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Progress on climate-related disclosures in annual reports by some of the world's leading banks slowed down in 2021, according to a new report from ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø International Standards Group.

The annual benchmarking analysis, now in its second year, looked at climate-related disclosures in the most recent annual reports of 35 major banks, based in territories around the worldÌý - offering insight to investors, regulators, preparers and other interested key stakeholders.

Despite increasing consensus on the need for enhanced climate impact transparency, the findings reveal that, while many institutions are on a clear journey towards greater voluntary disclosure, with 100 percent of banks analysed providing some form of climate-related disclosures, more detailed progress in annual reports has slowed and varies significantly from territory to territory.Ìý

Banks based in jurisdictions that have already implemented heightened regulation on climate-related disclosures have made the biggest strides with more enhanced disclosuresÌý - with UK banks ahead of the pack. Meanwhile, some jurisdictions where the base level of disclosure in annual reports was historically lower are catching up with those that have more advanced disclosures.

The formation of the International Sustainability Standards Board (ISSBTM) marks a critical milestone in the journey towards a consistent global baseline of investor-relevant sustainability reportingÌý - including on climate. In anticipation of new disclosure standards from the ISSB, there is some anecdotal evidence from ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø's analysis that some banks may have taken a wait-and-see approach until they have more clarity about the new standards.

Despite slower progress, ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø’s analysis highlights that banks are aware of climate-related risks, particularly when it comes to describing the risks they have identified and how they have set up their governance structures to manage these risks. Given banksâ€� traditional focus on risk management, it doesn’t come as much of a surprise that most of those analysed provide detailed disclosure in this area.

Seventy seven percent of the banks surveyed disclose that they are integrating climate-related risks into their wider risk management framework and that they are starting to follow the more ‘business as usual� processes of identification, assessment, management and reporting of climate-related risk.

Many of the banks also acknowledge that climate-related risk is an overarching risk that affects their other risks. Their most commonly impacted other risks are credit risk, reputational risk, compliance risk and operational risk. However, while the credit risk disclosures are detailed in the front part of annual reports, very few of the banks are connecting those disclosures with impacts in the financial statements.

The benchmarking analysis report can be viewed at:Ìý
/xx/en/what-we-do/services/audit/corporate-reporting-institute/ifrs/banks/banks-climate-related-disclosures.html

Brian O’Neill, Senior Manager, Global External Communications
T: +44 7823 668 689
E: Brian.O’Neill@kpmg.co.ukÌý

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