Climate-related financial risk disclosure requirements under Pillar 3 (2023-2025): A comparative study

Abstract

The research aims to review the most important developments regarding interest in qualitative and quantitative climate disclosure in the banking sector according to the proposals of the Basel Committee (BCBS), as (BCBS) is the international body responsible for setting standards for banking regulation and supervision worldwide, and has developed internationally agreed measures aimed at enhancing regulation, supervision and risk management in the banking sector, which consist of three pillars. The current research is concerned with pillar (3), which aims to enhance market discipline through disclosure requirements for banks. Updates to pillar three were issued in 2023 and 2025. By using the information content analysis of the reports of the banks (Commercial Bank of Egypt) and (Baghdad Commercial Bank) as a case study and according to the tables (CRFR1- CRFR2), the research found that there is a discrepancy in the level of disclosure of financial risks and awareness according to the third pillar (2023-2025) in bankers due to the recentness of the two issues, and the research reached many recommendations, most notably strengthening banks' precautionary measures and compliance with the requirements of the third pillar and encouraging disclosure of risks by including climate risks within banking risks.