The International Public Sector Accounting Standards Board (IPSASB) has launched a draft of Sustainability Reporting Standard (SRS ED 1), a first climate disclosures standard that focuses on the public sector, to meet its unique reporting needs. The draft, created with the support of the World Bank, is intended to create disclosure which provides useful information for primary users of general purpose financial reports. 

SRS ED 1 establishes a clear framework for climate disclosures, offering private equity and credit firms, asset managers, and impact investors useful comparability of standards across sectors. This consistency enables these investors to make more informed decisions based on standardized data, providing insights that are especially relevant for private companies influenced by public sector activities.

Let's explore the climate-related disclosures standard draft released by IPSASB in detail.

About the Sustainability Reporting Standard (SRS ED 1)

The SRS ED1 is a set of rules or a framework for public sector entities to report on climate-related risks and opportunities. The framework aims to allow government and public organizations communicate their strategies and actions effectively. As the public sector entities start to consider this standard, they are expected to be better prepared to engage with stakeholders, such as investors, citizens, and regulators. 

IPSASB Chair Ian Carruthers said “The rapid progress needed to address climate change requires public sector action. The scale of the investment involved and the need for coordinated action across all sectors of the economy mean that only governments are equipped to lead the changes required. Using policy tools, such as taxation, regulation, and subsidies, governments can influence behaviors across entire economies.”

Key aspects of the climate-related disclosures standards

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  The SRS ED1 is the first of its kind sustainability reporting standard that is being developed specifically for government and public organizations. 

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  The draft of the standard is based on existing guidelines from the International Sustainability Standards Board (ISSB) ensuring consistency with the global sustainability reporting practices. 

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  IPSASB standards are designed for public sector entities that — provide services to benefit the public, finance their activities through taxes or other levels of social or government contribution, and do not have a primary objective to make profits. 

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  The disclosures include requirements that are aligned with key areas such as: 
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    Strategy: Integration of climate consideration into organizational strategies.
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    Governance: How organizations manage concerns relating to climate change.
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    Risk management: Identifying and then managing the risks associated with climate change.
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    Metrics: Defining clear metrics for measuring climate performance. 

Next steps

Since the SRS ED1 is in a drafting stage, the IPSASB is currently inviting feedback from stakeholders, company owners and other concerned entities on its draft until February 28, 2025, to improve the standard based on suggestions across the sector.

While you’re here…

While SRS ED 1 targets public sector entities, its development signals an increasing global commitment to standardized climate disclosures. Therefore, understanding and potentially aligning with emerging standards like SRS ED 1 could offer private market players a strategic edge. 

However, keeping up with standards updates like this and assessing them accurately can be challenging. This is where Auquan comes into play. 

Auquan automates and streamlines deal sourcing, due diligence, monitoring, ESG/sustainability, and compliance workflows so teams can move faster and more efficiently. Using advanced AI, Auquan generates material and sustainability insights on any entity worldwide — public or private — fine-tuned for your team's investment and lending requirements.

Let's explore how Auquan can help you and your team eliminate tedious and time-consuming manual data work and focus more on what you do best.