IPSASB climate-related focus ‘could lead to greenwashing’, industry warns

The ICAEW and CIPFA have warned that the International Public Sector Accounting Standards Board should broaden the scope of proposed reporting on climate-related disclosures, saying that “the current narrow focus could lead to greenwashing”. 

As a result, the accountancy bodies suggested broadening the scope to include all material policies that contribute to the country’s climate targets to ensure genuine and comprehensive climate reporting. 

However, the ICAEW and CIPFA do not back pausing the introduction of climate reporting, which they said would send out “the wrong signals”, and called for a phased implementation process to enable public sector entities to set up the necessary processes, upskill the workforce and start on data collection. 

In addition, the two industry bodies emphasised the “critical” role of government policies and regulations in achieving global emissions targets and driving positive climate change. 

Henning Diederichs, senior technical manager of public sector at ICAEW, said: “Comprehensive climate reporting is an essential part of sustainability work and it’s important that the final standard promotes transparency, accountability and genuine progress. We are concerned that the current narrow scope of climate-related disclosures could lead to greenwashing, and instead we propose that all material policies are included to provide a more accurate and comprehensive view of a country’s climate activity.

“Climate reporting is not easy for the private sector and will be equally challenging for the public sector, but it is in the public interest to see the reporting on major policies that impact our climate. We will all need to work together to upskill the workforce to meet these challenges, but IPSASB should put a marker down to show what the public sector should be aiming for.”

Amit Verma, sustainability policy manager at CIPFA, added: “CIPFA supports the inclusion of public policy programmes in climate-related reporting but is concerned that restricting disclosures to only climate-related policies could lead to greenwashing. This narrow approach focuses solely on policies with climate outcomes as their primary objective, reducing transparency around policies that, while aimed at other goals—such as economic growth—may still have significant climate impacts.

“We urge the IPSASB to broaden the scope to include all material policies that contribute to a jurisdiction’s climate goals. A more comprehensive approach would provide a clearer picture, capturing both positive and negative climate impacts, as well as the trade-offs involved. Expanding the scope will enhance transparency, better meet user needs, and reduce the risk of greenwashing in public sector climate reporting.”