Global Standard for Government Climate Reporting Breaks New Ground in Public Sector Accountability

Governments worldwide face mounting exposure to climate-related risks and increasingly frequent extreme weather events, yet until now have operated without clear, standardized guidance on disclosing these impacts in ways that support accountability and informed decision-making. This gap has left stakeholders—from citizens to capital market participants—without consistent, comparable information about how governments are managing climate challenges.

To address this critical shortfall, the International Public Sector Accounting Standards Board (IPSASB) has issued IPSASB SRS 1, Climate-related Disclosures, marking the first global standard designed specifically to help governments and public-sector entities report climate-related risks and opportunities in a clear, consistent manner. The landmark standard, developed with support from the World Bank, becomes effective January 1, 2028, though earlier adoption is permitted.

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Filling a Critical Gap in Climate Accountability

The new standard emerges at a pivotal moment when the public sector’s contribution to global emissions demands greater transparency. “Governments play a fundamental role in climate action, as their decisions can shape outcomes across the entire economy,” said Thomas Müller-Marqués Berger, Chair of the IPSASB. He emphasized that climate-related information proves essential for stronger public financial management, offering insights into risks and opportunities affecting government operations while enabling more efficient access to capital markets to mobilize financing for climate resilience.

The World Bank’s involvement underscores the standard’s global significance. The institution provides financing, knowledge and technical expertise to advance sustainable development worldwide, making it an ideal partner in developing guidance that will affect government reporting across both developed and developing nations.

Arturo Herrera, Global Director for Governance at the World Bank, highlighted that this collaboration reflects a shift in sustainability reporting beyond the private sector. “With the public sector responsible for a significant share of global emissions, these new standards represent an important opportunity to make more complete climate-related information available to the public,” he stated.

Alignment with Global Frameworks

A critical feature of IPSASB SRS 1 is its alignment with IFRS S2, the International Sustainability Standards Board’s climate-related disclosure standard for the private sector. This alignment ensures greater consistency and comparability of climate-related disclosures across public and private sectors, particularly benefiting lenders and other providers of capital who must evaluate climate risks across their entire portfolios.

The harmonization between public and private sector standards addresses a longstanding challenge in climate reporting. Previously, investors and lenders analyzing sovereign bonds or government-backed projects lacked the standardized climate disclosure they could obtain from private sector entities. With sovereign bonds comprising nearly 40% of the $100 trillion global bond market, this gap represented a substantial blind spot in understanding climate-related financial risks.

The IFRS S2 standard, which became effective for private entities in January 2024, builds on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and incorporates industry-based disclosure requirements. By aligning with this established framework while addressing public sector-specific needs, IPSASB SRS 1 creates a cohesive global ecosystem for climate reporting.

Comprehensive Disclosure Requirements

IPSASB SRS 1 establishes disclosure requirements across four fundamental pillars: governance, strategy, risk management, and metrics and targets. These components create a comprehensive framework for understanding how governments identify, assess, and manage climate-related matters.

In the governance dimension, the standard requires disclosures about processes, controls and procedures an entity uses to monitor, manage and oversee climate-related risks and opportunities. This includes detailed information about the roles of both governing bodies and management in overseeing and managing climate-related matters, ensuring accountability extends from operational levels to the highest decision-making authorities.

The strategy pillar demands disclosures about climate-related risks and opportunities that could reasonably be expected to affect an entity’s long-term fiscal sustainability. This encompasses the entity’s strategy and decision-making processes, current and anticipated financial effects, and climate resilience informed by climate-related scenario analysis. This forward-looking orientation represents a significant evolution in public sector reporting, requiring governments to articulate not just current conditions but also their preparedness for future climate scenarios.

For risk management, entities must disclose the processes and policies they employ to identify, assess, prioritize and monitor climate-related risks and opportunities, and how these integrate into overall risk management frameworks. This integration requirement acknowledges that climate risks cannot be siloed from other governmental risks but must be woven into comprehensive risk assessment processes.

The metrics and targets component requires disclosures on an entity’s performance in relation to climate-related risks and opportunities, including greenhouse gas emissions and climate-related targets. Significantly, the standard includes a “rebuttable presumption” that entities will measure GHG emissions using the GHG Protocol, establishing consistency in measurement methodologies across jurisdictions.

Greenhouse Gas Emissions Reporting

A particularly notable feature of IPSASB SRS 1 involves requirements for Scope 3 GHG emissions—indirect emissions occurring in an entity’s value chain. Recognizing the complexity of measuring these emissions, the standard provides transition relief for the first three annual reporting periods, allowing governments time to develop robust data collection and measurement systems.

This phased approach balances the need for comprehensive emissions reporting with the practical challenges governments face in obtaining data from sources beyond their direct control. Given that global greenhouse gas emissions reached 53.2 gigatonnes of CO2 equivalent in 2024, comprehensive public sector emissions reporting represents a crucial step toward understanding and managing climate impacts.

The emphasis on emissions measurement reflects broader trends in climate accounting. As governments commit to net-zero targets and climate action plans, accurate baseline measurements become essential for tracking progress and ensuring accountability. The standard’s requirement for consistent methodology helps prevent “creative accounting” in emissions reporting while facilitating meaningful comparisons across jurisdictions and over time.

