Out With a Whimper: BCBS Publishes Climate Disclosure Framework

On June 13, 2025, the Basel Committee on Banking Supervision (“BCBS”) published its framework for the disclosure of climate-related financial risks. The framework is entirely voluntary and has several notable changes from the 2023 proposal. In this brief Legal Update, we highlight those changes and discuss why the climate disclosure framework will have at best a minor impact in the United States and Europe.

Background

In 2023, BCBS issued a proposal for a disclosure framework for climate-related financial risks. The proposal would have integrated climate disclosures into Pillar 3 of the Basel Accords. Pillar 3, known as Market Discipline, is a set of requirements that strengthen market discipline and encourage sound banking practices through the compulsory disclosure of relevant financial information by banks. Pillar 3 disclosures are typically made through periodic disclosures by banks using templates and formats that align with BCBS standards.

The proposed disclosure framework would have required the 28-member jurisdictions of BCBS to implement bank-specific disclosure requirements for climate-related financial risks. Some of the disclosure requirements would have had to precisely mirror the BCBS framework, while others could have been tailored by jurisdictions acting under national discretion. They would generally have been applied to internationally active banks, although jurisdictions could apply them more broadly (as the United States has done with the capital-adequacy requirements under Pillar 1). Compliance would have been required by 2026.

The proposal contemplated qualitative and quantitative disclosure requirements for climate-related financial risks in the banking book. Qualitative information requirements would have addressed (i) governance; (ii) strategy; (iii) risk management; and (iv) concentration-risk management in relation to climate-related financial risks. Quantitative information requirements would have contained metrics on (i) exposures by sector; (ii) financed emissions; and (iii) exposures subject to physical risk by geographical area. These requirements would have been specific to banking and were intended to complement other efforts, such as the requirements of the International Sustainability Standards Board.

Changes in the Final Framework

The final disclosure framework for climate-related financial risks will be voluntary (i.e., not part of the international Pillar 3 requirements). This means that the jurisdictions will not be required to implement it. Further, if they choose to implement climate disclosure requirements, BCBS will not monitor adherence to its framework as part of the regulatory consistency assessment program.

The final disclosure framework adopts a more consistent approach to materiality by removing the requirement to disclose information on all 18 sectors from the Task Force on Climate-Related Financial Disclosures framework, regardless of materiality. Instead, banks must disclose information only on material sectors.

The final disclosure framework replaces the concept of “forecasts” with “targets.” Whereas the proposal would have required banks to disclose forward-looking information on climate-related financial risks (if otherwise produced by the bank), the final framework only requires disclosure of already-publicly disclosed specific, actionable portfolio objectives set by the bank to measure and manage its exposure to climate-related financial risks.

The final disclosure framework omits quantitative disclosures on facilitated emissions, which are emissions that are attributed to a bank’s capital markets and financial advisory activities. Mandatory disclosure of information on facilitated emissions had been criticized as not being meaningfully connected to a bank’s financial performance or financial risk.

Conclusion

The BCBS framework for the disclosure of climate-related financial risks, while thoughtful in its approach to climate disclosures, is unlikely to have a meaningful impact on bank regulation.

Some jurisdictions, like the United Kingdom and the European Union, already have integrated climate disclosure frameworks as requirements for their banks. These jurisdictions may modify their requirements to align with the BCBS framework, but are less likely to do so because national implementations will not be assessed for consistency.  Further, some national frameworks for climate disclosures may be more extensive than the BCBS framework.

Other jurisdictions, like the United States, have made it clear that they will not move forward with climate-disclosure requirements for their banks. Their decisions may reflect national priorities, as well as concerns with the accuracy, consistency and quality of climate-related data and the materiality of climate-related financial risks to safety and soundness and market discipline.