The International Public Sector Accounting Standards Board (IPSASB) announced the release of its finalized “IPSASB SRS 1, Climate-related Disclosures,” a new standard aimed at enabling governments and public sector entities report on climate-related risks and opportunities, marking the first sustainability reporting standard for the public sector.

The new standard was developed with the support of The World Bank, which called on IPSASB in 2022 to lead a process aimed at gaining support for the development of public sector-specific sustainability reporting guidance. Following the request, IPSASB issued a consultation paper to evaluate demand, with respondents indicating an urgent need for public sector sustainability reporting standards. IPSASB released an initial draft of the new standard in 2024.

Among the key changes from the initial exposure draft in the finalized standard was a decision by IPSASB following feedback to leave out specific disclosure requirements covering public center entities’ public policy programs and their outcomes, with the new standard instead focused on the entities’ own operations, and public policy program-related disclosures to be addressed in a future phase.

According to IPSASB, the development of the standard leveraged existing private sector-focused sustainability reporting standards, primarily the IFRS Foundation’s International Sustainability Standard Board’s (ISSB) climate reporting standard, IFRS S2. Accordingly, the structure of the standard is similar to that of IFRS S2, with the core text outlining disclosures related to the key pillars of Governance, Strategy, Risk Management, and Metrics and Targets.

Disclosure requirements include the oversight of climate-related risks and opportunities (Governance), strategy and decision-making, current and anticipated financial effects, including scenario analysis, and climate resilience (Strategy), processes to identify, assess, prioritize and monitor climate-related risks and opportunities (Risk Management), and Scopes 1, 2, and 3 emissions, based on the GHG Protocol, or another established methodology, alongside other metrics and targets (Metrics and Targets).

While broadly aligning with IFRS S2, IPSASB highlighted some differences from the private sector standard, including the public sector standard’s design to address broader stakeholder needs, compared to IFRS S2’s investor focus, as well as the use of public sector terminology, and the introduction of a “rebuttable presumption” on GHG Protocol, with the expectation that entities will use the GHG Protocol for emissions reporting unless they use the rebuttable presumption for another methodology.

The new standard is also being launched with a few transition reliefs, including allowing entities to not disclose Scope 3 emissions in the first three annual reporting periods, as well as reliefs aligned with the private sector, not requiring disclosure of comparative information and allowing reporting to be done after reporting of financial statements for the first year of reporting.

IPSASB Chair Thomas Müller-Marqués Berger, said:

“Governments play a fundamental role in climate action, as their decisions can shape outcomes across the entire economy. Climate-related information is therefore essential for stronger public financial management as it provides insights into the climate-related risks and opportunities to governments’ operations. By doing so, the new disclosures enable efficient access to capital markets to mobilize the additional financing needed for climate resilience.”

Click here to access the new standard.