The Determinants of Climate Risk Disclosure in Malaysian Banking Sector: A Conceptual Framework

Climate change poses substantial physical and transitional risks to Malaysian banks through impacts on their customers and loan portfolios. Despite BNM guidance encouraging climate risk management and disclosure, reporting remains limited. This study develops a conceptual framework grounded in stakeholder theory to examine determinants of voluntary climate risk disclosure using mixed methods. The framework proposes bank governance and bank specific characteristic shape transparency through pressures from stakeholders demanding fuller reporting. Specifically, board oversight, gender diversity, bank capital, profitability and size are hypothesized to influence disclosure. Machine learning text analysis will quantify reporting disclosure before panel regressions test relationships with hypothesized determinants. This localized study addresses a gap on climate risk disclosure practices in Malaysia’s emerging economy context. Findings can guide policy and industry initiatives aimed at improving transparency and resilience of the banking sector to climate change. Enhanced disclosure better equips stakeholders to assess bank exposures and risk management strategies.