IPSASB Leads the Way: New Standards for Government Action on Climate Change

The International Public Sector Accounting Standards Board (IPSASB) has released a draft Sustainability Reporting Standard, SRS Exposure Draft 1 (ED 1), tailored specifically for the public sector.

This proposed standard aims to elevate transparency, accountability, and action by establishing clear guidelines for climate-related disclosures that align with global best practices. This makes government action on climate change more measurable and visible.

Why Government Action on Climate Change Matters

Government action on climate change is crucial to global sustainability efforts. Public sector entities, from national ministries to local agencies, are in a unique position to set policies, allocate resources, and implement programs that can significantly reduce climate risks and create sustainable opportunities. But until now, governments have lacked a cohesive, globally recognized framework for disclosing these actions and their impact.

The IPSASB standard addresses this gap, helping public sector entities report on their climate-related risks, opportunities, and public policy programs with consistency and accuracy.

According to the IPSASB,

“there is increasing demand and need for reporting by governments on the measures taken to combat the negative impacts of climate change”​.

In other words, transparent climate reporting from the public sector will foster greater accountability and enable investors, taxpayers, and citizens to better understand how governments are responding to the climate crisis.

IPSASB Chair Ian Carruthers stated,

“The rapid progress needed to address climate change requires public sector action. The scale of the investment involved and the need for coordinated action across all sectors of the economy mean that only governments are equipped to lead the changes required”​.

Key Components of IPSASB's Climate-related Disclosures Standard

IPSASB’s ED 1 introduces a structured approach for public sector climate reporting, with two primary disclosure requirements: reporting on an entity’s climate-related risks and opportunities and reporting on climate-related public policy programs.

Both components are essential to paint a full picture of government action on climate change and provide accountability to stakeholders.

1. Reporting on Government Operations and Climate Impact

ED 1 emphasizes the importance of disclosing climate-related risks to government operations and the opportunities arising from climate adaptation. Public sector operations, ranging from infrastructure management to service delivery, are vulnerable to climate threats such as extreme weather and sea-level rise. These disclosures must cover four pillars of information—governance, strategy, risk management, and metrics/targets—to offer a comprehensive overview.

For instance, the standard requires entities to outline their governance processes, including “the role of the governing body and management” in overseeing climate risks. It also proposes that public sector organizations describe their strategies, financial impacts, and the resilience of their operations to withstand climate disruptions.

By covering these pillars, governments share a roadmap for climate resilience.

2. Public Policy Program Outcomes

Governments play a dual role in the climate arena: managing their climate risks and enacting policies that influence wider society. IPSASB’s ED 1 includes detailed guidance on reporting the outcomes of climate-related public policy programs. These programs—ranging from tax incentives for green energy to regulations on emissions—are powerful levers for change, and their outcomes need to be transparent.

To achieve this, IPSASB Chair Carruthers noted that the standard is designed to show how “public policy programs contribute to climate-related outcomes and meet international commitments.” These disclosures, according to the IPSASB, should reveal “the anticipated challenges to achieving intended outcomes,” along with any trade-offs governments face in policy implementation.

Building on International Standards

IPSASB’s proposed standard is built on established frameworks, such as the Task Force on Climate-related Financial Disclosures (TCFD) and the International Sustainability Standards Board (ISSB).

However, ED 1 tailors these private sector benchmarks to meet the unique needs of the public sector. According to the draft, the IPSASB aims to “align public sector reporting with global best practices, while addressing the unique differences and information needs of primary users of public sector reports”​

ISSB Vice-Chair Sue Lloyd highlighted the importance of this alignment:

“The public sector is a major component of global capital markets, so ensuring public sector organizations disclose high-quality, comparable sustainability information is essential”​.

This consistency across sectors will aid capital markets, as more investors now prioritize sustainability data to make informed decisions.

How Public Sector Transparency Drives Global Climate Action

The IPSASB’s draft standard supports transparency not just for transparency’s sake, but as a catalyst for action. With sustainability-focused disclosures becoming the norm across sectors, IPSASB’s ED 1 ensures the public sector keeps pace.

“Sovereign bonds already make up almost 40% of the $100 trillion global bond market,”

Carruthers noted.

This means governments must be clear and consistent in their climate reporting to maintain investor confidence and access to funding that supports climate adaptation projects.

The new standard allows the public sector to convey its climate commitments, reducing the complexity that can hinder stakeholders’ understanding of sustainability initiatives. Additionally, the IPSASB’s focus on “connected information” within climate disclosures means users can link an entity’s climate-related risks, opportunities, and public policy programs for a comprehensive understanding.

How to Get Involved: IPSASB Calls for Public Feedback

The draft standard is open for public comment until February 28, 2025. IPSASB encourages stakeholders, from government agencies to citizen advocacy groups, to submit feedback. The IPSASB seeks responses to “specific matters for comment,” which will inform the final standard and ensure it meets the diverse needs of public sector entities.

A Unified Step Forward

The IPSASB’s pioneering approach to climate-related disclosures is a tool for government action on climate change. As governments strive to meet ambitious climate goals, IPSASB’s ED 1 offers a structure for aligning public sector practices with global standards, building transparency, and instilling public trust.

With these standards in place, governments can drive the transition to a sustainable future, proving that climate leadership begins with accountability.

You can access the full IPSASB SRS ED 1 draft on Climate-related Disclosures and submit your comments here.

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