Sustainability Reporting

Message from the IPSASB Chair

We all have our part to play in addressing climate change and achieving the Sustainable Development Goals (SDGs) laid out by the UN. As public sector accountants, we have been asked to, and can play an important leadership role.  

The World Bank’s January 31, 2022 report, 'Sovereign Climate and Nature Reporting,' provides 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.

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. On November 3, 2022, the IPSASB issued Exposure Draft (ED) 83, Reporting Sustainability Program Information — RPGs Non1 and 3: Additional Authoritative 1 Guidance. In this ED, the IPSASB proposes additional guidance for RPG 1 and RPG 3 be developed to facilitate sustainability reporting, in particular the reporting of sustainability program information. This additional guidance will enhance awareness about the applicability of, and help in applying the existing reporting models in RPG 1 and RPG 3. The IPSASB seeks your input by January 16, 2023. 

What the IPSASB is Doing Now

Financial statements on their own will not provide all the information needed – non-financial information on progress towards SDG targets, the key drivers of climate change, and other sustainability information will also be required. To advance public sector sustainability reporting, the IPSASB is actively exploring how it could take forward the World Bank report’s invitation to lead a consultative process to gain support for developing the necessary framework.

To kick-off the discussion, the IPSASB issued its Consultation Paper, Advancing Public Sector Sustainability Reporting. The consultation period closed September 9, 2022.

The aim of the public consultation process was to evaluate the demand from stakeholders for global public sector specific sustainability reporting guidance, as well as the degree of support for the IPSASB developing such guidance, the priority areas for coverage, and how this might be approached.

An overview of the feedback received over the course of the open consultation, collected through the IPSASB’s regional roundtables and from written submissions, was presented at the IPSASB’s September 2022 Public Sector Standard Setters Forum hosted by the Order of Certified Accountants (OCC) in Cascais, Portugal, attended by more than 100 delegates from 36 jurisdictions. In addition to supporting the main proposals, the feedback strongly encouraged collaboration between IPSASB and other international standard setters, particularly the International Sustainability Standards Board and the Global Reporting Initiative, in using its current processes to ensure that new guidance addresses public sector needs while maximizing consistency with sustainability frameworks globally.

By the end of 2022, the IPSASB intends to conclude its detailed review and deliberation of responses to this consultation to determine the extent to which it would be able to take on the development of global public sector specific sustainability reporting guidance.

What the IPSASB is Doing Now

Should the IPSASB take on the development of global public sector specific sustainability reporting guidance, it intends to leverage its existing leadership, board, oversight, and advisory arrangements, as well as the current operating infrastructure in order to advance its sustainability work. Notwithstanding this, the IPSASB would require additional resources to deliver sustainability reporting guidance, in a timely manner, while continuing to deliver on its current financial reporting work program. The IPSASB’s current primary funding source is not able to meet this additional resource need.

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

The additional resources needed by 2023 to take forward the development of public sector specific sustainability reporting guidance would need to be sufficient to enable the IPSASB to establish a small, highly qualified, dedicated technical staff team to lead sustainability reporting guidance development, as well as to support stakeholder engagement and the operations of a new Sustainability Reference Group.

If you are willing to contribute financial or other support to the IPSASB for the development of global public sector specific sustainability reporting guidance, please email rosssmith@ipsasb.org or jamesgunn@profstds.org for more information.