New climate-related financial disclosures introduced by HM Treasury have provided the clearest picture yet of how central government bodies are preparing for the risks posed by climate change. However, the first year of mandatory reporting suggests that while some organisations are developing a strong understanding of their exposure, many remain at an early stage of assessing the potential impacts on public services, operations and finances.
For the first time, larger central government bodies are required to disclose the impacts, timelines and costs associated with significant climate-related risks in their annual reports. The requirement applies from the 2025-26 reporting year and is based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
The new disclosures sit alongside existing requirements that have applied to certain public corporations and government-owned companies since 2022. While both frameworks are rooted in TCFD principles, there are some differences in reporting expectations.
An assessment of 31 audited public sector organisations indicates that government-wide climate resilience reporting is still maturing, although there are encouraging signs of progress.
Early Progress, But Significant Work Remains
The review found that most central government organisations are still developing their understanding of the most significant climate-related risks facing their operations and the services they deliver.
However, several organisations have produced high-quality disclosures that offer meaningful insight into the challenges they face, including the potential financial and operational consequences of climate change.
These stronger examples demonstrate how climate-related reporting can support better decision-making by helping organisations identify vulnerabilities, assess long-term risks and plan appropriate mitigations.
The findings suggest that disclosure quality is likely to improve as organisations gain more experience with the reporting framework and strengthen their climate risk management processes.
Valuable Insights from More Mature Reporters
Public corporations and government-owned companies that have been producing climate-related disclosures since 2022 are already generating useful information about the resilience of public services and infrastructure.
Their experience highlights the benefits of embedding climate risk assessment into wider financial and strategic planning, enabling organisations to better understand future pressures and investment requirements.
The review assessed 31 bodies considered most likely to face significant climate-related risks, including:
- 25 organisations reporting under HM Treasury guidance
- Six organisations reporting under Companies Act requirements
Each organisation was assessed against the appropriate disclosure framework.
Key Areas of Insight
Through the review process, auditors gained a deeper understanding of:
- The government's overall response to climate-related risks.
- The maturity of sustainability reporting across central government.
The findings provide an important baseline for measuring progress in future years as climate risk reporting becomes more established across the public sector.
Who Should Read This Report?
The report has been designed to support several key audiences across government and the wider public sector.
Members of Parliament
MPs can use the findings to scrutinise how government organisations identify and manage climate-related risks, and to assess the implications for public services, public spending and long-term national resilience.
Senior Government Leaders
Board members, accounting officers and audit committee members can use the report to consider whether they are receiving sufficient information to support decisions about risk management, organisational resilience and resource allocation.
Preparers of Climate-Related Disclosures
Finance, sustainability and governance professionals responsible for producing climate-related reports can use the findings to identify common reporting challenges and opportunities to improve disclosure quality.
Why It Matters
Climate change is increasingly recognised as a financial, operational and strategic risk for public sector organisations. The introduction of mandatory climate-related financial disclosures marks a significant step in improving transparency and accountability across government.
While the latest reporting highlights varying levels of preparedness, it also provides a stronger foundation for understanding how climate change could affect public services, infrastructure and public finances in the years ahead.
As reporting frameworks mature and organisations build their capability, climate-related disclosures are expected to become an increasingly valuable tool for strengthening resilience across the public sector.
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