Beyond compliance: Early lessons in public sector climate disclosure

This article was originally published by The Mandarin: Beyond compliance: Early lessons in public sector climate disclosure.

Climate disclosure is no longer a future requirement. It is already influencing how agencies assess risk, report performance, and plan for long-term service delivery. 

The first wave of public sector sustainability reporting is sending a clear signal: some approaches are working, others are not. Implementation and investment choices made now will shape how effectively agencies respond in the years ahead. 

Climate disclosure is no longer a future requirement. It is already influencing how agencies assess risk, report performance, and plan for long-term service delivery. For many, the challenge is not policy but delivery; building new capability, managing overlapping requirements and addressing data and resourcing constraints. 

What began in the corporate sector is now firmly taking hold across government agencies in Australia, signalling a shift in expectations around transparency, accountability and resilience. Unlike the corporate sector, government has a unique opportunity to harness shared knowledge across agencies, enabling a more coordinated response and accelerating delivery. 

Why climate disclosure is changing how government manages risk 

Climate-related financial disclosure reflects a broader shift in how governments understand and manage risk.   

The Australian Federal Government was among the first to formalise its approach through the Commonwealth Climate Disclosure Policy, setting a clear direction for integrating climate considerations into reporting.  At a state level, New South Wales (NSW) has taken a leading role through Treasury Policy and Guidelines TPG 24-33, requiring agencies to prepare climate-related financial disclosures. 

Other jurisdictions are expected to follow, with similar disclosure frameworks likely to be introduced as climate-related financial risk becomes a national priority. 

As these requirements take hold, climate-related risk is becoming more visible, structured and comparable across the public sector. For agencies, this aligns with broader policy objectives such as Net Zero and climate adaptation, while introducing a new level of scrutiny. As more jurisdictions introduce similar requirements, the focus will continue to move from reporting to capability, and building the systems, processes and culture required to respond effectively to climate change. 

Beyond incremental change: A step up in capability 

Agencies are starting from very different points in their climate reporting journey, ranging from more mature programs to those still building foundational capability. However, climate-related financial disclosure introduces a consistent uplift in rigour. 

Under frameworks such as TPG 24-33, agencies must disclose climate-related risks and opportunities, governance arrangements, and financial impacts in a way that integrates with existing financial reporting. These disclosures are also subject to assurance. 

For agencies that have historically approached climate issues primarily through policy or operational lenses, this represents a clear step change. Climate-related risk must now be translated into financial and service delivery impacts, supported by documented assumptions, methodologies and governance. Even for more mature agencies, existing sustainability initiatives do not always translate cleanly into disclosure requirements. 

This shift is not only technical, but organisational. One of the most underestimated challenges is how agencies engage the broader organisation. 

The underestimated challenge: Engaging the organisation 

Climate disclosures rely on inputs from across the agency, including finance, risk, asset management, operations and frontline service delivery. This requires clear governance, defined accountabilities and effective coordination. 

In practice, sustainability teams must act as facilitators, translating climate concepts into language that resonates across functions, while securing the inputs needed for risk assessments and disclosures. 

This is not straightforward in large, complex organisations with existing structures, competing priorities, and varying levels of climate literacy. Establishing working groups, securing executive sponsorship and clearly communicating expectations are critical to making progress. 

Implementation reality: Resourcing, coordination and competing demands 

The intent behind climate-related financial disclosures is clear: to improve visibility of climate-related risk, strengthen resilience, and align public sector reporting with the standards applied to the corporate sector. Central agencies, particularly in NSW, are supporting implementation through frameworks and guidance. 

However, delivery is complex. 

Disclosures are not being introduced in isolation. Agencies are often working within broader policy settings, including carbon emissions reporting and climate transition planning under frameworks such as the Net Zero Government Operations Policy. While aligned in intent, these requirements introduce multiple, concurrent deliverables, often with overlapping timelines. 

Without coordination, there is a risk of duplication or fragmented approaches to climate-related risk. At the same time, many agencies are managing these requirements without additional resourcing, placing significant pressure on internal teams. 

Why most agencies are taking a staged approach 

In response to these challenges, many agencies are adopting a pragmatic, staged approach to implementation, focusing initially on compliance while building the foundations for more mature disclosures. 

This typically involves high-level identification of climate-related risks and opportunities in year one, with more detailed analysis and quantification developed in subsequent reporting cycles. Agencies are also drawing on external expertise, including consultants, peer agencies and support from central government bodies such as the NSW Department of Climate Change, Energy, the Environment and Water, to help navigate early requirements. 

Collaboration is becoming increasingly important, with agencies in later reporting phases sharing lessons learned and practical approaches to accelerate progress and shape how agencies understand risk, allocate resources and plan for the future. 

Over time, the shift is broader and more strategic. The real value lies in embedding climate considerations into core decision-making and building capability that extends well beyond reporting. 

Practical insights for agencies 

Early implementation is already highlighting several practical lessons: 

• Establish governance early: Define ownership, decision-making structures and executive oversight. 
• Focus capability where it matters most: Prioritise delivery-critical teams across finance, risk and sustainability. 
• Start with climate-related risk and opportunity assessment: Treat this as a core capability underpinning disclosure and transition planning. 
• Take a phased approach: Build a baseline and progressively increase maturity. 
• Plan for engagement: Recognise the breadth of internal coordination required and embed it into delivery plans. 
• Build in assurance from the outset: Strengthen documentation, assumptions and methodologies early to support future audit requirements. 

Agencies that invest early in governance, coordination and capability will be better positioned to move beyond compliance and integrate climate considerations into long-term decision-making. 

How BDO can help 

BDO works with government agencies to navigate the transition to climate-related financial disclosure, from governance and implementation planning through to risk assessments, data frameworks and assurance readiness. We also support with broader climate resilience planning including net zero transition planning and responding to climate-related risks and opportunities. 

If your organisation is preparing for climate disclosure, or looking to build capability beyond initial compliance, our team can help you strengthen your approach and take the next step.