Climate Risk Disclosure Requirements: Banking Sector Obligations Under TCFD and Beyond — TGB Regulatory & Policy Brief August 2025

From TCFD recommendations to a global baseline

The TCFD framework set the vocabulary that most bank climate disclosure still uses. It organised disclosure into four areas: governance, strategy, risk management, and metrics and targets. In July 2023 the Financial Stability Board (FSB) announced that the work of the TCFD had been completed, with the two inaugural ISSB standards issued in June 2023 marking what it called the culmination of that work. Having fulfilled its remit, the TCFD disbanded in October 2023, alongside the release of its final status report.

Practice at the point of handover was uneven. In fiscal year 2023, 82% of the more than 3,000 companies examined disclosed information in line with at least one of the 11 TCFD recommended disclosures, but only about 3% reported in line with all 11. The FSB drew the conclusion that few companies cover all four recommended areas. Between October 2023 and March 2024, more than 1,000 companies referenced the ISSB in their reports, a sign that preparers had begun to move to the successor framework.

The ISSB issued IFRS S1 and IFRS S2 on 26 June 2023, and both standards fully incorporate the TCFD recommendations. They are effective for annual reporting periods beginning on or after 1 January 2024, which means investors could begin to see disclosures in 2025 for the 2024 reporting cycle. IOSCO, the international organisation of securities regulators, endorsed the standards and called on jurisdictions to consider how to adopt, apply or otherwise be informed by them. The ISSB has also said it will work with jurisdictions that want to require disclosures beyond the global baseline.

For banks, the most consequential feature of IFRS S2 is its explicit requirement on financed emissions. Companies with commercial banking activities must disclose financed emissions, including absolute gross financed emissions disaggregated by Scope 1, Scope 2 and Scope 3 greenhouse gas (GHG) emissions. The standards contain first-year reliefs, including the option to limit disclosures to climate-related risks and opportunities in the first year of application. Australia's version of the climate standard shows how the Scope 3 relief works in practice: in the first annual reporting period, an entity need not disclose Scope 3 emissions, which for commercial banks includes the additional information on financed emissions. The same standard defines financed emissions as the portion of a counterparty's gross emissions attributed to the entity's loans and investments, and places them in Scope 3 Category 15.

Assurance is the next layer. The IAASB and the IESBA launched their new sustainability assurance and ethics standards on 27 January 2025. ISSA 5000 and the accompanying ethics standard are effective for assurance engagements on sustainability information for periods beginning on or after 15 December 2026. For banks that have reported climate data on a best-efforts basis, assured financed emissions numbers would raise the bar on data lineage and methodology documentation.

The adoption map in mid-2025

On 12 June 2025 the IFRS Foundation said 36 jurisdictions had adopted or otherwise used ISSB Standards, or were finalising steps to introduce them, and published an initial set of 17 jurisdictional profiles. Of the 17 profiled jurisdictions, 14 target full adoption, two target adoption of the climate requirements and one targets partial incorporation. The profiles cover Australia, Bangladesh, Brazil, Chile, Ghana, Hong Kong SAR, Jordan, Kenya, Malaysia, Mexico, Nigeria, Pakistan, Sri Lanka, Chinese Taipei, Tanzania, Türkiye and Zambia.

A further 16 jurisdictions were described in snapshots because their approach had not been finalised. Of these, 12 propose or have published requirements that are fully aligned with ISSB Standards, such as Canada, or designed to deliver functionally aligned outcomes, such as Japan; three propose requirements that incorporate a significant portion of ISSB disclosures; and one is considering permitting their use. According to the ISSB, as reported by the FSB, jurisdictions representing about 57% of global GDP had taken steps towards adoption or other use of ISSB Standards by November 2024, and as of September 2024, 17 FSB jurisdictions had put or were putting in place structures to bring them into local requirements.

