What's Happening?
The International Public Sector Accounting Standards Board (IPSASB) has released a new standard, IPSASB SRS 1, aimed at helping governments and public sector entities report climate-related risks and opportunities consistently on a global scale. Developed
with the support of the World Bank, this standard aligns with the International Sustainability Standards Board's IFRS S2 climate-related disclosure standard. It is designed to provide consistency and comparability of climate-related disclosures across both public and private sectors, which is particularly beneficial for market participants such as lenders and resource providers. The standard mandates disclosures about governance processes, controls, and procedures used by entities to monitor and manage climate-related risks and opportunities. It also requires entities to disclose their strategies, decision-making processes, and the financial effects of climate-related risks and opportunities. The standard will apply to financial reports for periods starting on or after January 1, 2028, with earlier adoption permitted.
Why It's Important?
This development is significant as it underscores the critical role governments play in climate action. By standardizing climate-related disclosures, the IPSASB aims to enhance public financial management and provide insights into the climate-related risks and opportunities affecting government operations. This transparency is expected to facilitate more efficient access to capital markets, thereby mobilizing the necessary financing for climate resilience. The initiative also marks a shift towards including the public sector in sustainability reporting, which has traditionally focused on the private sector. Given that the public sector is responsible for a substantial share of global emissions, these standards represent a crucial step in making comprehensive climate-related information available to the public.
What's Next?
To support the adoption of IPSASB SRS 1, the IPSASB plans to host a global webinar on February 12, 2026. This event will provide participants with an opportunity to learn about the standard, ask questions, and explore practical implementation strategies. Additionally, the IPSASB has issued another related standard, IPSAS 51, which offers guidance on accounting for tangible natural resources held for conservation. Both standards are set to take effect for financial statements for periods starting on or after January 1, 2028, although earlier application is encouraged.
