Sustainability reporting: what about the public sector?

Sustainability reporting has increased over the years for various reasons including investor interest, demand within companies and from other institutions. Following the 1929 stock market crash, markets around the world emphasized the importance of company transparency and disclosures. As financial information became more standardized and comparable across countries, key stakeholders realized that non-financial topics are also important in understanding the sustainability of a company. This, combined with the critical need to address climate change, led to the development of various sustainability standards and frameworks (e.g., the Global Reporting Initiative and Sustainability Accounting and Standards Board).

While most sustainability reporting targets the private sector, this is changing with the International Public Sector Accounting Standards Board (IPSASB) outlining the role of the public sector in disclosures.(1) It is envisioned that public sector-specific sustainability reporting standards will encourage transparency, allowing governments to communicate the long-term impacts of their interventions.(2) Importantly, public spending represents a significant part of the global economy and given its impact on achieving sustainable development, disclosure is important to enable stakeholders in identifying areas where progress is being made and issues requiring action. The public sector should also consider the information required by investors in sovereign bonds, as well as bodies funding development initiatives. Public sector reporting is also thought to impact public trust with increased disclosure contributing to higher levels of trust in governments.

In countries where healthcare is a public good, health organizations will need to consider the impacts of sustainability reporting on their current operations. While various organizations already disclose some information on their sustainability impacts and action plans, many are at a high-level and do not provide an understanding on the areas of greatest impact. Moreover, frameworks may not be used in selecting financially-material data for reporting. Integrating sustainability reporting will be a challenge for some organizations. Having a clear understanding of material topics and existing standards is one of the first steps in sustainability reporting.  

Sources:

1.     IPSAS, Sustainability reporting

2.     IFAC, Preparing sustainability reporting and assurance