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.
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.”
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 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.
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