The headline count overstates convergence for internationally active banks. The IFRS Foundation did not update its description of the EU's approach, previously treated as full adoption through interoperability, pending the outcome of the Omnibus simplification of the European Sustainability Reporting Standards (ESRS). The FSB noted that some jurisdictions, for example the United States, no longer support mandatory climate-related disclosures at the federal level. The ISSB itself has flagged jurisdictional modifications to its standards as a challenge to timely and comparable information. A bank group reporting in several jurisdictions therefore faces a baseline that is shared in principle but modified in practice. Transition plans are a second area of divergence. IFRS S2 requires transition plan information to be disclosed if an entity has such a plan. In June 2025 the ISSB published guidance to address the fragmentation of transition plan disclosure requirements, building on materials from the Transition Plan Taskforce.

The Basel Committee's bank-specific layer

The Basel Committee's work on climate began with risk management rather than disclosure. On 15 June 2022 it published principles for the effective management and supervision of climate-related financial risks. Principle 12 asks banks, where appropriate, to use scenario analysis to assess the resilience of their business models and strategies to a range of plausible climate-related pathways. Principles 13 to 18 are addressed to supervisors, and Principle 18 says supervisors should consider using climate scenario analysis and, where appropriate, disclosing the findings.

On 29 November 2023 the Committee consulted on a Pillar 3 disclosure framework for climate-related financial risks. It sought views on a potential implementation date of 1 January 2026, one year after the effective date then proposed by the ISSB, with comments due by 14 March 2024. That date will not be met as a binding standard. On 13 June 2025 the Committee published the final framework and agreed that it will be voluntary, with jurisdictions to consider whether to implement it domestically. The document states that its tables and templates would only be mandatory when required by national supervisors at a jurisdictional level. The Committee's own disclaimer applies with extra force here: it has no formal supranational authority and its decisions have no legal force.

The Committee justified the flexibility by pointing to data. It said the accuracy, consistency and quality of climate-related data are evolving, and that users need to consider the disclosures holistically, understanding their strengths and shortcomings. It will monitor the implementation of other reporting frameworks and disclosure practices at internationally active banks, and consider whether revisions are warranted.

Three changes from the consultation matter for preparers. The framework replaces "forecasts" with "targets", replaces "regardless of materiality assessment" with "where material" to match the Pillar 3 materiality principle, and removes Template CRFR5 on facilitated emissions.

Components of the Basel voluntary climate disclosure framework

Source: Basel Committee on Banking Supervision (BIS), A framework for the voluntary disclosure of climate-related financial risks, 13 June 2025.

The quantitative core is Template CRFR1, which asks for gross carrying values by sector together with financed emissions, credit quality and a maturity ladder. Financed emissions are to be measured under the Greenhouse Gas Protocol Corporate Standard and expressed in metric tonnes of CO2 equivalent (MtCO2e). Templates CRFR1 and CRFR4 use the 18 sectors defined by the TCFD, which are based on the Global Industry Classification Standard (GICS), and the 18 sectors should be disclosed where material. Where a bank uses GICS anywhere to classify lending or investment, the sector split should follow it; otherwise the bank falls back on a classification it uses for jurisdictional reporting. Where financed emissions are not available for a sector, banks must instead disclose their plans to implement estimation methodologies. The same template asks, where applicable and available, for forward-looking absolute emission targets and their reference year, and for off-balance sheet commitments by sector. Taken together, these columns would let a reader set a bank's sector exposures, their credit quality and maturity, and their associated emissions side by side, which is more than most corporate-level disclosures provide. The qualitative tables reach into strategy. Table CRFRA asks for information on any publicly disclosed transition plan, including key assumptions and dependencies, and on whether and how the bank uses scenario analysis to inform strategy, targets and transition plans. The geographical regions subject to physical risk are left to national supervisors to determine. That choice is likely to limit comparability across jurisdictions even where the framework is adopted. Table CRFRB goes further on transition risk, asking how far the bank's financing supports clients in climate change mitigation and adaptation, and on concentration risk, asking whether and how the bank monitors material concentrations within sectors or geolocations. All tables and templates are annual. For supervisors that choose to adopt the framework, these qualitative tables offer a route to test whether a bank's stated targets and its credit portfolio tell the same story.

