The public sector is on the cusp of going through its own climate reporting revolution as the final touches are put to new disclosure standards. The final details could take up to a year to pin down, but what we do know is there will be two standards: one covering climate disclosures in ‘own operations’, but, more tellingly, a separate standard for reporting on the climate performance of public policy programmes.
Though public policy reporting measures were always included in the standards under development by the International Public Sector Accounting Standards Board (IPSASB), the separation will now underline the role of accountants and finance teams in ensuring policy outcomes are transparent and officials held to account.
A record 92 organisations from every corner of the globe responded
According to Bernhard Schatz, a public sector accounting expert with PwC in Vienna and a member of IPSASB’s Sustainability Reference Group, the newly standalone measures will be a valuable development. ‘From a strategic perspective I think that both the own operations and the public policy part will be integral for government accountability but also for policymaking,’ he says.
Big split
IPSASB began work on a climate-related reporting standard for the public sector two years ago, though arguably its efforts got off the ground a year earlier with a May 2022 consultation paper on whether a new standard was required.
A scoping exercise followed with the support of the World Bank, and a draft standard was issued in October 2024. What followed was the highest response rate for any piece of work under review at IPSASB, with 92 organisations from every corner of the globe sending in their opinion and proposals.
In June 2025, after considering the replies, IPSASB voted to separate the existing exposure draft into two sister standards. ‘Own operations’ and the outcomes of ‘public policy programmes’ are two very different issues, with each raising an entirely different set of questions.
‘The main issue that came through that needed further consideration was the complexity of having two different reporting perspectives in a single standard,’ says Ross Smith, programme and technical director at IPSASB.
‘A transparency, accountability perspective needed to be reflected’
One respondent makes the point emphatically in their consultation response. ‘There is potential confusion arising from requiring disclosures for both public policy programmes and own operations to be in one standard, especially because most entities will not have public policy programmes’.
Smith has no doubt the public policy element is a necessity, given that many governments have signed up to international commitments, whether it be the Paris Accord of 2015 or the UN Sustainable Development Goals.
‘It really was a transparency, accountability perspective that needed to be reflected,’ he says.
‘Significant’ comments
The own operations standard is likely to be finalised later this year while the accompanying work on public policy programmes will go into 2026.
That means the final public policy disclosures won’t just be a ‘cut and paste’ job from the current document. Smith says there is ‘significant comment’ in need of consideration before a finished document can be issued. ‘Our process requires us to take stock of what we hear and then to update our standard,’ he adds.
Schatz calls the separation a ‘smart move’, buying time for standard developers to get under the skin of consultation comments. He says the current framing gave some observers concerns that public sector bodies could cherrypick ‘poster child’ projects for disclosure and ignore others that could be detrimental to climate.
There were also worries that the standard would involve many organisations in vast projects having to identify policy initiatives that are primarily aimed at climate goals.
‘If this is part of the risk profile, it absolutely belongs to finance’
Certainly, the UN World Food Programme has concerns about what would be reported, claiming current provisions risk building in a ‘conceptual flaw’ because they rest on ‘single materiality’ instead of also incorporating ‘impact materiality’ or, to put it another way, ‘double materiality’.
Given IPSASB’s work builds on the IFRS Sustainability Disclosure Standards (IFRS S1 and S2), which apply only single materiality and are already in circulation for private sector use, this concern seems unlikely to go away. Guidance for reporting greenhouse gas emissions may evolve as the standard is progressed, and Smith says there may also be a question of whether the standard should be limited to ‘climate-related’ public programmes or embrace a much broader base of sustainability issues.
Accountants’ space
One thing seems sure: reporting and eventually assurance of public policy programmes will give accountants a new area in which to expand.
Heather Taylor, a partner at EY in Toronto and also on IPSASB’s Sustainability Reference Group, says there is a constant debate about who ‘owns’ sustainability. She argues that sustainability should fall within their remit of finance teams as they are the aggregators of data and the ‘owners’ of risk inside most organisations. ‘If you’re going to classify this as part of the risk profile, it absolutely belongs to finance,’ she says.
Smith agrees. Accountants and the profession are well placed given that they are already steeped in reporting to provide transparency and accountability on finances. But the shift to climate and other non-financial topics may require preparation. ‘This is an area where accountants are well placed,’ he says, ‘but clearly there’s a need to enhance skillsets and understanding on the technical content – different unique specificities and challenges – that this new reporting space brings.’
There’s no escaping the fact that it will place public sector accountants in a new arena where they could make significant difference around policies that are likely to be prove highly sensitive.
However, this is not work that can be shirked, Taylor says. ‘Think of the lived experiences from a political perspective. Whether you’re talking floods, whether you’re talking fires, whether you’re talking heatwaves, there’s a disruption to society, and if that disruption actually equates into an economic disruption, politicians are going to be accountable. Politicians are going to have to discuss it.
‘I do agree it creates tension, but as the lived experiences are felt, this is going to be part of the narrative that has to be addressed.’
