Risk Governance Briefing — January 1, 2025
Basel Committee climate risk Pillar 3 disclosures go live, requiring large banks to publish standardized metrics on greenhouse gas exposures, financed emissions, and scenario analysis outcomes for 2024 data.
Executive briefing: Basel Committee on Banking Supervision (BCBS) climate-related financial risk disclosure requirements take effect for large internationally active banks with reporting periods beginning January 1, 2025. Institutions must now integrate the Pillar 3 climate templates into year-end 2024 public disclosures covering governance, risk management, metrics, and targets.
Key regulatory signals
- Scope of application. Pillar 3 climate disclosures apply to Category 1 and 2 banks operating in Basel jurisdictions, aligning with Task Force on Climate-Related Financial Disclosures (TCFD) structure but enforcing standardized quantitative tables.
- Mandatory metrics. Banks must publish financed emissions, exposures to carbon-intensive sectors, transition and physical risk sensitivities, and qualitative scenario analysis narratives using consistent methodologies.
- Supervisory expectations. National regulators are expected to embed the BCBS templates in supervisory reviews, increasing scrutiny of data lineage, control frameworks, and assurance over climate metrics.
Operational priorities
- Data supply chain. Map emissions and counterparty datasets to the new templates, reconciling ESG data vendors, internal credit systems, and climate scenario outputs.
- Controls and assurance. Extend SOX and internal audit scoping to cover climate metrics, ensuring reconciliations, materiality thresholds, and management review controls are documented.
- Scenario tooling. Validate climate scenario models against NGFS pathways and ensure governance evidence is retained for board oversight and examiner review.
Enablement moves
- Coach risk, finance, and sustainability teams on the Pillar 3 templates, emphasizing data definitions, rounding conventions, and cross-references to existing TCFD reports.
- Coordinate investor relations messaging for simultaneous CSRD, SEC climate, and BCBS climate publications to maintain narrative consistency.
Sources
Zeph Tech synchronizes Basel Pillar 3 climate reporting with enterprise ESG and risk dashboards so boards see a unified view of transition exposures and scenario outcomes.