ICAEW and CIPFA call for broader climate disclosures to prevent greenwashing

The International Public Sector Accounting Standards Board (IPSASB) should broaden the scope of its proposed climate-related disclosure standards to prevent greenwashing and ensure comprehensive reporting, the ICAEW and CIPFA have warned.

In a joint response to the Sustainability Reporting Standards Exposure Draft 1, the two chartered accountancy bodies expressed concerns that the current definition of climate-related public policy programmes—which limits disclosures to policies with climate-related outcomes as their primary objective—is too narrow.

They cautioned that this definition could allow policies to be included or excluded simply by altering their stated objective, creating a loophole that undermines transparency.

Instead, ICAEW and CIPFA recommended that all material policies contributing to a country’s climate targets be included, allowing for more meaningful comparisons between different measures and ensuring genuine and complete climate disclosures.

Phased Implementation Needed to Support Public Sector Adoption

ICAEW and CIPFA opposed any delays in introducing climate reporting, warning that a pause would send the wrong signals. Instead, they called for a phased implementation process, allowing public sector entities time to develop necessary processes, upskill their workforce, and begin data collection to meet reporting requirements effectively.

Given that much of the reported ESG information is subjective, the two bodies also stressed that it must be capable of being assured to enhance rigour and trust in public sector climate disclosures.

The Role of Government in Driving Climate Action

ICAEW and CIPFA emphasised that government policies and regulations play a critical role in achieving climate goals. They reaffirmed their commitment to environmental sustainability and called for strong government action to support progress.

Henning Diederichs, ICAEW Senior Technical Manager, Public Sector, underlined the importance of expanding the scope of disclosures to reflect a full and accurate picture of national climate efforts.

“Comprehensive climate reporting is an essential part of sustainability work, and it’s important that the final standard promotes transparency, accountability, and genuine progress,” Diederichs said.

“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.”

Diederichs also stressed that public sector climate reporting, while challenging, is essential, and that stakeholders must work together to upskill the workforce in preparation for these requirements.

Ensuring Transparency and Avoiding Greenwashing

Amit Verma, CIPFA Sustainability Policy Manager, echoed these concerns, warning that restricting disclosures only to policies with explicit climate objectives could reduce transparency.

“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,” Verma said.

“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.”

Verma urged IPSASB to expand the scope of climate disclosures to capture both positive and negative climate impacts of government policies.

“A more comprehensive approach would provide a clearer picture, capturing both positive and negative climate impacts, as well as the trade-offs involved,” he added. “Expanding the scope will enhance transparency, better meet user needs, and reduce the risk of greenwashing in public sector climate reporting.”

IPSASB is expected to review stakeholder feedback before finalising the standard, with ICAEW and CIPFA urging them to ensure that the new framework promotes transparency, accountability, and genuine climate progress.