• First mandatory climate disclosure standard designed specifically for governments and public sector entities, effective from 2028
• Alignment with IFRS S2 aims to make public sector climate risks visible and comparable for lenders, investors, and rating agencies
• Signals a shift toward treating climate exposure as a core element of public financial management and sovereign risk

Governments are being asked to account for climate risk with the same rigor long expected of listed companies. The International Public Sector Accounting Standards Board has released IPSASB SRS 1, Climate-related Disclosures, its first sustainability reporting standard for the public sector, closing a long-standing gap in how governments disclose exposure to climate risks and opportunities.

The standard follows a public consultation launched in October 2024 and responds to growing pressure from capital markets, multilateral lenders, and citizens for clearer insight into how climate change affects public finances, infrastructure, and long-term fiscal resilience. Until now, no global baseline existed for climate disclosures in the public sector, despite governments’ central role in climate policy, public investment, and emissions.

A Climate Framework for Public Financial Reporting

IPSASB SRS 1 requires public sector entities to disclose material climate-related risks and opportunities within their general purpose financial reports. The standard mirrors the architecture of IFRS S2 Climate-related Disclosures, extending familiar concepts such as governance, strategy, risk management, and metrics into the public sector context.

By aligning with IFRS S2, the IPSASB aims to enhance consistency and comparability across public and private disclosures. This is particularly relevant for lenders and other providers of capital that increasingly assess sovereign and sub-sovereign climate risk when pricing debt or allocating financing.

The standard applies to reporting periods beginning on or after 1 January 2028, with earlier adoption permitted. IPSASB has scheduled an interactive webinar on 12 February 2026 at 8am EST to support implementation and interpretation.

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Why Governments Are Now in Focus

Public sector entities face mounting exposure to climate-related shocks, from extreme weather damage to infrastructure and rising adaptation costs that strain public budgets. At the same time, governments influence climate outcomes across entire economies through regulation, taxation, and public investment.

“Governments play a fundamental role in climate action, as their decisions can shape outcomes across the entire economy,” said IPSASB Chair Thomas Müller-Marqués Berger. “Climate-related information is therefore essential for stronger public financial management as it provides insights into the climate-related risks and opportunities to governments’ operations. By doing so, the new disclosures enable efficient access to capital markets to mobilize the additional financing needed for climate resilience.”

The framing of climate disclosures as a tool for capital market access reflects a growing reality. Investors, credit rating agencies, and development banks increasingly view climate exposure as a determinant of fiscal sustainability and long-term creditworthiness.

World Bank Backing and Global Governance Implications

IPSASB SRS 1 was developed with support from the World Bank, underscoring the standard’s relevance for development finance and sovereign governance.

Arturo Herrera, World Bank Global Director for Governance, highlighted the shift in emphasis toward public sector accountability. “In the past, the focus of sustainability reporting has been on 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.”

For multilateral institutions, standardized climate disclosures could improve how climate risk is integrated into lending decisions, policy conditionality, and technical assistance. For governments, the disclosures may expose vulnerabilities that require politically difficult trade-offs between spending priorities, resilience investments, and debt management.

What Executives and Investors Should Watch

For finance ministers, treasuries, and supreme audit institutions, IPSASB SRS 1 elevates climate risk from a policy concern to a reporting obligation. The standard creates expectations that climate impacts on public assets, liabilities, and service delivery will be assessed systematically and disclosed transparently.

For investors and lenders, alignment with IFRS S2 offers a clearer line of sight between public sector climate exposure and private capital risk. Over time, this could influence sovereign bond pricing, infrastructure finance, and public private partnerships, particularly in climate-vulnerable regions.

At a global level, the standard strengthens the architecture linking climate goals, fiscal governance, and capital markets. As governments face rising climate costs and scrutiny over public spending, IPSASB SRS 1 positions climate disclosure as a foundational element of credible, modern public financial management.

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