Principles for the effective management and supervision of climate-related financial risks
The document sets out 18 principles covering corporate governance, internal controls, risk assessment, management and reporting. Principles 1 through 12 provide banks with guidance on effective management of climate-related financial risks, while principles 13 through 18 provide guidance for prudential supervisors. These principles seek to achieve a balance in improving practices and providing a common baseline for internationally active banks and supervisors, while retaining sufficient flexibility given the degree of heterogeneity and evolving practices in this area. They were designed so they can be adapted to a diverse range of banking systems in a proportional manner, depending on the size, complexity and risk profile of the bank or banking sector. In December 2022 the BCBS published responses to frequently asked questions (FAQs) to clarify how climate-related financial risks may be captured in the existing Basel Framework. These responses have been integrated into the consolidated Basel Framework.