The impact of Climate change-related financial risks disclosure on financial performance in the banking sector (An Empirical Study)

This study examines the impact of climate change-related financial risks disclosure on the financial performance of Egyptian banks. To achieve this goal, a descriptive analytical approach has been employed in which the study analyzes the financial statements, the annual reports, and the sustainability and climate change reports of the banks under investigation for the period 2020-2024. According to the study findings, the majority of Egyptian banks had experienced an incremental rise in the levels of risk disclosure throughout the study period. The study has also found a statistically significant impact of climate change risk disclosure on the financial performance indicators (Profitability, Liquidity, and Efficiency) of Egyptian banks. In light of the study findings, it is recommended that banks should enhance and increase the levels of climate risk disclosure in their annual reports. Furthermore, responsible professional authorities should develop the climate change related financial risks disclosure guidelines for the annual reports of Egyptian banks, as there are some aspects of ambiguity in the current structure of risk disclosure. The risk disclosure guidelines should include specific and clear instructions for each category of risk that is required to be disclosed. Moreover, the issued guidelines should be clear enough to enable banks to provide descriptive and quantitative disclosure information for each type of climate risk.