Accountancy Europe continues to support the International Public Sector Accounting Standards Board (IPSASB) as the most appropriate standard setter to develop international sustainability standards for the public sector.
We believe that it is vitally important that the public sector is engaged with ESG transition and reporting – particularly in respect of climate related issues where there is a real urgency for the public sector to take action.
Consequently, we congratulate the IPSASB on the publication of SRS ED 1 and the speed with which it has been developed.
We support the IPSASB’s decision to leverage private sector standards as a starting point for the sake of speed and also to support alignment with the private sector.
In respect of entity-level reporting, we would have preferred that public sector entities report both the impact of climate-change on their own operations and the impact of their own operations on the climate. However, we accept the exigencies that have led the IPSASB to concentrate on the financial impacts of climate change on the entity and its ability to deliver service potential.
A crucial difference between the private and public sectors is the power of the public sector to set policy. Consequently, we welcome the inclusion into the draft standard of public policy programmes.
However, we do not agree with the scope of public policy programmes that are required to be reported on – those programmes that have a primary objective that is climate-related.
We believe that this opens the scope for greenwashing with relatively small programmes labelled as climate-related are given prominence whereas other programmes that may have a much larger, often negative, effect on climate are left unreported.
In our opinion, there should be a requirement to report on the climate-related outcomes of all public policy programmes that could have a material impact on climate.
On a related matter, we also do not agree with the Paragraph 12(c) of the draft standard. This requires that the entity responsible for the climate-related public policy programme only disclose the financial consequences of the programme to the entity itself.
This is contrary to the definition of climate-related public policy programme outcomes as “the impacts on the economy, environment and/or people” and is unlikely to provide meaningful to most interested stakeholders. We believe it should be required that the entity responsible for the programme in question discloses the anticipated financial impacts of the programme on the broader elements of society, the economy etc that would be impacted by the programme.
There is a global shortage of skills in respect of all aspects of sustainability and also increasing pressure on public sector spending. Many public sector entities will struggle with the entity-level reporting requirements contained in this draft standard – especially as there is no carve out for smaller or less complex entities.
Consequently, we call on the IPSASB to consider whether a longer transitional period for adoption would be appropriate, and to also consider whether smaller public sector entities could be scoped-out, at least temporarily.
Download our response from the ‘downloads section’.
