- Basel Committee proposes climate impact disclosure by banks starting January 2026.
- The aim is to help investors compare climate risks among banks and ensure sufficient capital for stability.
The Basel Committee, a global banking watchdog, has urged banks to start disclosing how climate change affects their business from January 2026. This targets helping investors and regulators in assessing how banks manage climate risks. The proposal aims to make it easier for investors to compare climate exposures among banks and ensure they maintain enough capital for stability.
These disclosures in the banking sector would complement broader corporate disclosures by the International Sustainability Standards Board. However, not all countries will adopt ISSB disclosures, creating uncertainty about aligning Basel’s proposals with the EU’s finalised disclosures. In the US, the Securities and Exchange Commission faces opposition from companies regarding draft climate disclosures, particularly concerning “Scope 3” greenhouse gas emissions.
The Basel framework includes Scope 1, Scope 2, and, crucially, Scope 3 emissions, which represent financed emissions associated with banks’ loans and investments. This is often the most significant of their total greenhouse gas emissions. Acknowledging challenges in data acquisition, the committee emphasised the importance of banks understanding and reporting these emissions for a comprehensive assessment of their climate impact.