Amit Verma, Sustainability Policy Manager
Sustainability reporting - what and why?
Sustainability reporting allows organisations to disclose their progress towards environmental, social, and governance, ESG targets. This form of non-financial reporting drives actions toward achieving these goals and helps organisations assess their sustainability related impacts, risks and value generation for stakeholders. Sustainability reporting is vital for promoting sustainability across business functions by informing strategies to minimise environmental and social impacts. Typically, reports include numbers, charts, and infographics to communicate progress clearly.
With a fast-evolving regulatory landscape, sustainability reporting is increasingly crucial for both private and public sectors. Stakeholders like consumers, suppliers, and regulators demand transparency around sustainability assessments and risk management. However, no single method exists for sustainability reporting; multiple frameworks exist, such as the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), Task Force on Climate-related Financial Disclosures (TCFD) and Carbon Disclosure Project (CDP). These frameworks all cater to different organisational needs.
Sustainability reporting within public sector
Compared to the private sector, sustainability reporting in the public sector is still in its early stages. While financial reporting has long established frameworks, public sector sustainability reporting lacks standardised processes. As governments face mounting pressure to meet UN Sustainable Development Goals (SDG’s), the need for clear and effective sustainability reporting practices in the public sector has become urgent. Transparency is key for building trust, monitoring progress and fostering public-private partnerships.
Public sector organisations must understand how sustainability issues impact their operations, identify areas for improvement, and quantify their positive and negative impacts on the environment, society, and the economy. Despite its importance, sustainability reporting in the public sector lags the private sector, partly due to the absence of internationally recognised standards. Many public sector organisations rely on local guidelines based on GRI standards, but these are often inconsistent with national or global requirements.
Advancing public sector sustainability reporting
To address this gap, the International Public Sector Accounting Standards Board (IPSASB) is developing sustainability reporting guidance for the public sector. IPSASB’s work focuses on three key research topics; General Requirements for Disclosure of Sustainability-related Financial Information, Climate-Related Disclosures, and Natural Resources – Non-Financial Disclosures.
These projects mark significant progress in advancing public sector sustainability reporting, particularly given that no other international body has yet developed global sustainability reporting standards for this sector.
IPSASB’s consultation paper, such as Advancing Public Sector Sustainability Reporting released in May 2022 and the Natural Resources paper in October 2022, are critical steps towards creating comprehensive sustainability reporting guidance for the public sector. These initiatives are vital as public sector organisations increasingly recognise the importance of sustainability reporting in addressing environmental and social challenges.
CIPFA’s role in sustainability reporting
The Chartered Institute of Public Finance and Accountancy (CIPFA) plays a pivotal role in advancing sustainability reporting within the public sector. By collaborating with organisations such as IPSASB, CIPFA publishes several resources within sustainability reporting. The CIPFA sustainability forum serves as a hub for knowledge exchange and innovative in this domain.
CIPFA’s partnership with Institute of Chartered Accountants in England and Wales (ICAEW) to develop the Public Sector Sustainability Certificate demonstrates its commitment to supporting public sector organisations. Additionally, CIPFA is exploring connections between its work on the International Framework for Good Governance and sustainability reporting, highlighting the importance of strong governance in delivering robust sustainability reports.
As public sector organisations face challenges in developing their sustainability reporting capabilities, CIPFA's efforts to provide guidance, education, and collaboration opportunities will be crucial in helping them navigate this complex domain. The potential for CIPFA to contribute to the growth and success of sustainability reporting in the public sector is immense.