Development Process and Stakeholder Engagement

The path to IPSASB SRS 1’s finalization involved extensive consultation and refinement. The Board originally released an exposure draft in October 2024, inviting public comment through February 2025. This consultation period generated substantial feedback from preparers of public sector reports, regional and national sustainability reporting standard setters, professional accountants, sustainability assurance providers, and interested members of the public.

Responding to stakeholder input, the IPSASB made a pivotal decision in June 2025 to split the project into two phases. The Board recognized that combining different reporting perspectives—climate-related risks to an entity’s own operations versus climate-related public policy programs and their outcomes—in a single standard would not adequately serve the public sector’s diverse needs.

Phase 1, culminating in IPSASB SRS 1, focuses on how public sector entities disclose climate-related risks and opportunities affecting their own day-to-day operations. Phase 2, which will begin development in 2026, will create a separate standard for entities responsible for climate-related public policy programs and their outcomes. This division allows for more tailored guidance that addresses the unique characteristics and information needs associated with each perspective.

The phased approach demonstrates the IPSASB’s commitment to developing standards that work in practice, not just in theory. By listening to stakeholders and adjusting the implementation roadmap, the Board has created a more manageable pathway for governments at different stages of climate reporting maturity.

World Bank Partnership and Development Support

The World Bank’s support for developing IPSASB SRS 1 extends beyond endorsement to active collaboration throughout the standard-setting process. This partnership provides crucial resources for a project with global implications, particularly for developing countries that face the most acute climate risks while often lacking resources for sophisticated reporting systems.

Funding for the climate disclosure project comes through the World Bank’s Financial Management Umbrella Program, supported by multiple international donors including the Australian Department of Foreign Affairs and Trade, the Government of Austria, the Bill & Melinda Gates Foundation, the European Union, the Swedish International Development Cooperation Agency, Switzerland’s State Secretariat for Economic Affairs, the United Kingdom’s Foreign, Commonwealth and Development Office, and the United States Agency for International Development.

This diverse funding base reflects the international community’s recognition that climate reporting infrastructure represents a global public good. When governments can accurately measure and report their climate-related risks and impacts, capital can flow more efficiently to climate resilience and mitigation efforts, benefiting both individual nations and the global community.

Arturo Herrera has emphasized that many countries, particularly developing nations among the most at-risk from climate change, lack effective ways to track and assess progress against climate-related commitments and to identify and disclose risks and impacts. The standard addresses this gap by providing a clear, internationally recognized framework that countries can adopt regardless of their current reporting sophistication.

Implementation Support and Capacity Building

Recognizing that adopting new reporting standards requires more than just publishing requirements, the IPSASB has committed to comprehensive implementation support. The Board will host a global webinar on February 12, 2026, where participants can learn about the standard, ask questions, and explore practical implementation strategies. This represents just the beginning of ongoing support initiatives.

Implementation guidance will prove particularly crucial for governments without extensive experience in climate-related financial disclosures. The standard’s effective date of January 1, 2028, provides nearly three years for jurisdictions to build capacity, develop data collection systems, and train personnel responsible for preparing climate-related reports.

During this transition period, early adopters can provide valuable lessons about practical implementation challenges and effective solutions. The IPSASB encourages early adoption precisely to build this knowledge base and identify areas where additional guidance may prove necessary.

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Implications for Capital Markets and Sovereign Finance

The standard’s implications for capital markets extend far beyond improved disclosure. When governments provide consistent, comparable climate-related information, investors and lenders can make more informed decisions about sovereign debt instruments. This transparency can reduce risk premiums for governments demonstrating strong climate resilience and effective risk management, potentially lowering borrowing costs.

Conversely, governments failing to adequately address climate risks may face higher financing costs as investors demand compensation for poorly understood or managed exposures. This market discipline creates incentives for governments to take climate risks seriously and implement robust management strategies.

The standard also addresses information asymmetries between governments and market participants. Currently, investors often rely on third-party assessments of sovereign climate risks, which may not fully capture government-held information about vulnerabilities, adaptation plans, or resilience measures. Direct disclosure by governments themselves provides more authoritative, comprehensive information for investment decisions.

Relationship to Paris Agreement Commitments

While distinct from Paris Agreement reporting requirements, IPSASB SRS 1 complements and enhances countries’ ability to demonstrate progress toward climate commitments. The Paris Agreement requires countries to submit Nationally Determined Contributions (NDCs) outlining their emissions reduction targets and climate actions. However, detailed financial reporting on climate-related risks and opportunities has remained less standardized.

By providing a framework for consistent, comparable climate-related financial disclosures, the standard helps countries connect their climate commitments to financial planning and resource allocation. Governments can demonstrate how climate considerations integrate into fiscal sustainability assessments, capital budgeting, and long-term planning processes.

This integration proves particularly important as countries develop and implement national climate strategies. Climate action requires significant financial resources, and demonstrating fiscal capacity alongside climate commitments helps build confidence among both domestic and international stakeholders.

