18 March 2024

EBF Response to the Basel Committee’s consultation on a Pillar 3 disclosure framework for climate-related financial risk

Disclosure frameworks are crucial in fostering transparency in the banking sector so investors/stakeholders can assess risks, vulnerabilities, and mitigation strategies...quantitative/qualitative information is essential, encompassing traditional and climate-related financial risk drivers.

The European Banking Federation welcomes the opportunity to respond to the Basel Committee’s consultation on a Pillar 3 disclosure framework for climate-related financial risk. The EBF recognize the critical importance of addressing climate-related risks within the financial sector while ensuring the stability and resilience of the global financial system.

Key points of our response include:

• Support for comparability and prudential risk-based approach: We endorse the proposal to ensure comparability while maintaining a prudential risk-based approach.
• International harmonization and coordination: We emphasize the importance of international harmonization to aid comparability and prevent duplications.
• Avoidance of jurisdictional discretions: We advocate for a framework devoid of jurisdictional discretions, with necessary flexibility for efficient implementation.
• Guidance on critical areas: Additional guidance is needed in areas such as criteria for proxies, methodologies for emission calculation, and value chain considerations to enhance comparability and mitigate greenwashing risks.
• Exclusions from public disclosures: Certain exposures, including trading book exposures, facilitated emissions, concentration, and liquidity risk, should not be subject to public disclosures at this stage.
• Supervisory reporting for concentration risk disclosures: Concentration risk disclosures should, if considered necessary, be part of supervisory reporting at this stage.
• Clarity on forecasting requirements: The framework should clarify requirements for disclosing forecasts, as disclosing forecasts of future conditions should not be part of a P3 disclosure framework.
• Scope of application: We advocate for the broadest scope of application at the highest consolidated level.

full paper

EBF

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