Tanzanian Banks to Integrate Climate and Sustainability Risks to Enhance Resilience and Transparency

The Bank of Tanzania (BoT) has issued two new sets of guidelines for banks and financial institutions aimed at integrating sustainability and climate-related risks and opportunities into their governance, risk management, and reporting frameworks.

These guidelines, titled the Guidelines on Climate-Related Financial Risks Management and Disclosures, 2025 and the Guidelines on Reporting of Sustainability-Related Risks and Opportunities for Banks and Financial Institutions, 2025, come as part of BoT’s efforts to enhance the resilience and transparency of the banking sector.

The Guidelines on Climate-Related Financial Risks Management and Disclosures outline the expectations for banks to establish robust governance structures, implement effective risk management processes, and disclose climate-related risks.

The document highlights requirements such as scenario analysis, stress testing, and the integration of climate-related risks into prudential risk management systems, including credit, market, liquidity, and operational risks.

The Guidelines on Reporting of Sustainability-Related Risks and Opportunities provide a comprehensive framework for banks to disclose material information related to sustainability risks and opportunities.

The guidelines emphasize the importance of establishing governance structures, setting targets, and reporting on metrics aligned with sustainability disclosure standards.

These measures aim to provide primary users, including investors and policymakers, with reliable and actionable information.

Both guidelines were issued under Section 71 of the Banking and Financial Institutions Act, 2006, and apply to all banks and financial institutions operating in Tanzania.

Banks are required to report these disclosures alongside their annual audited financial statements and ensure compliance through internal processes and governance frameworks.

Climate and Sustainability in The Financial Sector

The introduction of these guidelines aligns with international efforts to incorporate climate and sustainability into financial systems. Globally, regulatory bodies have recognized the significant risks posed by climate change to economic stability and financial institutions.

Frameworks such as the Basel Committee’s Principles for Effective Management and Supervision of Climate-Related Financial Risks and the International Sustainability Standards Board (ISSB) guidance have been pivotal in defining best practices for managing these risks.

In Africa, several central banks, including those in Kenya, Nigeria, and South Africa, have implemented similar policies to address sustainability and climate challenges.

Tanzania’s move reflects a commitment to ensuring the country’s financial sector remains resilient and competitive while supporting global goals such as the Paris Agreement to limit global warming.