The international bank regulatory body on Wednesday launched a process to develop rules for lenders to report their climate-related risks in a bid to boost transparency and financial stability.

The Basel Committee on Banking Supervision said it aims to "promote a common disclosure baseline for climate-related financial risks across internationally active banks" as it issued a preliminary proposal for qualitative and quantitative public disclosure of climate-related risks and sought comments from stakeholders.

It suggested a target date of 2026 for implementing disclosure rules, after the expiration of temporary rules adopted by the International Sustainability Standards Board.

Insurers are already confronted with the growing cost from more frequent and destructive weather events, but the Basel Committee said lenders face similar risks as borrowers encounter difficulties repaying loans.

It also said banks face risks linked to efforts to reduce greenhouse gas emissions.

"Transition risks include the societal changes arising from a transition to a low-carbon economy," said the consultation paper.

Other factors include "changes in public sector policies, innovation and changes in the affordability of existing technologies or investor and consumer sentiment towards sustainable consumption and production practices."

The paper called disclosure requirements a fundamental component of a sound banking system, providing market participants with meaningful and comparable information.

It said qualitative information relating to exposure to climate-related financial risks may help to ensure that bank disclosures are sufficiently comprehensive and meaningful.

While acknowledging that the accuracy, consistency and quality of climate-related data is still evolving, the Basel Committee said "disclosure requirements will accelerate the availability of such information and facilitate forward-looking risk assessments by banks."

It said it plans to incorporate a reasonable level of flexibility into a future disclosure framework, including which elements would be mandatory and which subject to national discretion.

Banks have come under regular criticism from climate activists for their reporting of their efforts to reduce the carbon imprint of their physical operations and in their lending and investments.