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Basel Committee on Banking Supervision Introduces Framework for Voluntary Climate Risk Disclosure
The Basel Committee’s latest framework offers banks a flexible, globally aligned path for disclosing climate-related risks.
On 13th June, the Basel Committee on Banking Supervision published a paper on a voluntary framework to guide banks in disclosing climate-related risks. The Committee emphasised the need for flexibility as the accuracy, consistency, and quality of climate-related data is still evolving across the financial sector globally. Thus, each jurisdiction will determine whether and how to apply the framework within its own regulatory system. While the framework is not legally required, it provides guidance on integrating environmental factors into financial risk management and supervision.
Taking a Comprehensive Approach to Climate Risk Disclosure
The committee recognises that capturing climate-related financial risks requires more than a single metric. Banks are encourages to use a combination of quantitative metrics and qualitative information to give a comprehensive view of their exposures. Users of these disclosures should consider the information as a whole, understanding both its strengths and limitations.
Key Changes Within the Framework
Alongside its now-voluntary nature, the framework includes several notable revisions. The term “forecasts” has been replaced with “targets”. This is important as it encourages banks to be open about their objectives in managing their exposure to climate-related financial risks. Rather than just stating the current direction, it emphasises that lenders have an active role in managing exposure.
To align with the materiality principle outlined in the Pillar 3 framework, the phrase “regardless of materiality assessment” has been changed to “where material”, ensuring that disclosures remain meaningful and relevant. This marks a move away from reporting being seen essentially as a bureaucratic exercise, to one which emphasises the importance of managing risks.
Additionally, Template CRFR5, which covered facilitated emissions, has been removed entirely. The Committee also introduced clarifications to Tables CRFRA and CRFRB, with revisions to Table CRFRA specifically emphasizing the process and policies a bank employs to address material climate-related financial risks.
More detailed information on the required reporting within the framework can be found on the Bank of International Settlements’ (BIS) website.
So What?
For banks, the Basel Committee’s new framework represents both a signal and an opportunity. While it is voluntary, its alignment with global standards like TCFD and ISSB means it is likely to influence future regulatory expectations, and possibly become a foundation for more formal requirements down the line.
The message is clear: climate-related financial risks are now a supervisory priority, and transparency around governance, strategy, and risk management will increasingly be expected. Banks that begin aligning with the framework now will be better positioned to meet the future demands of regulators, investors, and customers.
While there seems to be a broad perspective in some circles that “ESG” is moving down the priority order in governance, we believe that it is more to do with the maturity of the sector. Taking out immaterial risks effectively reduces the noise in the data – much of which was challenging to collect and compare, and which gave the exercise a distinctly “box-ticking” nature. Instead of forecasting everything, we are now setting targets for important, material risks which impact on the core of a bank’s activities.
At SkenarioLabs, we see this as a critical moment. For banks, the framework offers a chance to build trust, strengthen internal risk management practices, and get ahead of future regulatory expectations. The voluntary nature of the framework means leadership is now a choice, but this flexibility should be taken as an opportunity to lead rather than delay the transition.
