of banks to enhance financial stability globally. Despite its influential role, the Committee does not possess formal supranational authority; it relies on the commitments of its members to fulfill its objectives.

The publication of this framework comes at a critical time when banks increasingly face scrutiny regarding their exposure to climate risks. A recent report by the International Monetary Fund (IMF) emphasized the pressing need for financial institutions to integrate climate risk assessments into their operational frameworks. According to Dr. Lisa M. Thompson, Senior Economist at the IMF, "The financial sector must adapt to the realities of climate change, and transparent disclosure is a fundamental first step in this transition."

As global attention on climate change intensifies, the Basel Committee's framework may play a pivotal role in guiding banks toward more responsible and transparent practices, thereby contributing to a more resilient financial system in the face of environmental challenges. Future developments in this area will likely shape the way financial institutions approach climate risk management and disclosure.