Basel Committee supports the establishment of the International Sustainability Standards Board

• Basel Committee welcomes the IFRS Foundation's establishment of the International Sustainability Standards Board.
• Supports the development of a consistent approach across sectors and minimising regulatory fragmentation.
• Will work on the Pillar 3 framework to promote a common disclosure baseline for climate-related financial risks across internationally active banks.

The Basel Committee on Banking Supervision welcomes today's announcement by the International Financial Reporting Standards (IFRS) Foundation that it is establishing the International Sustainability Standards Board (ISSB) to develop global standards to improve the consistency, comparability and reliability of sustainability reporting.

Disclosure requirements are a fundamental component of a sound banking system, as providing market participants with meaningful information about common key risk metrics reduces information asymmetry and helps promote comparability of banks' risk profiles. To identify and manage climate-related financial risks, banks require accurate information from their customers and counterparties. Consistency and comparability in sustainability reporting across sectors and over time are essential to promote transparency and market discipline, and the Basel Committee looks forward to continued collaboration with the IFRS Foundation as future disclosure standards for climate-related financial risks are developed.

The Committee supports the IFRS Foundation's proposed approach to developing globally consistent disclosures by working with relevant standard setters and building on existing initiatives and frameworks, including the Task Force on Climate-related Financial Disclosures (TCFD).

In parallel with the ISSB's work, the Committee will explore using Pillar 3 of the Basel Framework to promote a common disclosure baseline for climate-related financial risks across internationally active banks. This work will consider the availability and reliability of sufficiently granular data for banks and their counterparties, and of defined risk metrics.

The Pillar 3 work is part of the Committee's holistic approach to addressing the range of climate-related financial risks to the banking system, spanning regulatory, supervisory and disclosure-related elements.

The Committee will continue to coordinate with the IFRS Foundation and leverage the work of other international forums, including the Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS), to ensure the prerequisites for a high-quality and globally consistent disclosure framework for climate-related financial risks are in place.

¹       Task Force on Climate-Related Financial Disclosures | TCFD (fsb-tcfd.org).