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The government is implementing new
annual climate-related reporting requirements, aligned with the
Taskforce on Climate-related Financial Disclosures (TCFD),
which are already used in the private sector to help investors
assess companies' resilience to climate-related risks
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TCFD-aligned reporting has potential
to help public sector bodies improve transparency about
climate-related risks and strengthen accountability for how
government is managing these risks
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The National Audit Office (NAO) has
outlined a series of enablers and recommendations after
examining the early stages of implementation of climate-related
reporting across government
There are examples of good practice
that have helped public sector bodies make effective use of the
new TCFD reporting requirements, but even bodies who were well
set up for the new requirements will need continued work to reach
the point where their disclosures will be a useful tool to
support scrutiny and decision-making, a new NAO report
finds.
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. Climate-related reporting in annual
reports supports accountability and transparency on how these
risks are being managed.
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.
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.
As government is still in the early
stages of implementing the new reporting requirements, a new NAO
report has identified enablers which have supported bodies to
make a good start on TCFD-aligned reporting, these
include:
• Ownership by an
appropriately senior stakeholder – Ensure there is an
identified appropriately senior stakeholder in the organisation
responsible for the approach to climate related risk
• Collaborative and cross-functional working –
Successful climate-related reporting requires an integrated
response across government professions, such as finance,
sustainability, risk, policy and delivery
• Considering a broad range of climate-related
risks – Examine physical, transition and public sector
climate risks that might be relevant to the organisation, beyond
the scope of existing estates and operations
reporting
• Capability and access to
external expertise – Assess whether they have the
internal expertise required, but where they identify gaps, public
bodies should consider opportunities for training or draw on
external expertise
These enablers draw on the NAO's
review of central government bodies implementation of
TCFD-aligned reporting, which found that there is a risk that the
process will be delayed by a lack of clarity about the full scope
of climate-related factors they are expected to assess.
In addition, some central government bodies have experienced
challenges interpreting the guidance and collecting the data they
need to meet reporting requirements.
While HM Treasury has made a good
start in supporting the implementation of the new reporting
requirements, offering guidance and bespoke support, it does not
yet have a formal plan for oversight and support beyond
2026.
, head of the NAO,
said:
“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.”
Notes to editors
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Press notices and reports are
available from the date of publication on the NAO website via
this link: https://www.nao.org.uk/reports/implementation-of-climate-related-reporting-in-central-government-annual-reports/
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As part of its report, the NAO
conducted a survey which found high awareness of
climate-related risk amongst public sector bodies. 94% (of 36
respondents) consider this risk to be relevant to them. While
79% (of 34 respondents) identified physical climate-related
risk to workforce and service delivery as being relevant to
them, indicating many are already thinking about their
operational resilience.
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As part of its strategy for
2025-2030, the NAO is supporting improvement to reporting on
sustainability in central government annual reports and
accounts. The Environment and Climate
Change Insights team leads the NAO's work on holding
government to account for use of public money to achieve
environmental aims and sustainability reporting in the public
sector, including through: supporting Parliamentary scrutiny of
sustainability information included in annual reports and
accounts; supporting practitioners through published insights
reports, that set out foundations for effective sustainability
reporting; and, by providing expert input into the financial
audit of annual report disclosures of climate-related
risks