Financed emissions under review

The ISSB's own standard is also being adjusted at the point where it bears most heavily on banks. On 28 April 2025 it published an Exposure Draft of targeted amendments to IFRS S2, with a 60-day comment period that closed on 27 June 2025. The proposals include relief from measuring and disclosing Scope 3 Category 15 emissions associated with derivatives and some financial activities, and relief from using GICS, in some circumstances, when disclosing disaggregated financed emissions. They also clarify the jurisdictional relief to use a measurement method other than the GHG Protocol and allow jurisdiction-required global warming potential values.

The ISSB has said the amendments are not aimed at reducing GHG disclosures but at making the standard easier to apply while keeping the information decision-useful. The design is optional: entities can choose whether to use the reliefs and jurisdictions whether to adopt them, without affecting their degree of alignment. The ISSB aims to finalise the amendments by the end of 2025, subject to feedback.

The FSB's 2025 roadmap update places this in context. It noted that Basel Committee work has identified forward-looking climate risk metrics that banks could disclose, but that to develop them banks may have to rely on a range of datasets, including data sourced directly from counterparties. It described the main challenge as having comprehensive, reliable, granular, consistent and comparable information on climate-related financial risks. Where authorities have acted, the FSB said, persistent gaps in data granularity, comparability and consistency limit the usefulness of supervisory reporting and risk assessments. Our reading is that financed emissions will remain the line item where standards, relief and data quality are negotiated, and that banks should expect estimates and proxies to be accepted for some time, provided methodologies are disclosed.

European Union: broader scope, slower enforcement

The EU already has a binding bank-specific template set. On 24 January 2022 the European Banking Authority (EBA) published final draft implementing technical standards (ITS) on Pillar 3 disclosures of ESG risks, built on the FSB-TCFD recommendations, the Commission's non-binding climate reporting guidelines and the EU Taxonomy. The package set mandatory and consistent disclosure requirements, including granular templates, and ratios such as the green asset ratio (GAR) on exposures financing taxonomy-aligned activities.

The original requirement in Article 449a of the Capital Requirements Regulation (CRR) applied to large institutions with securities admitted to trading on a regulated market. The banking package (CRR3) extended the scope of ESG disclosure to all institutions, with the revised obligations applying from 1 January 2025. On 22 May 2025 the EBA consulted on amended ITS, proposing simplified requirements for small and medium banks and no new obligations for large listed banks. The proposal adds materiality considerations to the frequency of some disclosures and aligns the GAR templates permanently with the Taxonomy Regulation. The consultation runs until 22 August 2025. Until the amended standards apply, the EBA is encouraging supervisory flexibility, to clarify expectations, ensure consistency and reduce the operational burden on banks.

The EU's broader simplification agenda is now shaping bank disclosure. The Commission published its Omnibus proposal to simplify reporting under the Corporate Sustainability Reporting Directive, the Corporate Sustainability Due Diligence Directive and the Taxonomy Regulation on 26 February 2025. On 6 August 2025 the EBA issued a no-action letter recommending that competent authorities do not prioritise enforcement of ESG templates EU 6 to EU 10 and specific columns in Templates 1 and 4 for large institutions with listed securities. The same letter covers the corresponding templates for all other institutions recently brought into scope of Article 449a. The EBA had signalled in May that the relief would target templates related to the green asset ratio and the Taxonomy Regulation for large listed institutions. In practice, the legal scope has widened while the enforced content has narrowed, particularly around taxonomy-linked ratios.

