Global Financial Regulators Decide That This Is A Good Time To Make Climate Risk Disclosures Voluntary
Experts and advocates reacted with concern and disappointment after the world’s top financial regulators agreed on Monday to shift the climate focus of the Basel Committee on Banking Supervision toward voluntary disclosures and a narrower focus on extreme weather—a move seen as a step back from earlier momentum toward mandatory global standards. The Group of Central Bank Governors and Heads of Supervision (GHOS), which oversees the Basel Committee, endorsed the changes at its regular meeting in Basel, Switzerland.
A body of banking supervisors from 28 jurisdictions, including the United States, Europe and China, the Basel Committee sets international regulatory standards for the financial sector. The body does not have a legal enforcement authority but its decisions shape the global banking and financial systems. In an official press release, the group reaffirmed its commitment to finalizing capital rules laid out in Basel III but said climate-related risk disclosures would now be “voluntary” and that future efforts would prioritize “analysis” of financial risks tied to extreme weather events.
Basel III rules are designed to ensure banks have set aside enough money to handle losses and withstand financial storms. These rules help protect customers’ deposits and keep the wider economy safe from financial crises. Experts say the language marks a retreat from efforts to create robust, binding climate risk rules for global banks, and reflects pressure from U.S. regulators under the Trump administration to weaken the Basel Committee’s Task Force on Climate-Related Financial Risks, the body that had driven forward more ambitious proposals in recent years.
“The Basel Committee is stepping back from ambitious climate regulations and shifting toward a slower, voluntary, research-focused approach,” said Anne Perrault, senior climate finance policy counsel at Public Citizen. She said that omitting any mention of the task force in the official statement clearly signaled a retreat from earlier momentum toward mandated standards. “Regulators won’t be acting in line with the data if they’re avoiding an analysis of transition risk. It’s fair to wonder what this avoidance of transition risk implies for [Federal Reserve] independence.”
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https://insideclimatenews.org/news/12052025/basel-committee-banking-rclimate-rules/