On 16 September 2024, EU and global experts discussed how to foster transparency, ensure better accountability, and provide the data needed for the public sector to play its role in ensuring more sustainable public finances and a more sustainable planet at a joint IPSASB, IFAC, Accountancy Europe and European Commission conference in Brussels. Enhancing Public Sector Action Through Climate Reporting brought together over 100 participants for this interactive event.
Watch the full event.
“As the world unites to combat climate change and preserve our planet, public sector participation is required to ensure lasting change. Unique levers exist in the public sector—taxation, regulation, subsidies—that can influence behaviors across entire economies. There is no solution to addressing climate change that does not include public sector leadership,” said Ross Smith, Program and Technical Director at the IPSASB, in his opening remarks.
“And it is crucially important for the public sector to show leadership in taking forward climate-related initiatives and in reporting on climate,” Ross Smith added.
Karen Leung, Manager at IPSASB presented an overview of the public sector proposals related to the climate-related disclosure exposure draft and the next steps.
“It is essential that we ensure that public sector entities can provide appropriate information for primary users of the report to ensure transparency and accountability,” said Karen Leung. “This represents a significant opportunity for the public sector to strengthen its commitment to climate action.”
An urgent need for global sustainability standards for the public sector on climate reporting
All speakers agreed that this is a very exciting time in climate reporting. The private sector has already made significant progress in its reporting and the capital markets are really demanding this information now.
Lee White, Chief Executive Officer of IFAC said: “Progress is happening at a rapid pace regarding climate-related disclosures in the public sector across the globe. And this is an incredibly important development because climate is a global issue and needs a global response. This is global transformation, and it is essential that governments and the public sector lead.”
This was echoed by Lynn Pamment, Comptroller and Auditor General for Jersey & Chair of the UK Financial Reporting Advisory Board: “Climate change impacts do not stop at borders - consistent disclosures and accountability should help better international collaboration on mitigations and actions.”
“Climate is an urgent issue and it’s affecting all of us. Wheat production in the UK and France is down 20% this year because of the rainfall. So, it's important that we address these issues. The Accountancy Europe Public Sector Group is much involved in looking at IPSASB’s work, we have been commenting on the various exposure drafts, and we're looking forward to this new discussion,” added Peter Welch, the Chair of Accountancy Europe’s Public Sector Group.
Beatriz Sanz Redrado, Director of Directorate C - Treasury, accounting and financial reporting, DG Budget, at the European Commission said: “The European Commission is helping and promoting climate neutrality in the future and the objective we have set to ourselves is that Europe will be the first climate-neutral continent in the world by 2050. For our own operations, we are aiming for climate neutrality by 2030. It is essential that we report in a robust and transparent way on how we progress on these commitments."
“We highly appreciate the IPSASB outstanding achievement of finalizing its exposure draft on climate-related disclosures in such a short timeframe. As the host of the 2024 September IPSASB Board meeting, we are very much looking forward to the approval of the exposure draft,” she added.
During the discussions moderated by Fabienne Colignon, Chair of IPSASB Consultative Advisory Group, panelists discussed the drivers of adoption of sustainability reporting practices, highlighting successful examples, and the key challenges. They also offered recommendations for public sector entities to start -- or further advance -- their reporting journey and discussed the next steps towards the future adoption and implementation of the coming IPSASB Sustainability Reporting Standard globally.
Drivers of adoption & successful examples of sustainability reporting practices
Renée Pichard, Partner, Public Sector Accounting and ESG Reporting Advisory at Deloitte Canada said: “While both public and private sector entities are driven by the need for transparency, regulatory compliance, and operational efficiency, the specific drivers and challenges they face can differ significantly. The public sector is often driven by public accountability, mission alignment, and funding opportunities, while the private sector is more influenced by investor pressure, market differentiation, and competitive advantage.”
David Vidanes, Head of Sector, EU budget performance and policy mainstreaming, DG Budget of the European Commission explained how the European Commission is integrating climate-related disclosures into its budget performance and policy setting efforts, focusing on reporting and monitoring requirements. He also shared how the European Commission assesses the impact of expenditures financed by Next Generation EU green bonds.
“The EU has now two main budgetary instruments. One is the traditional long-term EU budget, the Multiannual Financial Framework, under performance-informed budgeting. The other one, the Recovery and Resilience Facility (the EU's temporary recovery instrument, centerpiece of the €800 billion NextGenerationEU plan), is performance-based. The implementation of this instrument and the payments to the EU member states are purely based on member states achieving milestones and targets linked to investments and reforms. For this specific instrument, member states also must allocate 37% of their investments to climate objectives” David Vidanes explained. “Combining these two elements we have a direct link between performance related to climate objectives and the implementation of the program,” he added.
Laure Ledoux, Head of Unit Greening, Safety and Buildings, DG Human Resources and Security at the European Commission, presented the Eco-Management and Audit Scheme (EMAS) and explained how integrating EMAS into public sector operations contributes to achieving broader environmental goals and enhancing public trust in government sustainability initiatives.