Addressing Physical and Transition Risks

IPSASB SRS 1 requires governments to address both physical climate risks—direct impacts from climate change such as extreme weather events, sea level rise, and temperature changes—and transition risks arising from shifts toward a lower-carbon economy including policy changes, technological disruption, and market preferences.

Physical risks already affect government operations and fiscal positions across the globe. Extreme weather events damage public infrastructure, increase disaster response costs, and reduce economic activity that supports tax revenues. Sea level rise threatens coastal communities and infrastructure, potentially requiring expensive adaptation measures or managed retreat. Temperature changes affect agriculture, water resources, and public health, all areas where governments play significant roles.

Transition risks present different but equally important challenges. As countries implement carbon pricing, renewable energy mandates, and other climate policies, governments must manage economic disruption, support workforce transitions, and adapt fiscal systems designed around fossil fuel revenues. These transitions create both risks and opportunities that require careful management and transparent disclosure.

Role in Developing Countries

For developing countries, IPSASB SRS 1 represents both a challenge and an opportunity. Many developing nations face the most severe climate impacts while having the least capacity to manage and report on these risks. The standard provides a pathway to build reporting infrastructure that can support better climate risk management and potentially improve access to climate finance.

International climate finance mechanisms increasingly emphasize transparency and accountability. By adopting internationally recognized disclosure standards, developing countries can strengthen their cases for climate finance while building capacity for effective fund management. The standard’s requirements, while comprehensive, provide clear targets for capacity-building efforts supported by international development partners.

The World Bank’s involvement in developing the standard reflects recognition of these capacity challenges. Beyond the standard itself, the Bank can support implementation through technical assistance, training programs, and knowledge-sharing platforms that help countries build the systems and expertise needed for effective climate-related financial reporting.

Coordination with Other Public Sector Reforms

IPSASB SRS 1 exists within a broader context of public sector financial management reforms. Many governments are simultaneously implementing accrual-based accounting, performance budgeting, and other improvements to financial transparency and accountability. Climate disclosure requirements can leverage and complement these broader reform efforts.

Countries already implementing International Public Sector Accounting Standards (IPSAS) for financial reporting will find climate disclosure requirements align with existing frameworks and systems. The same governance structures, internal controls, and assurance processes that support financial reporting can extend to cover climate-related disclosures, creating efficiencies in implementation.

The IPSASB has also issued related standards that complement climate disclosure requirements. IPSAS 51, Tangible Natural Resources Held for Conservation, provides guidance on accounting for natural resources with physical substance that governments hold to preserve or protect them. Together, these standards help governments better connect environmental stewardship with public finances.

Future Developments and Phase 2

While IPSASB SRS 1 addresses climate-related risks and opportunities affecting an entity’s own operations, Phase 2 of the project will tackle the distinct challenge of reporting on climate-related public policy programs and their outcomes. This work, expected to be finalized around the end of 2026, will address how governments disclose information about their climate policies, programs, and their effectiveness.

Phase 2 presents unique challenges because it involves reporting not just on how climate affects government operations, but on how government actions affect climate outcomes. This requires different conceptual frameworks and disclosure approaches than operational risk reporting. The IPSASB has indicated it will carefully consider stakeholder feedback on proposed approaches for this phase.

The two-phase structure allows the IPSASB to prioritize getting operational climate risk disclosure requirements established and implemented while developing more complex program outcome reporting requirements. This sequencing helps manage implementation burdens while ensuring both aspects of public sector climate reporting receive appropriate attention.

Implications for Accountability and Trust

Beyond technical reporting requirements, IPSASB SRS 1 has profound implications for government accountability and public trust. Climate change represents one of the most significant long-term challenges facing societies worldwide, and citizens increasingly demand that governments take effective action while being transparent about risks and responses.

By requiring standardized climate-related disclosures, the standard creates mechanisms for holding governments accountable for their climate risk management. Citizens, civil society organizations, and other stakeholders can use disclosed information to evaluate whether governments adequately understand and manage climate risks affecting public finances and service delivery.

This accountability extends beyond current voters to future generations who will bear the consequences of today’s climate-related decisions. By requiring disclosure of long-term climate risks and resilience measures, the standard helps ensure current decision-makers consider and communicate the long-term implications of their choices.

Conclusion: A New Era in Public Sector Climate Reporting

The issuance of IPSASB SRS 1 marks a watershed moment in public sector climate reporting. For the first time, governments worldwide have access to comprehensive, internationally recognized guidance on disclosing climate-related financial information. This standard promises to enhance transparency, improve decision-making, and strengthen accountability in how governments address climate challenges.

As countries begin implementing the standard in the lead-up to its 2028 effective date, the global community will gain unprecedented insights into how governments understand and manage climate-related risks and opportunities. This information will support better-informed policy decisions, more efficient capital allocation, and ultimately more effective climate action.

The standard’s success will depend not just on its technical quality but on the commitment of governments, international organizations, and other stakeholders to effective implementation. With continued support for capacity building, knowledge sharing, and continuous improvement, IPSASB SRS 1 can fulfill its promise of creating a more transparent, accountable, and climate-resilient public sector worldwide.

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By: Montel Kamau

Serrari Financial Analyst

4th February, 2026