Commercial Banks

Select Language
Current language: English
Commercial banks accept deposits and make loans to individuals and corporations, and engage in lending to infrastructure, real estate and other projects. By providing these services, the industry serves an essential role in the functioning of global economies and in facilitating the transfer of financial resources to their most productive capacity. The industry is driven by the volume of deposits, quality of loans made, the economic environment and interest rates. The risk from mismatched assets and liabilities further characterises the industry. The regulatory environment governing the commercial banking industry witnessed significant changes in the wake of the 2008 global financial crisis and continues to evolve today. These and other regulatory trends may affect performance. Commercial banks with global operations must manage new regulations in many jurisdictions that are creating regulatory uncertainty, particularly regarding the consistent application of new rules.

Relevant Issues (5 of 26)

Why are some issues greyed out? The SASB Standards vary by industry based on the different sustainability-related risks and opportunities within an industry. The issues in grey were not identified during the standard-setting process as the most likely to be useful to investors, so they are not included in the Standard. Over time, as the ISSB continues to receive market feedback, some issues may be added or removed from the Standard. Each company determines which sustainability-related risks and opportunities are relevant to its business. The Standard is designed for the typical company in an industry, but individual companies may choose to report on different sustainability-related risks and opportunities based on their unique business model.

Disclosure Topics

What is the relationship between General Issue Category and Disclosure Topics? The General Issue Category is an industry-agnostic version of the Disclosure Topics that appear in each SASB Standard. Disclosure topics represent the industry-specific impacts of General Issue Categories. The industry-specific Disclosure Topics ensure each SASB Standard is tailored to the industry, while the General Issue Categories enable comparability across industries. For example, Health & Nutrition is a disclosure topic in the Non-Alcoholic Beverages industry, representing an industry-specific measure of the general issue of Customer Welfare. The issue of Customer Welfare, however, manifests as the Counterfeit Drugs disclosure topic in the Biotechnology & Pharmaceuticals industry.
General Issue Category
(Industry agnostic)

Disclosure Topics (Industry specific) for: Commercial Banks

Data Security
  • Data Security

    Ensuring personal financial data privacy and security is an essential responsibility of Commercial Banks. Entities that fail to safeguard customer data may be susceptible to decreased revenue and consumer confidence. As the growth in mobile banking and cloud storage continues and more bank operations become technology- and internet-dependent, data security management becomes increasingly important. Sophisticated technology and continuous staff training are essential amid growing cybersecurity threats. The metrics for this disclosure topic focus on providing more detail on efforts related to safeguarding data against emerging and continuously evolving cybersecurity threats and technologies, and security breaches compromising customers’ information. Enhanced disclosure on management strategies to address these risks may permit shareholders to understand how commercial banks are protecting shareholder value.
Access & Affordability
  • Financial Inclusion & Capacity Building

    As their primary business activity, commercial banks must continuously balance their capacity building efforts with the risks and opportunities associated with lending to unbanked, underbanked or underserved customers. Emerging financing models and technologies provide banks with an opportunity to offer products and services in previously underserved markets and obtain additional sources of revenue. Entities that can meet the need to extend credit and financial services to low-income populations and small businesses while avoiding predatory and irresponsible lending practices may create long-term value and improve brand reputation. These services also should be complemented by efforts to improve financial literacy, which will assist customers in making informed decisions. By disclosing their approach to financial inclusion and capacity building, commercial banks can provide investors with decision-useful information for assessing banks’ ability to ensure long-term, sustainable value creation.
Product Design & Lifecycle Management
  • Incorporation of Environmental, Social, and Governance Factors in Credit Analysis

    As financial intermediaries, commercial banks contribute to significant positive and negative environmental and social externalities through their lending practices. Environmental, social and governance (ESG) factors can have material implications for the underlying entities, assets and projects to which commercial banks lend across a range of industries. Therefore, entities increasingly must examine ESG factors when determining the quality of collateral. Commercial banks also may enable positive environmental and social externalities to generate significant revenue streams through their lending practices. Commercial banks that fail to address these risks and opportunities could face diminished returns and reduced value for shareholders. Commercial banks should subsequently disclose how ESG factors are integrated into lending processes and the current level of portfolio risk associated with specific sustainability trends. Specifically, investor and regulatory pressure is mounting for banks to disclose how they address climate change related risks.
  • Financed Emissions

