Public sector bodies will have to complete detailed climate disclosures to give a clearer picture of each organisation’s impact and how they are managing climate-related risks.
These will follow the TCFD reporting frameowork that have been used by workplace pensions for the past four years. These annul TCFD reports have subsequently also been required of larger publicly-listed companies and central government departments.
The National Audit Office, which is implementing this change, said these new reporting requirements will help public sector bodies improve transparency around climate-related risks and strengthen accountability for how the Government is managing these risks. It adds that climate reporting in annual reports is a useful tool to support scrutiny and decision-making.
The NAO says central government bodies, parliament and other senior decision-makers need practical, relevant information on how climate-related risks will affect operations and public service delivery.
The UK was among the first jurisdictions in the world to introduce an internationally recognised framework of climate-related disclosure into Central Government annual reporting.
Work to date by the NAO says that central government bodies have found the framework useful, even in its infancy, reporting that they see improved understanding and management of climate-related risks, better financial management and identification of potential cost efficiencies.
The NAO says it is important that there is ownership of these new requirement by senior stakeholders within the organisation. It adds that successful successful climate-related reporting requires an integrated response across government professions, such as finance, sustainability, risk, policy and delivery — and it is important organisation assess whether they have the internal expertise required. Where they identify gaps, public bodies should consider opportunities for training or drawing on external expertise.
NAO head Gareth Davies says: “The emerging climate reporting requirements are helping public bodies assess the risks to service resilience. Our report points to early good practice in maximising the value of this work.”
The TCFD requirements have been subsumed into the global International Sustainability Standards Board (ISSB) standards. However UK pension schemes can still report under TCFD framework, and it is not mandatory to complete ISSB disclosures.
Reporting under ISSB may require more detailed disclosure, especially around materiality, financial effects of climate risk and broader sustainability risks, compared with basic TCFD recommendations, potentially requiring enhanced data and governance.
