The International Public Sector Accounting Standards Board (IPSASB) announced today that it will develop a climate-related disclosure standard for governments and other private sector entities, marking the first sustainability reporting standard for the public sector.
IPSASB Chair Ian Carruthers called the announcement a “huge first step in addressing the public sector’s need for sustainability reporting standards,” with the board noting that it hopes to initiate additional sustainability reporting projects in the coming months, and will consider addressing other ESG topics as well.
“The Board is delighted to be able to respond to stakeholder calls in this way and hopes to be able to initiate other projects in this critical area in the coming months.”
The IPSASB’s announcement follows a call on the organization by the World Bank in January 2022 to lead a process aimed at gaining support for the development of public sector-specific sustainability reporting guidance, followed by the IPSASB’s issuance of a consultation paper to evaluate demand an gauge support for the organization’s investment in the process.
According to the IPSASB, the consultation paper respondents indicated an urgent need for public sector sustainability reporting standards. In December 2022, the IPSASB began exploring three potential sustainability reporting projects, including general requirements for disclosure of sustainability-related financial information, climate-related disclosures, and natural resources non-financial disclosures.
The board subsequently decided to prioritize the development of a climate-related disclosure standard. In addition to the urgency to address climate change, IPSASB also cited feasibility as a key rationale for the project, with the board proposing building the standard off existing and emerging resources including the IFRS S2 Climate-related Disclosures standard and GRI climate-related topic standards.
In a project brief released by the IPSASB, the board said that it will seek to collaborate with standard setters including the IFRS Foundation’s International Sustainability Standards Board (ISSB) and the GRI.
ISSB Chair Emmanuel Faber said:
“IPSASB had been an observer on the Technical Readiness Working Group of the IFRS Foundation that established the foundations to our work back in 2021. I am thrilled about our collaboration since then, and that their project will build off from our International Sustainability Standards Board (ISSB) Climate Standard combined with Global Reporting Initiative (GRI), leveraging our cooperation agreement with the latter.”
According to the project brief, the scope of the project will include the development of disclosure requirements for public sector entities, encompassing their climate-related impacts on the economy, environment and people, and their exposure to climate-related risks including physical and transition risks, as well as climate-related opportunities.
Approval of the projects exposure draft is expected in mid-2024, with final standard approval anticipated for the second half of 2025.