    Entities participating in commercial banking activities face risks and opportunities related to the greenhouse gas emissions associated with those activities. Counterparties, borrowers or investees with higher emissions might be more susceptible to risks associated with technological changes, shifts in supply and demand and policy change which in turn can impact the prospects of a financial institution that is providing financial services to these entities. These risks and opportunities can arise in the form of credit risk, market risk, reputational risk and other financial and operational risks. For example, credit risk might arise in relation to financing clients affected by increasingly stringent carbon taxes, fuel efficiency regulations or other policies; credit risk might also arise through related technological shifts. Reputational risk might arise from financing fossil-fuel projects. Entities participating in commercial banking activities are increasingly monitoring and managing such risks by measuring their financed emissions. This measurement serves as an indicator of an entity’s exposure to climate-related risks and opportunities and how it might need to adapt its financial activities over time.
Business Ethics
  • Business Ethics

    The regulatory environment surrounding the Commercial Banks industry continues to evolve internationally. Entities must adhere to a complex and often inconsistent set of rules relating to performance and conduct, as well as provide disclosure on issues including insider trading, antitrust behaviour, price fixing and market manipulation. Entities are subject to strict legal requirements against tax evasion, fraud, money laundering and corrupt practices. In some jurisdictions, enhanced rewards for whistle-blowers may increase the number of complaints brought to regulators. Entities that ensure regulatory compliance through robust internal controls may build trust with clients, increase revenue and protect shareholder value by minimising losses incurred because of legal proceedings.
Systemic Risk Management
  • Systemic Risk Management

    Commercial Bank entities that fail to manage risks to capital effectively may suffer significant losses while increasing their liabilities. Because of the interconnectedness of the global financial system, these failures can contribute to significant market disruption and financial crises. The systemic interconnectedness of financial institutions has become a central concern for regulators. As a result, many jurisdictions require that banks undergo supervised stress tests to evaluate whether the entity has sufficient capital reserves and liquidity to absorb losses, continue operations and meet obligations during adverse economic and financial conditions. Failure to meet regulatory requirements may lead to penalties and substantially increased future compliance costs. Commercial banks should improve their disclosures by measuring how well they can absorb shocks arising from systemic stresses to demonstrate how risks associated with their size, complexity, interconnectedness, substitutability and cross-jurisdictional activity are being managed. Entities that commit to enhanced disclosures may experience improved investor and shareholder confidence, potentially leading to increased revenues.

Select up to 4 industries

Current Industry: Commercial Banks

Financials
Consumer Goods
Extractives & Minerals Processing
Food & Beverage
Health Care
Infrastructure
Renewable Resources & Alternative Energy
Resource Transformation
Services
Technology & Communications
Transportation

Tell Us About Yourself

While it’s free to download SASB Standards, we request the following information to better understand how the Standards are being used.

Content Use Policy

The SASB Standards are made available for free for non-commercial use, such as corporate disclosure. The content in the SASB Standards is copyrighted. All rights reserved. Commercial use of the content in the SASB Standards – including for investment analysis, data services, and product development - is not permitted without consent. To request more information, please contact us at: [email protected].

Stay Informed: Please tick the below boxes to subscribe to specific email updates. The IFRS Foundation is committed to protecting and respecting your privacy, and we’ll only use your personal information to administer your account and to provide the products and services you requested from us.

You can unsubscribe from these communications at any time. For more information on how to unsubscribe, our privacy practices, and how we are committed to protecting and respecting your privacy, please review our Privacy Policy.

By clicking submit below, you consent to allow the IFRS Foundation to store and process the personal information submitted above to provide you the content requested.


We encourage you to visit the IFRS Foundation notification dashboard to register for an account and sign up for additional email subscriptions you may be interested in, such as notifications about the ISSB and the IFRS Sustainability Disclosure Standards.