The Australian public sector needs to prepare for the likelihood that government agencies may soon have to report to the public on what they are doing to act on climate change, South Australia’s Auditor General says.

The global standard-setting body for public sector accounting is currently developing what will be the first sustainability reporting standard, with a consultation paper expected next year.

The standard would require government agencies to disclose information about how they manage sustainability and climate risks, as well as data about greenhouse emissions, in financial reports.

The International Public Sector Accounting Standards Board (IPSASB) is expected to issue an exposure draft on its Climate-Related Disclosures project in the second half of 2024 and approve a final standard in 2025.

The Australian Accounting Standards Board  (AASB) says once the IPSASB draft is released it will also consider “the need to undertake a domestic project to develop requirements for NFP public sector entities to report the effect of climate-related risks and opportunities, and related government policies, on the Australian economy, environment and people.”

Adoption of new standard is anticipated

In a wide-ranging report on the South Australian audit system, Auditor General Andrew Richardson says his counterparts in other jurisdictions are already assessing the implications of mandated climate-related impact reporting.

“Whether and how Australian governments adopt these standards is yet to be decided,” he says.

“But adoption in some form should be anticipated and we need to start preparing for this.”

Adoption in some form should be anticipated and we need to start preparing for this.

SA Auditor General Andrew Richardson

IPSASB Chair Ian Carruthers says IPSASB’s decision to develop a climate-related disclosures standard is a “huge first step in addressing the public sector’s need for sustainability reporting standards”.

“Reporting on climate change is one of the most important issues in sustainability reporting, which also encompasses environmental, social and governance issues,” he said.

The move will help governments and other public sector provide better transparency, accountability, and comparability of their efforts to combat the climate crisis, Mr Carruthers added.

Lack of climate-related disclosure can also affect the accountability and decision-making ability of public sector organisations.

The project will help develop a global baseline for consistent and comparable public sector climate-related disclosures, IPSASB says.