Bank of International Settlements offices in Basel, Switzerland © Fred Romero
The Basel Committee on Banking Supervision (BCBS) released guidance for climate-related financial risk disclosures which has been watered down from the original proposals after strong pushback from the US.
The long-awaited framework is voluntary instead of mandatory after the US pressured the Basel Committee to completely drop climate-related efforts which could weaken global efforts to curb greenhouse gas emissions.
US obstruction to the Basel Committee “undermines the effectiveness of these international fora,” said Graham Steele, an attorney and former assistant secretary at the US Department of the Treasury.
“The US has not been a leader on this issue. They’ve been leading from behind, and they’ve been counterproductive for the most part,” he said.
US influence on Basel Committee changes
US intervention may have also had an impact on changes to the standard which are “pretty basic,” said Paul Schreiber, a senior policy advisor at Reclaim Finance.
The voluntary guidance moves away from the original proposal by removing a requirement to report on facilitated emissions.
“This means that a lot of the essential activities of the banks would be out of scope. So, for example, underwriting conditions would not be considered. And we know that these activities have a lot of impact on the development of activities like fossil fuel production,” said Schreiber.
The framework includes recommendations around disclosures on banks’ governance, controls and procedures to monitor and manage material climate-related financial risks, as well as methodologies to determine physical and transition risk.
Reporting is also only recommended on sectors “where material” instead of “regardless of materiality”. This change to single materiality could restrict the standard’s impact depending on how it’s interpreted, as materiality assessments in the financial sector are very scarce, said Schreiber.
“You have materiality tables that are often disclosed, but it’s only [a bit of] information and … they don’t really publish the justification behind it. You just have a table and you have written, okay we consider it’s not material because it’s only ‘x’ percent of activities, for example,” he said.
Julia Symon, head of research and advocacy at Finance Watch, welcomed the standards but said it wasn’t enough to rely on jurisdictions to potentially implement the framework, as supervisors need data to understand the financial risks from climate change.
“A well-defined, widely applied disclosure framework is essential, not just to promote comparability but to enable effective risk identification, assessment and mitigation,” she said.
While the Basel Committee is not legally binding, it’s often used by central bankers and regulators as a base standard.
A US-sized hole in climate risk disclosures
The framework was first proposed in 2023 as part of the Basel Committee’s efforts to tackle climate change. Soon after, US regulators pushed back against the efforts being mandatory for supervisors and had asked that the measures be voluntary.
Under the Trump administration, the US and federal regulators have taken a stronger stance against climate change efforts. The Fed and other regulators have pulled out of various climate commitment groups and have made it clear that they have no intention of implementing climate disclosures.
The US Securities and Exchange Commission pulled back on its climate disclosure rules, while Travis Hill, vice-chair of the Federal Deposit Insurance Corporation, said in January that “regardless of what the Basel Committee might publish next year, the FDIC will not be issuing any quantitative or qualitative climate disclosure regime for banks in the US”.
This will leave “a US-sized hole” in the Basel framework, which could have an impact on understanding the interconnectedness and scope on a global scale, as the US is home to many of the world’s largest and systemically important banks, said Steele.
While it’s possible the private sector might step up to fill in the gaps that US regulators are creating, it’s not ideal, he added.
“[Risk management] is not a thing that should be left up to private investors. Fundamentally, it is a thing that is the job of regulators and supervisors,” said Steele.
This page was last updated June 23, 2025
Written by
Moriah Costa is the Editor-in-Chief of Green Central Banking and has over a decade of experience writing about banking and finance. She is an award-winning American journalist based in Paris and has written for major international publications, including Reuters, The Guardian, and S&P Global. Having grown up in water-stressed Arizona, she has always had a strong interest in bringing awareness to climate and environmental issues.
