Global watchdog proposes detailed climate disclosures from banks

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LONDON, Nov 29 (Reuters) – A global watchdog on Wednesday proposed that, starting in January 2026, banks publish detailed information about the impact of climate change on their business to help investors and regulators check on how the risks are being managed.

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The Basel Committee of banking regulators from G20 and other economies proposed climate-related disclosures by banks to make it easier for investors to also compare climate exposures at lenders, and ensure banks hold enough capital to remain stable.

The watchdog, which writes high-level rules that its members commit to applying in national handbooks, said such disclosures could help accelerate availability of climate related data, which is evolving, with patchy coverage in some cases.

“For this reason, the committee aims to incorporate a reasonable level of flexibility into a future framework,” the watchdog said in a statement.

Based on feedback from the public consultation on the proposals, the committee would decide which disclosures should be mandatory, and which could be at the discretion of national banking regulators.

The proposals provide more detailed banking sector climate-related disclosures to supplement broader corporate disclosures agreed at the global level by the International Sustainability Standards Board.

Not all countries will apply ISSB disclosures, however, and it is unclear how Basel’s disclosures would dovetail with corporate climate disclosures the European Union has finalised.

Draft U.S. corporate climate disclosures from the Securities and Exchange Commission face heavy pushback from companies which want to ditch the inclusion of so-called Scope 3 greenhouse gas emissions produced by a company’s customers.

The proposed Basel framework includes Scope 3, as well as Scope 1, covering direct emissions from a bank, and Scope 2, or indirect emissions from purchases of energy, such as for heating or cooling premises.

“Financed emissions commonly refer to the greenhouse gas (GHG) emissions associated, in the case of banks, with loans and investments, and that are part of their Scope 3 emissions,” the watchdog said. “For banks, financed emissions are often the most significant part of their total GHG emissions.”

The committee said it recognises the challenges banks may have in obtaining data from their counterparties.

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