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      In December 2025, the International Public Sector Accounting Standards Board1 (IPSASB®) approved and issued IPSASB SRS™ 1 - Climate-related Disclosures, the first international climate disclosure standard tailored to the public sector. This milestone marks a new era of sustainability reporting for governments and public sector entities worldwide.

      Key objectives

      The standard establishes requirements for disclosing material information on climate-related risks2 and opportunities arising from an entity’s own activities and operations that could reasonably be expected to affect its long‑term fiscal sustainability.

      The disclosures are intended to:

      • Provide primary users3 of general-purpose financial reports with decision‑useful information.
      • Enhance accountability by showing how climate‑related risks and opportunities influence strategy, governance, risk management, and performance.
      • Align public sector climate reporting with global best practice, notably IFRS Sustainability Disclosure Standards (refer to KPMG resource center to read more about these standards), while incorporating public sector‑specific context from IPSASB guidance.

      The standard’s applicability

      IPSASB standards are designed for public sector entities that meet the following three criteria:

      a. Are responsible for the delivery of services (encompassing goods, services, and policy advice, including to other        public sector entities) to benefit the public and/or to redistribute income and wealth

      b. Mainly finance their activities, directly or indirectly, by means of taxes and/or transfers from other levels of                government, social contributions, debt, or fees

      c. Do not have the primary objective to make a profit

      Entities may apply the standard whether or not they follow IPSAS Standards (IPSAS accounting standards) or another GAAP.

      Relationship with other standards

      IPSASB SRS 1 is largely aligned with IFRS S2 Climate-related Disclosures and draws on IFRS S1 for general requirements. It also integrates concepts from the IPSASB Conceptual Framework, RPG44 1(long‑term fiscal sustainability), and RPG 3 (service performance information).

      Reporting structure - four pillars

      Aligned with IFRS S2 and the TCFD framework, IPSASB SRS 1 requires disclosures under four interconnected pillars:

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      Governance

      The objective is to enable primary users of general-purpose financial reports to understand the governance processes, controls, and procedures an entity uses to monitor, manage, and oversee climate-related risks and opportunities.

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      Strategy

      The objective is to enable primary users of general-purpose financial reports to understand an entity’s strategy for managing climate-related risks and opportunities and their expected effects on operations, value chain, strategy and decision making, financial position and financial performance and cash flow, and resilience using scenario analysis.

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      Risk management

      The objective of climate-related disclosures on risk and outcome management is to enable primary users of general-purpose financial reports to understand an entity’s processes to identify, assess, prioritize, and monitor climate‑related risks and opportunities, and integrate into overall risk management.

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      Metrics and targets

      The objective is to enable primary users of general-purpose financial reports to understand an entity’s performance, including progress towards any climate-related targets it has set, and any targets it is required to meet by law or regulation in relation to climate-related risks and opportunities.

      Effective date and transition

      • Effective for annual reporting periods beginning on or after 1 January 2028, with early application permitted.
      • Transition reliefs include:
        • No comparative disclosures in the first reporting year
        • Up to 9 months after year end to publish climate disclosures in year one
        • Relief from Scope 3 emissions disclosure for the first three years

      If an entity elects to adopt the standards at an earlier date, it cannot utilize transition reliefs.

      Next steps: recommendations for public sector leaders

      We recommend that senior leaders in the public sector approach IPSASB SRS 1 as more than a reporting obligation – rather, it can be seen as a strategic opportunity to strengthen transparency, accountability, and operational resilience. They would be well advised to consider the following.

      • Assess the value of adoption

        Public sector entities should carefully evaluate the benefits of voluntarily adopting the standard and how it integrates with their current internal and external reporting frameworks.

      • Understand the broader context

        Government officials and leaders need to clearly comprehend how these standard fits within their jurisdiction’s overall reporting landscape. In most countries that are signatories to the Paris Agreement, national‑level climate reporting is managed by a designated government body.

      • Coordinate before adopting

        Alignment at the government level is essential before implementation. This ensures consistency, avoids duplication, and leverages existing reporting infrastructure - ultimately maximizing the value and impact of disclosures under IPSASB SRS  1.

      At the same time, attention should be given to future publications from the IPSAS Board, as it has announced its intention to issue additional standards5.

      Contact us

      raed
      Raed Karroum

      Partner, Advisory

      KPMG Middle East

      Lamis
      Lamis Jarrar

      Director, Accounting and Finance

      KPMG Middle East

      Khadeejeh
      Khadejeeh Ghanem

      Associate Director, Accounting and Finance

      KPMG Middle East

      1. Developer of international reporting standards for use by governments and other public sector entities around the world.
      2. Climate risks include: climate-related physical risks and climate-related transition risks;
        • Climate-related physical risks are risks resulting from climate change that can be event-driven (acute physical risk) or from longer-term shifts in climatic patterns (chronic physical risk).
        • Climate-related transition risks are risks that arise from efforts to transition to a lower-carbon economy. Transition risks include policy, legal, technological, market and reputational risks.
      3. Primary users of general purpose financial reports (primary users) are existing and potential service recipients and their representatives, as well as resource providers and their representatives.
      4. Recommended Practice Guide.
      5. IPSASB has prioritized key research areas, including general requirements for the disclosure of sustainability-related financial information, and natural resources and non-financial disclosures. Aside from this, the climate standards that cover climate-related public policy programs and their outcomes is expected to be issued in the first half of 2026.