European Sustainability Reporting Standards: Make our governments exemplary again!

 

 

1. The adoption of the European Sustainability Reporting Standards (ESRS) for use by all companies subject to the Corporate Sustainability Reporting Directive (CSRD) is an important tool and a step forward in the transition to a sustainable economy. But what about in the public sector?

 

The public sector is clearly lagging behind in the environmental transition issues. At best, it produces greenhouse gas (GHG) emissions reports, but many are partial and difficult to use due to poor data quality. Just as investors have held the private sector accountable for its environmental, social and governance (ESG) commitments, citizens and taxpayers are raising their voices to hold governments and the public sector accountable for how they address sustainability challenges.

 

In the European Union (EU), government spendings account for around 52% of gross domestic product (GDP) in 2022. Public administration budgets in Europe are very large – around half of GDP. They are major purchasers, so it is essential that they play their full role in the environmental transition.

 

States and governments sign international treaties on climate and biodiversity. They make commitments. The EU aims to be carbon neutral by 2050 and implements policies and regulations for the private sector to comply with. Sustainability reporting is seen as a performance lever for companies. Why not do the same for the public sector? Green budgets and GHG emissions reports are simply not enough. In my opinion, the public sector, like the private sector, needs to implement proper carbon accounting based on common sustainability reporting standards. This will allow carbon reductions to be monitored in real time and informed decisions to be made based on quality data. Well-performing public services will undoubtedly contribute to a more resilient European Union.

 

     2. Why do you think it is appropriate to introduce such standards for the public sector?

 

It is essential that states and governments are accountable for their environmental footprint using “standardized” indicators. In this way, the actions and impacts of the public sector can be measured, compared, and audited. The establishment of specific indicators for the public sector will help to increase transparency and improve decision-making regarding sustainable development, climate change and biodiversity protection. The public sector needs to be able to collect, report and act on reliable and accessible emissions data to drive its actions. This will enable countries and governments to make more well-informed decisions.

 

The public sector is a major source of GHG emissions. In France, the Shift Project think tank shows that the main sources of carbon emissions in the public sector are real estate, employee travel (home-work and work-related), catering, digital and public procurement. It is essential to have a reliable set of data for all these sectors.

 

Promoting transparency and accountability in the public sector will increase public trust and citizen participation in addressing the global challenges of the environmental transition. Data quality and access will provide European governments, citizens, and NGOs with a realistic roadmap to 2050. That is why the public sector should take the lead in sustainability reporting.

 

Standards created for the private sector cannot be directly applied to the public sector, but like companies, the public sector needs granular sustainability information, quantitative and qualitative metrics, and targets. Sustainability reporting needs to meet the same rigorous standards as financial reporting. Actions now need to be measured against yearly commitments and public interest to avoid issues such as greenwashing.

 

     3. Are there any ongoing initiatives?

 

Indeed, the International Public Sector Accounting Standards Board (IPSASB) is currently working on a global standard for climate-related disclosures, as it believes that “the public sector urgently needs its own sustainability reporting standards”. Following an international consultation on public sector sustainability reporting in 2022, IPSASB now aims to publish the first standards for public sector-specific sustainability reporting in the second half of 2025, with international guidance from the International Sustainability Standards Board (ISSB) and Global Reporting Initiative (GRI). “IPSASB’s scope is to develop climate-related disclosure requirements for public sector entities that cover the climate-related impacts of the entity on the economy, the environment, and people; the climate-related risks to which the entity is exposed; and the climate-related opportunities available to the entity.”

 

As the European Union strives to be at the forefront of environmental protection measures, it is important that it quickly grasps the challenges of public sector reporting and soon moves on to social and governance disclosures. It’s also important that there is a very high degree of interoperability between global and European standards to avoid unnecessary double reporting by public services.

 

     4. Finally, in a few words, what would you like to see in the future?

 

European states where public services use recognized sustainability reporting standards and carbon accounting to monitor, control and reduce the GHG emissions generated by their upstream and downstream activities, based on quality data. I believe some of these reportings should be accessible to the public.