Skip to main content

Sustainability Reporting

Image
Top view of trees and body of water with sun setting

Advancing Public Sector Sustainability Reporting

The threats to the world and its citizens from climate change are well publicized. Yet, despite significant government influence over the global economy, there are currently no internationally recognized public sector specific sustainability reporting standards to guide how they measure and report their critical contributions to addressing the global climate emergency. 

Public sector-specific sustainability reporting standards will encourage transparency, allowing governments to be held accountable for the long-term impacts of their interventions, and enabling better-informed decision-making. Reporting on climate change is one of the most important issues in sustainability reporting, which also encompasses environmental, social and governance issues. 

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.

  • What the IPSASB is Doing

    At its December 2022 meeting, considering the urgency of this issue, 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 IPSASB established its Sustainability Steering Committee in January 2023 to lead this first critical phase of research and scoping. 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 (in parallel with the development of financial reporting guidance proposed in its Consultation Paper, Natural Resources). 

    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 is 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.   

    The IPSASB established a Climate-related Topic Working Group to provide climate-related expertise and advice to support delivery of the project. The IPSASB also set up a Sustainability Reference Group to provide advice on its overall sustainability reporting standards development program.  

  • IPSASB Sustainability Reference Group

    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 can input their sustainability expertise and advise on:  

    1. The development of sustainability-related reporting standards for the public sector; and 
    2. Relevant emerging environmental, social and governance (ESG) trends and issues.

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

    1. The IPSASB’s overall sustainability strategy and work program;  
    2. Individual projects, including views on key technical issues or matters that may impede the adoption or effective implementation of IPSASB sustainability reporting standards; and  
    3. 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
    • Anne-Claire Howard, United Nations Office for Project Services 
    • Guohua Huang, International Monetary Fund
    • Patrick Kabuya, World Bank 
    • Maia Kutner, CDP 
    • 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 
    • Official Observer: Paul Munter, SEC 
  • Existing IPSASB Guidance 

    In terms of public sector reporting, the IPSASB has already provided strong foundations for reporting on programs addressing both climate change and the 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, on May 9, 2023, the IPSASB issuedReporting Sustainability Program Information—Amendments to RPGs 1 and 3: Additional Non-Authoritative 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

  • Funding Opportunities

    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.  

    Image

    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).