The International Public Sector Accounting Standards Board (IPSASB) has unveiled SRS ED 1, a proposed climate-related disclosure standard aimed at enhancing sustainability reporting for governments and public sector entities. This marks a significant development as it will be the first dedicated sustainability reporting standard for the public sector.

The initiative is supported by The World Bank, which urged IPSASB in 2022 to spearhead efforts in establishing public sector-specific sustainability reporting guidelines. In response, IPSASB released a consultation paper that confirmed a strong demand for standardized sustainability reporting in the public sector.

After evaluating several potential projects, including general sustainability disclosure requirements and non-financial disclosures regarding natural resources, IPSASB decided in 2023 to prioritize the climate-related reporting standard. This decision aligns with the urgent need to combat climate change and utilizes existing frameworks like the IFRS S2 Climate-related Disclosures standard and Global Reporting Initiative (GRI) climate standards.

IPSASB Chair Ian Carruthers emphasized the crucial role of public sector action in addressing climate change, highlighting that only governments possess the capacity to enact comprehensive changes through policy tools such as taxation, regulation, and subsidies. This standard is designed to guide public sector entities responsible for climate-related public policies and their outcomes.

Sue Lloyd, Vice-Chair of the International Sustainability Standards Board (ISSB), noted that this initiative will integrate the public sector into the broader sustainability reporting landscape. By aligning with the ISSB’s global standards, IPSASB aims to enhance consistency and comparability across sectors, facilitating a more effective corporate reporting system and reducing potential fragmentation in sustainability disclosures.

The draft standard is now open for public comment until February 28, 2025, inviting feedback from stakeholders including public sector report preparers, national and regional sustainability standard setters, professional accountants, and sustainability assurance providers.