Risk management requirements continue regardless. The EBA published final Guidelines on the management of ESG risks on 9 January 2025; they apply from 11 January 2026, and for small and non-complex institutions at the latest from 11 January 2027. The Guidelines require plans to address financial risks from ESG factors, including the adjustment towards EU climate neutrality by 2050, and these plans should be consistent with transition plans disclosed under other EU legislation. The EBA described the ESG risk landscape across EU and EEA banks as stable, reflecting the long horizon of climate risks and the gradual pace of change in portfolios. Climate data is also entering central bank operations: on 29 July 2025 the ECB decided to introduce a climate factor in its collateral framework for marketable assets issued by non-financial corporations, taking effect in the second half of 2026.

United Kingdom: from TCFD to UK SRS

In the UK, the prudential regulator proposes to swap the TCFD reference for ISSB-based standards without adding new bank disclosure demands. On 30 April 2025 the Prudential Regulation Authority (PRA) published CP10/25, proposing updated expectations to replace SS3/19, with responses requested by 30 July 2025. The PRA said that since it first set expectations in 2019, firms' progress has been uneven and more needs to be done.

On disclosure specifically, the PRA is not proposing substantive changes to the expectations in SS3/19. It proposes to remove the reference to TCFD recommendations and add a reference to UK SRS, subject to the UK endorsement process. The Financial Conduct Authority (FCA) intends to consult on moving its disclosure rules for UK-listed companies from TCFD recommendations to UK SRS once endorsement is sufficiently advanced in 2025. The PRA was explicit that a proliferation of disclosure requirements from multiple regulators could strain banks and undermine disclosure quality, and said it does not intend to add to them. It argued that climate disclosures integrated with financial reporting should let users see how climate risks may affect balance sheets, earnings and, for banks, regulatory capital.

The draft supervisory statement includes a chapter on banking-specific issues that encourages integration of climate risks into financial reporting. The proposals are meant to be applied proportionately: all firms are to assess their exposure first, and those materially exposed to climate risk are expected to take greater action than those less exposed. Supervisors would not ask firms to evidence gap analyses or action plans until six months after the final statement is published. The PRA estimates total annualised compliance costs at £45 million over 10 years, of which £32 million would fall on banks and £13 million on insurers. Its cost-benefit analysis cites anticipated climate-related losses to the UK financial system of £6.7 billion a year, the most conservative estimate from the Bank of England's 2021 Climate Biennial Exploratory Scenario.

The corporate standard is moving in parallel. On 25 June 2025 the Department for Business and Trade opened a consultation on exposure drafts of UK SRS based on IFRS S1 and IFRS S2, with six proposed minor amendments for UK application; it closes on 17 September 2025. The consultation seeks evidence on costs and benefits to inform any decision to require reporting, and it was published alongside a consultation on the government's transition plan commitment.

North America: retreat in the US, phasing in Canada

The United States has moved away from mandatory climate disclosure at the federal level. The SEC adopted climate disclosure rules on 6 March 2024 that would have required large accelerated and accelerated filers to disclose material Scope 1 and/or Scope 2 emissions. Those filers would also have needed an assurance report, initially at limited assurance and, for large accelerated filers after a further transition, at reasonable assurance. The rules also required disclosure of costs and losses from severe weather events, subject to a one per cent threshold. The Commission stayed the rules pending litigation and, on 27 March 2025, voted to end its defence of them.

Bank supervisors have also stepped back. On 17 January 2025 the Federal Reserve Board withdrew from the Network of Central Banks and Supervisors for Greening the Financial System (NGFS), saying its work had broadened to issues outside the Board's statutory mandate. On 31 March 2025 the Office of the Comptroller of the Currency (OCC) withdrew from the interagency principles for climate-related financial risk management for large financial institutions. The OCC said its existing risk management guidance applies to all activities, including exposures to severe weather events and natural disasters. For US banks, the federal push on climate disclosure has stalled, and remaining obligations stem largely from other regimes, such as those that apply to their overseas operations or listings.

