Climate-Related Financial Disclosures On Regulators’ Radar

Voluntary financial climate-related reporting was discussed at a recent Washington, D.C., meeting hosted by a task force of the Basel, Switzerland-based Financial Stability Board and attended by ABA staff. The task force’s reporting recommendations may affect banks both as reporters and as users of public disclosures. For example, such disclosure practices may affect reporting on climate-related risks associated with bank loans.

In addition, voluntary disclosures may expose banks to potential legal and regulatory risks based on subjective assessments of climate-related risks. Voluntary disclosures may also be converted into a mandatory reporting regime for banks.

The task force’s phase 1 report, released in March, focused on developing the scope and objectives for proposed work on a set of fundamental disclosure principles. The phase 2 report, which is anticipated in December, will likely make specific recommendations and guidelines for voluntary climate-related financial reporting. Through the International Banking Federation, ABA provided overall comments to the phase 1 report. For more information, please contact ABA’s Barry Mills or Mike Gullette.