Amid growing resistance, Basel Committee opts for voluntary compliance.

In the face of faltering efforts to mandate enhanced climate disclosure amid growing opposition in the U.S., global banking regulators are publishing a voluntary disclosure framework for banks.

The global standard setter for banks, the Basel Committee on Banking Supervision, issued its framework for reporting on climate-related financial risks. It covers both qualitative and quantitative disclosures and declares that compliance should be voluntary, allowing jurisdictions to decide whether to implement it or not.

A Brussels-based advocacy group that champions financial system reforms, Finance Watch, criticized the committee’s decision to make the framework voluntary, calling it “a serious step backwards.”

“The voluntary framework marks a clear shift from the Basel Committee’s earlier direction. It was made voluntary to appease domestic political concerns while maintaining the illusion of a common global standard. But if jurisdictions diverge, the coordinated global approach needed to manage climate risk is fundamentally undermined,” said Julia Symon, head of research and advocacy, in a release.

While setting a global prudential disclosure standard “is a positive step in the current geopolitical environment … relying on the goodwill of the jurisdictions will not suffice,” she said. “Without clear, consistent data, supervisors are flying blind, unaware of the real risks building up on balance sheets. A well-defined, widely applied disclosure framework is essential, not just to promote comparability, but to enable effective risk identification, assessment and mitigation.”

In addition to making the framework voluntary, the Basel Committee also made several changes since its initial consultation — such as replacing the term “forecasts” with “targets,” only requiring disclosure of material risks, and scrapping certain disclosures of facilitated emissions.

The committee stressed that users of the framework should evaluate banks’ climate disclosures holistically — with users “understanding the strengths and shortcomings of the disclosed information.”

“Given the unique and complex nature of climate-related financial risks, there is no single metric that can perfectly capture these risks,” the group said in its paper. Indeed, it acknowledged that “multiple quantitative metrics and qualitative information may be needed to form a comprehensive picture of banks’ exposure to climate-related financial risks.”

The framework also incorporates flexibility in recognition of the ongoing evolution in “the accuracy, consistency and quality of climate-related data,” the Basel Committee said, adding that it will monitor the implementation of other reporting frameworks and the disclosure practices of global banks to assess whether any revisions to the framework are warranted in the future.

Finance Watch noted that the final framework included some weaker standards than originally proposed.

“We’re seeing one step forward, two steps back,” Symon said. “As climate risks intensify, the momentum for coordinated action is fading. But climate change affects banks everywhere, and those banks are deeply interconnected. When one jurisdiction treats climate risks as optional, it raises financial stability risks for everyone.”