Sustainability Reporting

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

1. 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;
2. Mainly finance their activities, directly or indirectly, by means of taxes and/or transfers from other levels of government, social contributions, debt or fees; and
3.  Do not have the primary objective to make profits.

This includes a wide range of public sector entities, such as:

4. National, regional, state/provincial and local governments;
5. Government ministries, departments, programs, boards, commissions, agencies;
6. Public sector social security funds, trusts and statutory authorities; and
7. International governmental organizations.

The IPSASB issued proposals for its inaugural Sustainability Reporting Standard (IPSASB SRS) Exposure Draft 1, Climate-related disclosures. This Exposure Draft is out for public comment until February 28, 2025.

The other sustainability reporting standard setting topics that IPSASB has identified for further research and scoping work are:

• General Requirements for Disclosure of Sustainability-related Financial Information; and
• Natural Resources – Non-Financial Disclosures (to be considered following the development of the financial reporting guidance proposed in its Exposure Draft 92, Natural Resources).

The IPSASB has strong foundations for reporting on programs addressing both climate change and the United Nations Sustainable Development Goals (SDGs) in its Recommended Practice Guideline (RPG) 3 on ‘Reporting Service Performance Information’. This can be applied now, together with RPG 1 ‘Reporting on the Long-Term Sustainability of an Entity’s Finances’ which can be used to bring together the financial impacts of non-financial metrics and risks being managed. 

To support immediate application to sustainability reporting, the IPSASB issued Reporting Sustainability Program Information—Amendments to RPGs 1 and 3: Additional Non-Authoritative Guidance and Q&A: Climate Change: Relevant IPSASB Guidance which can be immediately applied by governments and public sector entities to report on sustainability program information. The additional guidance is intended to support the implementation of the key areas highlighted in the OECD paper Green Budgeting: A Way Forward.

The World Bank’s January 31, 2022 report, 'Sovereign Climate and Nature Reporting,' provided welcome further impetus to the critical issue of advancing sustainability reporting in the public sector. The report statistics that sovereign bonds make up almost 40% of the US$100 trillion global bond market is particularly striking. Together with the fact that national public sector expenditure is often the same percentage or more of GDP, this underlines both the urgency and importance of filling the current guidance gap.

In December 2022, the IPSASB decided to commence the scoping of three potential public sector specific sustainability reporting projects pending securing the resources needed to begin guidance development. This decision builds on IPSASB’s 25 years of public sector standard setting experience as well as the strong global stakeholder support for the proposals in its Consultation Paper, Advancing Public Sector Sustainability Reporting.

The Board’s prioritized research topics are: 

• General Requirements for Disclosure of Sustainability-related Financial Information,
• Climate-Related Disclosures, and
• Natural Resources – Non-Financial Disclosures (to follow the development of financial reporting guidance proposed in its Natural Resources financial reporting project).

Following the scoping and research phase, the IPSASB decided to move forward with the development of a public sector specific Climate-Related Disclosures standard at its June 2023 meeting and has published a Climate-Related Disclosures project brief. This decision was a significant first step in addressing the public sector’s need for sustainability reporting standards and responds to stakeholder calls to prioritize climate first. The Board hopes to be able to initiate other sustainability projects in the coming months subject to funding and resource availability.  

To support the development of sustainability reporting standards, the IPSASB established sustainability consultative groups, in addition to its existing financial reporting structures and due process, including the Consultative Advisory Group, to provide sustainability expertise advice to the Board.

The IPSASB Sustainability Reference Group (SRG) is an important part of the IPSASB’s sustainability standard setting work. The objective of the SRG is to provide an advisory forum where members with sustainability expertise can provide their input and advice on:

• The development of sustainability-related reporting standards for the public sector; and
• Relevant emerging sustainability reporting trends and issues.

The SRG will deliver on this objective by providing strategic advice on:

• The IPSASB’s overall sustainability strategy and work program;
• Individual projects, including views on key technical issues or matters that may impede the adoption or effective implementation of IPSASB sustainability reporting standards; and
• Other matters of relevance to the sustainability reporting standard-setting activities of the IPSASB.

Members of the SRG include:

• Alessandra Alfieri, United Nations Committee of Experts on Environmental-Economic Accounting
• Andrew Blazey, Organisation for Economic Co-operation and Development
• Sagé de Clerck, International Monetary Fund
• Dmitri Gourfinkel, World Bank
• Alex Hill, CDP
• Anne-Claire Howard, United Nations Office for Project Services
• Guohua Huang, International Monetary Fund
• Patrick Kabuya, World Bank
• Marcos Mancini, United Nations Development Programme
• Emily McKenzie, Taskforce for Nature-related Financial Disclosures
• Bernard Schatz, Forum of Firms
• Bonnie Ann Sirois, World Bank
• Heather Taylor, A4S Canadian Circle of Practice
• Karma Tenzin, INTOSAI Development Initiative
• Sebastian Welisiejko, The Global Steering Group for Impact Investment

The IPSASB Climate-related Topic Working Group (Climate TWG) is an important part of the development of the IPSASB SRS, Climate-related Disclosures standard. The objective of the Climate TWG is to provide climate-related expertise and advice to support delivery of the project. Members of the Climate TWG include international standard setters, from ISSB and GRI, and national standard setters advanced in the development of sustainability reporting standards, from Canada, the UK and New Zealand.

The IPSASB Sustainability Implementation Forum (SIF) is an open forum for public sector entities from around the world, across different levels of government, that are potential future users of the final IPSASB SRS Climate-related disclosures. Stakeholder engagement and feedback is of utmost importance in the development of sustainability reporting standards to ensure the principles proposed in draft standards can be implemented. The objective of the SIF is to gather feedback on the draft SRS based on real-life examples and practice and test whether the proposals in the draft SRS are implementable in order to inform the development of the SRS and implementation guidance and illustrative examples.

Sustainability reporting standards are part of a broader system of sustainability frameworks and guidance. Following are some other helpful international resources for users to consider:  

• Climate-related sources of guidance 
  • IFRS S2, Climate-related Disclosures 
  • GRI Climate Change Standards 
  • GHG Protocol: Corporate Accounting and Reporting Standard 
  • GHG Protocol: Policy and Action Standard 
  • GHG Protocol: Public Sector Protocol 
  • UN System of Environmental Economic Accounting  
  • UNFCCC CDM Methodology Booklet 
• Nature and biodiversity 
  • Taskforce on Nature-related Financial Disclosures 
  • GRI Biodiversity Standard 
• General sustainability-related information  
  • IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information 
  • GRI Standards 

The feedback received from stakeholders around the world is clear: the public sector needs its own specific sustainability reporting framework and the IPSASB should lead its development. But in addition to its existing expertise, IPSASB needs additional support, both financial and otherwise, from the global community in order to scale up its efforts and to move at pace to equip the public sector with the tools necessary to report on climate change and other sustainability issues.   

The additional resources needed to take forward the development of public sector specific sustainability reporting standards need to be sufficient to enable the IPSASB to build a small, highly qualified, dedicated technical staff team to lead sustainability reporting standards development, as well as to support stakeholder engagement and the operations of the new Sustainability Reference Group.   

The IPSASB is committed to the principle of diversified funding over time and envisions that new sources of funding will be earmarked for deployment for the specific purpose of advancing its sustainability work, rather than its financial reporting guidance program. Such additional sustainability reporting funding arrangements will be required to preserve and not interfere with the independent decision making of the IPSASB in its work. 

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To contribute financial or other support to the IPSASB for the development of global public sector specific sustainability reporting standards, please email Ross Smith, IPSASB Program and Technical Director (rosssmith@ipsasb.org).