Climate Disclosure Standards for Public Sector
The International Public Sector Accounting Standards Board (IPSASB) plans to establish climate disclosure standards for public sector to better address the climate crisis and sustainable challenges.
IPSASB will establish a Climate Related Topic Working Group to provide professional knowledge and advice on climate disclosure standards. IPSASB will also establish a Sustainability Reference Group to provide recommendations for the development of sustainable reporting standards.
Background of Climate Disclosure Standards
In January 2022, the World Bank released the Sovereign Climate and Nature Reporting, calling on IPSASB to develop sustainable reporting guidelines for the global public sector. In May 2022, IPSASB published a public sector sustainability report consultation document, soliciting opinions from stakeholders.
In December 2022, IPSASB decided to establish three public sector sustainability reporting standards, namely financial information disclosure related to sustainable development, climate related disclosure, and non-financial disclosure of natural resources. In March 2023, considering existing resources, IPSASB decided to prioritize the development of climate disclosure standards for public sector.
From an economic perspective, the public sector accounts for over 40% of global GDP and provides 20% of employment opportunities. In the global $100 trillion bond market, the public sector accounts for nearly 40%. Public sector climate related disclosures are crucial for addressing global climate change.
Contents of Climate Disclosure Standards
The IPSASB plans to develop climate disclosure standards for public sector based on IFRS S2. IFRS S2 is a climate standard adapted to the private sector, based on the TCFD framework.
IPSASB is preparing to refer to the GRI standard in order to meet the interests of the public sector. Climate issues may have an impact on the balance sheets of the private and public sectors, and the new climate disclosure standards will examine the impact of climate on financial reporting.
The climate disclosure standards will involve three aspects, namely:
- Possible climate impacts from the public sector.
- Climate related risks faced by the public sector, such as physical risks and transition risks.
- Climate related opportunities for the public sector.
In terms of implementation strategies, IPSASB plans to add some additional disclosures from the public sector. For example, those related to policy-making that should disclose the impacts, risks, and opportunities related to addressing climate change. The new disclosure standards will also adjust some terminologies in IFRS S2 to adapt to the actual situation of the public sector.
In terms of greenhouse gas emission standards, the IPSASB plan refers to the following guidelines:
- The 2006 IPCC Guidelines for National Greenhouse Gas Inventories issued by the Intergovernmental Panel on Climate Change (IPCC) and its 2019 revised version.
- GHG Protocol, such as the Global Protocol for Community Scale GHG Inventories.
- ISO 14064 International Standard for quantifying and reporting GHG Emissions.
In addition to establishing climate disclosure standards, IPSASB believes that the lack of climate related talent in the public sector can also affect the implementation of disclosure. Therefore, the public sector needs to develop plans to cultivate climate talents. IPSASB will also establish different levels of climate disclosure standards to provide adaptation space for the public sector.
Given the public sector’s requirements for climate related disclosure, the new climate disclosure standards need to be consistent with other international sustainable standards. Therefore, IPSASB will also consider providing a reporting model applicable to the United Nations Sustainable Development Goals (SDGs) to link climate disclosure with existing public sector indicators.
IPSASB plans to complete the draft climate disclosure standards in June 2024 and seek external feedback in October 2024. The final version of climate disclosure standards for the public sector will be released in the second half of 2025.