“The European Commission has committed to becoming climate neutral as an organization by 2030, and we evaluate and report on our progress through EMAS. Beyond the environmental impact, this is part of our efforts to also be an attractive employer. I hope that this will be a successful example of building public trust through reliable and transparent reporting, and that it will inspire others. I also look forward to the development of an international standard in this area,” Laure Ledoux pointed out.
Key challenges
Speakers highlighted resource constraints/limited funding, lack of expertise and training/skill gaps, complexity and fragmentation of data collection and management, and evolving standards as the main challenges for public sector entities in adopting comprehensive sustainability reporting practices.
Andrew Blazey, Deputy Head of Budgeting and Public Management at the OECD, reflecting on how governments can ensure that their budgeting processes are resilient and adaptable to the increasing demands of climate change and sustainability, underlined that “this is a challenging area of budgeting.”
“It’s important to be specific about the boundaries/limitations of the initiatives and to draw a distinction between greening government and greening policy. It’s also important to recognize the roles performed by non-governmental actors,” he added.
Key Recommendations to Get Started
Speakers shared recommendations for public sector entities to start or further advance their reporting journey:
- Educate your stakeholders (internal, external);
- Think medium-term perspective and align policy and prioritization;
- Align key leaders of the organization, clarify governance, as well as roles and responsibilities for reporting;
- Bring finance to the table;
- Validate material topics, perform materiality assessments and quantification of financial impact of climate actions, strategies, and policies;
- Inventory what exists today to support reporting (gap assessment, data inventory) against the proposed IPSASB climate disclosures standard exposure. Many public sector entities already have plans and strategies in place. E.g., climate adaptation plans, including strategies to green and decarbonize the public sector, GHG emissions inventory and tracking;
- Understand what data, processes and controls are currently in place to support climate disclosures and reporting to understand gaps;
- Share developments that contribute to disseminating best practices.
Next steps towards adoption and implementation of the new IPSASB Sustainability Reporting Standard globally
For Andrew Blazey, “It’s early days, but we are already starting to see greater transparency on public finance and sustainability. The work by fiscal councils provides a leading example. We also see considerable work on publishing on governance, strategy, and risk management. It is helping to narrow the focus on metrics and targets.”
“The IPSASB is working hard to develop its first public sector climate-related disclosure standard, around two main roles of public sector entities. First, like private corporations, they manage their own operations - our goal is to align our guidance with the private sector standards. And secondly, the board is developing new public sector-specific guidance to assist entities responsible for putting in place climate, which will require those entities' public policy programs to communicate and report on such programs to ensure accountability for the progress in achieving the outcomes of their policy activities,” said Renée Pichard.
Karen Leung indicated that “once the exposure draft on the climate-related disclosures is approved [note from the Editor- the standard was approved on September 20 at the IPSASB’s 3rd meeting of 2024 in Brussels, Belgium and will be published later in October), it will be out for public consultation for a minimum of 120 days, from the end of October until late February 2025. The IPSASB’s aim is to approve the final climate-related disclosures standard by the end of 2025.”
“We're also seeking volunteer entities to help field test parts of the exposure draft, to get feedback on implementation-related issues, to ensure that it meets the practical needs in the public sector. We will also be conducting outreach through regional roundtables,” she informed the audience.
For Laure Ledoux, “there is no need to reinvent the wheel.” She recommended to consider the example of successful approaches, such as EMAS, to help support existing schemes, to avoid duplicating or adding an additional reporting layer.
“We need to highlight the return on investment, such as economic savings, establishing trust, staff engagement and participation. It’s also very important to show examples of successful schemes and concrete impacts,” she added.
“We need to take action now. Don't wait for the standards to come out. Start collecting data and thinking through strategy and action,” recommended Lynn Pamment.
“Reporting on Climate-related Discloses in the public sector provides information useful for decision making, and for transparency and accountability purposes. This transparency allows governments to be accountable for their actions, which is important for building public trust,” said Ian Carruthers, Chair of IPSASB in his concluding remarks.
“We're looking forward to talking to our stakeholders to make sure that we can continue this dialogue and ensure that the proposals meet the reporting needs in the public sector. Stay tuned for more information on the IPSASB’s Climate-related Disclosures exposure draft and its standard-setting work and please ensure to provide feedback to the coming consultation,” he concluded.
Watch Key Recommendations from Our Experts
Useful Links
IPSASB
- IPSASB Begins Development of Climate-Related Disclosures Standard for the Public Sector
- IPSASB Developing the First Public Sector Sustainability Reporting Standard with Support from the World Bank
IFAC
Accountancy Europe
- Accountancy Europe’s responses to:IPSASB's exposure draft 83, reporting sustainability program information
European Commission
- 2021-2027 long-term EU budget & NextGenerationEU
- tools and guidelines about EMAS
- Impact and allocation report :NGEU Green Bond report
- Greening the European Commission (EC)
- EMAS in EU Institutions
