Evolving climate disclosures

The International Public Sector Accounting Standards Board (IPSASB)¹ , in collaboration with the World Bank, is crafting a groundbreaking climate-related disclosure standard for the public sector. This will be the first of the IPSASB sustainability reporting standards (IPSASB SRS), with an exposure draft set to be released for public comment by the end of October 2024.

At its December 2022 meeting, the IPSASB recognized the importance of sustainability reporting in the public sector and initiated the scoping of three specific projects. This decision builds on IPSASB’s 25 years of experience in public sector standard-setting and reflects strong global stakeholder support for the proposals outlined in its consultation paper, ‘Advancing public sector sustainability reporting’.

The board has prioritized key research areas, including: 

• General requirements for the disclosure of sustainability-related financial information 
• Climate-related disclosures
• Natural resources and non-financial disclosures (to follow the development of financial reporting guidance proposed in its consultation paper, ‘Natural resources’).

After completing the scoping and research phase, the IPSASB decided at its June 2023 meeting to proceed with the development of a public sector-specific climate-related disclosures standard. This decision marks a crucial first step in meeting the public sector’s need for sustainability reporting standards and addresses stakeholder requests to prioritize climate issues.

The IPSASB has made significant strides by approving its first sustainability reporting standard (IPSASB SRS™) exposure draft (ED) 1, focused on climate-related disclosures. This draft outlines requirements for all public sector entities to report on their climate-related risks and opportunities, aligning with the private sector disclosures developed by the International Sustainability Standards Board (see our article The dawn of the ISSB standards).

Additionally, it includes specific disclosures for select entities tasked with developing climate-related policy programs through their sovereign powers. The IPSASB anticipates publishing the ED by the end of October 2024, followed by a global consultation to gather feedback from constituents on the proposals. Following the formal consideration of respondents' comments on the ED, the standards will be finalized and issued with an effective date.

Public sector bodies are already considering the impact of climate on their operations and developing their strategies. The ED, and subsequent standard, will accelerate improved and more robust disclosure of the impact and effect of climate in the public sector. Organizations should start planning for this and ensuring they have the appropriate systems in place to report accurately.

For the latest updates and press release, visit - https://www.ipsasb.org/consultations-projects/sustainability-climate-related-disclosures

_{¹ Developer of international reporting standards for use by governments and other public sector entities around the world}