Banks: Prudential Authority Replaces Climate-Related Disclosure Guidance

Posted 14 October 2025 Written by Acts Online
Category Financial Sector

Brought to you by SA Legal Academy: The Prudential Authority has issued a new guidance note for banks regarding the disclosure of climate-related risks and opportunities, replacing the version previously issued in May 2024.

In terms of the Banks Act, No. 94 of 1990, the Prudential Authority (PA) has published this guidance to provide a framework for the disclosure of climate-related financial risks. The note is applicable to the following entities:

  • Banks;
  • Branches of foreign institutions; and
  • Controlling companies.

The guidance is underpinned by international standards, including the International Financial Reporting Standards (IFRS) S1 and S2, as well as the Basel Committee on Banking Supervision (BCBS) principles for the effective management and supervision of climate-related financial risks. It aims to ensure that institutions provide transparent, comparable, and consistent information regarding their exposure to climate-related risks and the opportunities arising from the transition to a low-carbon economy.

Assurance and Future Expectations

While the Prudential Authority does not currently require these climate-related disclosures to be subjected to independent external assurance, the guidance note explicitly states that institutions should anticipate and work towards a future state in which external assurance is expected. This suggests a phased approach to regulatory oversight, where voluntary adherence will eventually transition into a mandatory compliance requirement with formal audit oversight.

What this means for you, your business, or your clients

  • For yourself: Monitor the transition from voluntary disclosure to expected external assurance to advise on internal audit readiness and the evolving expectations of the Prudential Authority.
  • For your business: Update internal reporting policies and compliance frameworks to reflect the specific disclosure requirements for climate-related risks as outlined in the replaced guidance note.
  • For your clients: Banks and controlling companies must assess their current data collection capabilities to meet the disclosure standards of IFRS S1 and S2 as integrated into the South African regulatory framework.

Originally published at https://legalacademy.co.za/news/read/banks-climate-related-disclosures-guidance-note-replaced

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