Canada offers the contrast. The Office of the Superintendent of Financial Institutions (OSFI) published Guideline B-15 on 7 March 2023, with two chapters, Governance and Financial Disclosures, after receiving more than 4,300 consultation submissions. It took effect at fiscal year-end 2024 for domestic systemically important banks and takes effect at fiscal year-end 2025 for other in-scope institutions. After the Canadian Sustainability Standards Board released its standards on 18 December 2024, OSFI said on 20 February 2025 that it would align the Scope 3 disclosure expectation with them, at fiscal year 2028. It set fiscal year 2029 for Scope 3 disclosure on the off-balance sheet component of assets under management. Expectations on climate transition plans and scenario analysis were left unchanged, with implementation dates still to be set.

Asia-Pacific: national standards built on IFRS S2

Australia has legislated an ISSB-based climate reporting regime. The Australian Accounting Standards Board's AASB S2, dated 20 September 2024, applies to annual reporting periods beginning on or after 1 January 2025, and the Corporations Act sets three application dates, 1 January 2025, 1 July 2026 and 1 July 2027, for different classes of entity. The first-year Scope 3 relief means banks need not publish financed emissions in their first reporting year under the standard.

Japan's standard-setter has completed its first set of standards. On 5 March 2025 the Sustainability Standards Board of Japan issued three standards aligned with ISSB Standards: an application standard, a general standard and a climate standard. They were developed on the assumption that they would eventually be required for companies listed on the Prime Market of the Tokyo Stock Exchange. The legal framework that would make them mandatory under securities law is for the Financial Services Agency, Japan's securities regulator, to determine. Until that framework is set, application by Japanese banks remains a matter of choice rather than obligation.

In Hong Kong, the exchange's ESG Code has required climate disclosures in phases since 1 January 2025, with reference to IFRS S2. Scope 1 and 2 disclosure is mandatory for Main Board issuers from that date, while large-cap issuers move from comply-or-explain to mandatory disclosure of the wider climate requirements for financial years beginning on or after 1 January 2026. Issuers that are constituents of the large-cap index throughout financial year 2025 must make mandatory climate disclosure for financial year 2026, in reports published in 2027. In March 2024 the government appointed the Hong Kong Institute of Certified Public Accountants as local standard-setter for ISSB-based standards.

Selected climate disclosure regimes relevant to banks, as at August 2025

Source: Basel Committee on Banking Supervision (BIS), Basel Committee publishes framework for voluntary disclosure of climate-related financial risks, 13 June 2025; Basel Committee on Banking Supervision (BIS), A framework for the voluntary disclosure of climate-related financial risks, 13 June 2025; European Banking Authority, The EBA issues a no-action letter on the application of ESG disclosure requirements and updates the EBA ESG risks dashboard with December 2024 data, 6 August 2025; Bank of England, Prudential Regulation Authority, CP10/25 Enhancing banks' and insurers' approaches to managing climate-related risks: update to SS3/19, 30 April 2025; UK Department for Business and Trade, Exposure drafts: UK Sustainability Reporting Standards (consultation), 25 June 2025; US Securities and Exchange Commission, SEC votes to end defence of climate disclosure rules (press release 2025-58), 27 March 2025; Office of the Superintendent of Financial Institutions (Canada), Letter to Industry: We are updating Guideline B-15 for the final CSSB standards, 20 February 2025; Australian Accounting Standards Board, AASB S2 Climate-related Disclosures, 20 September 2024; Sustainability Standards Board of Japan, SSBJ issues inaugural sustainability disclosure standards to be applied in Japan, 5 March 2025; Hong Kong Exchanges and Clearing, Implementation guidance for climate disclosures under HKEX ESG reporting framework, 30 April 2024.

What this means for banks

The direction of travel is clear even if the pace is not. The ISSB baseline is spreading through national standards and proposals in Australia, Japan, Hong Kong, Canada and the UK, while the Basel framework offers supervisors a bank-specific template set they can adopt at their discretion. The retreat in the United States and the enforcement pause in the EU slow the timetable but do not remove the underlying expectation that banks understand and explain their exposure to climate risk.

