Climate disclosure mandates are coming but are we ready?

ESG began in the private sector around 2004 as a framework for considering environmental, social, and governance factors in investment decisions, shifting the focus beyond shareholder value. Since then, it has evolved to encompass all sectors, including government.

In the Australian Public Service (APS), social and governance have historically received the most attention. We have robust enterprise agreements, integrity and anti-corruption frameworks, and guidance from entities like the APSC. The environmental piece, however, has gained significant momentum only in the past five years, spurred by initiatives like the APS’s commitment to net zero by 2030 and now, with the introduction of mandatory climate-related disclosures.

From January this year, mandatory climate disclosures began to come into effect, with different streams and timelines for various entities. For the public sector, the Department of Finance oversees implementation. Stream One applies to entities already reporting on sustainability. Stream Two, where most entities fall, is divided into three “trenches” based on size and function, each with tailored requirements and timelines.

The disclosures themselves focus on four key areas:

1. Governance: What are your organisation’s views on climate risk? How are decisions made?
2. Strategy: Is there a written plan with defined roles and responsibilities? Are you accountable to it?
3. Risk Management: Have you identified both risks and opportunities related to climate change?
4. Metrics and Targets: How are you measuring progress, and what does success look like?

Embedding these considerations into the core strategy and culture of an organisation will lead to the greatest success.

Common challenges and how to address them

1. Where to start?

The “blank page syndrome” is real. Start with materiality. What matters most to your stakeholders? What aligns with your agency’s core purpose? A good materiality assessment looks at both internal and external priorities and helps map out what deserves the most attention.

2. Getting executive buy-in

Some executives are compliance-driven, others are innovators, and many prefer to stay in the safe middle. Tailor your message. Show the legal requirements for the compliance-focused. Highlight what peer agencies are doing to the middle-of-the-roaders. And for the passionate ones, emphasise the opportunity for real impact. ESG is a broad tent, use the right entry point for your audience.

3. Avoiding greenwashing

One of the most common pitfalls is claiming progress without real accountability. To combat this:

• Educate your teams on what greenwashing is.
• Set clear goals and metrics for ESG performance.
• Assign ownership to a senior executive.
• Consider third-party assurance to validate claims.
  Transparency isn’t just good governance—it’s essential to maintaining public trust.

4. Sustaining momentum

We’ve all seen programs launched by passionate individuals only to flounder when those people move on. ESG must be embedded in roles, not personalities. Ensure responsibilities are institutionalised, not ad hoc.

If you’re not sure where ESG sits in your agency, start with your governance or annual reporting team, they’ll likely have a role in compiling your disclosures. For deeper expertise, check out resources like the Department of Finance’s Climate Disclosure Policy or the Department of Climate Change’s Climate Risk and Opportunity Program.

Also, remember that you’re not alone. Leverage your networks. Talk to others at similar agencies. Attend events. Ask questions. Sharing insights and learning from one another is one of the most effective ways to grow ESG maturity across the public sector.

Preparing for mandatory ESG and climate disclosures is undeniably complex. But it’s also an unparalleled opportunity to shift our culture toward sustainability, accountability, and long-term thinking. As the reporting timelines approach, the most important thing is to start. Ask questions, build internal capability, bring your executive along, and don’t be afraid to collaborate across agency lines.

Public institutions play an important role in shaping a sustainable and fair future for all Australians. Building the kind of government, and society, we all want to be part of.