EBF RESPONSE PAPER

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

BRUSSELS, 18 March 2024 – 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.

Disclosure frameworks play a crucial role in fostering transparency within the banking sector, enabling investors and stakeholders to assess risks, vulnerabilities, and mitigation strategies. We believe that both quantitative and qualitative information are essential, encompassing traditional as well as climate-related financial risk drivers.

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.

For a comprehensive overview, kindly refer to our full response document.

For more information:

Denisa Avermaete, Senior Policy Adviser – Sustainable Finance, D.Avermaete@ebf.eu

Matilde Quarin, Policy Adviser – Prudential Policy & Supervision, M.Quarin@ebf.eu

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About the EBF:

The European Banking Federation is the voice of the European banking sector, bringing together national banking associations from across Europe. The EBF is committed to a thriving European economy that is underpinned by a stable, secure and inclusive financial ecosystem, and to a flourishing society where financing is available to fund the dreams of citizens, businesses and innovators everywhere.