Three practical implications follow. First, the sector classification and financed emissions methodology that a bank builds for one regime should be designed to map across to others, since the Basel templates and IFRS S2 both draw on GICS, while first-year and other reliefs differ by jurisdiction. Second, the disclosure and risk management tracks are converging: the EBA's plans under its ESG risk Guidelines, the PRA's banking-specific chapter and the Basel transition plan questions all link what banks disclose to how they manage climate risk internally. Third, assurance will expose weak data lineage, and the ISSA 5000 effective date leaves limited time to build controlled processes around data in which the FSB still sees persistent gaps in granularity, comparability and consistency.

For boards, the risk is less a single binding deadline than inconsistency: publishing different financed emissions figures, sector splits or transition narratives in different jurisdictions. The PRA's warning about the operational strain of overlapping requirements applies equally to the reverse problem of fragmented ones.

Primary sources: Financial Stability Board, FSB Roadmap for Addressing Financial Risks from Climate Change: 2025 update, 14 July 2025; Basel Committee on Banking Supervision (BIS), Basel Committee publishes framework for voluntary disclosure of climate-related financial risks, 13 June 2025; European Banking Authority, The EBA issues a no-action letter on the application of ESG disclosure requirements and updates the EBA ESG risks dashboard with December 2024 data, 6 August 2025; IFRS Foundation, IFRS Foundation publishes jurisdictional profiles providing transparency and evidencing progress towards adoption of ISSB Standards, 12 June 2025; Bank of England, Prudential Regulation Authority, CP10/25 Enhancing banks' and insurers' approaches to managing climate-related risks: update to SS3/19, 30 April 2025; US Securities and Exchange Commission, SEC votes to end defence of climate disclosure rules (press release 2025-58), 27 March 2025; Office of the Superintendent of Financial Institutions (Canada), Letter to Industry: We are updating Guideline B-15 for the final CSSB standards, 20 February 2025; IFRS Foundation, ISSB issues inaugural global sustainability disclosure standards, 26 June 2023; Basel Committee on Banking Supervision (BIS), A framework for the voluntary disclosure of climate-related financial risks, 13 June 2025; IFRS Foundation, Project Summary: IFRS S1 and IFRS S2, 30 June 2023; IFRS Foundation, ISSB publishes Exposure Draft proposing targeted amendments to IFRS S2 to ease application for companies, 28 April 2025; Australian Accounting Standards Board, AASB S2 Climate-related Disclosures, 20 September 2024; Basel Committee on Banking Supervision (BIS), Principles for the effective management and supervision of climate-related financial risks, 15 June 2022; Basel Committee on Banking Supervision (BIS), Consultative document: Disclosure of climate-related financial risks, 29 November 2023; European Banking Authority, EBA publishes binding standards on Pillar 3 disclosures on ESG risks, 24 January 2022; European Banking Authority, EBA launches consultation on amended disclosure requirements for ESG risks, equity exposures and aggregate exposure to shadow banking entities, 22 May 2025; European Banking Authority, The EBA publishes its final Guidelines on the management of ESG risks, 9 January 2025; European Central Bank, ECB to adapt collateral framework to address climate-related transition risks, 29 July 2025; UK Department for Business and Trade, Exposure drafts: UK Sustainability Reporting Standards (consultation), 25 June 2025; US Securities and Exchange Commission, SEC adopts rules to enhance and standardise climate-related disclosures for investors (press release 2024-31), 6 March 2024; Board of Governors of the Federal Reserve System, Federal Reserve Board announces it has withdrawn from the NGFS, 17 January 2025; Office of the Comptroller of the Currency, OCC withdraws from interagency climate-related financial risk management principles (NR 2025-27), 31 March 2025; Office of the Superintendent of Financial Institutions (Canada), OSFI issues new Guideline on Climate Risk Management, 7 March 2023; Sustainability Standards Board of Japan, SSBJ issues inaugural sustainability disclosure standards to be applied in Japan, 5 March 2025; Hong Kong Exchanges and Clearing, Implementation guidance for climate disclosures under HKEX ESG reporting framework, 30 April 2024.