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Sustainability in the public sector: building resilience

Author: ICAEW Insights

Published: 19 Apr 2022

ICAEW recently hosted a networking event on sustainability in the public sector featuring expert contributions on how to improve resilience. The importance of assessing and reporting on risk was a key theme.

Building on the success of last year’s public sector conference, ‘Road to Net Zero’, the ICAEW public sector team hosted a networking event to explore practical ways of engaging with sustainability and resilience in particular. It was a welcome return to Chartered Accountants Hall, with participants commenting how good it was to see people again in person.

The evening started with Henning Diederichs from ICAEW chairing an expert panel on resilience. Sharing their insights and practical experiences were Vicky Rock, Director Public Spending Group at HM Treasury, Stuart Bruce, Director Climate Risk and Decarbonisation Strategy at KPMG, and Alastair Brown, a consultant with Resilience First and former chief resilience officer for Glasgow. 

Rock stressed the applicability of the core principles within existing sustainability frameworks, such as TCFD, to the public sector, commenting that there was no need to reinvent the wheel when reporting on sustainability and resilience. She added that ensuring public body objectives are aligned with sustainability goals is important, and that reporting needs to encompass risks as well as opportunities in strategy disclosures, helping to hold public bodies accountable for how they are addressing their resilience to potential future shocks. Rock welcomed the role of the IFRS Foundation in taking on responsibility for sustainability standards.

Bruce was of the opinion that public sector entities would experience significant challenges in applying sustainability frameworks created specifically for the private sector. While operationally there was not much difference, the regulatory and policy remit of public bodies sets them apart, in addition to the contrast to the profit-driven nature of private entities. The use of enterprise value as a tool for assessing the relative importance of sustainability risks did not work in the public sector. 

Brown used his experience from working in local authorities, including as a former chief resilience officer for Glasgow, to focus on the local level. He stressed the importance of a joined-up approach to resilience, which brings together multiple risks across all areas of a local authority’s operations and the wider community. The potential social and economic impacts of acute shocks (floods, fire, terrorist attacks) and chronic stresses (high crime rates, housing, climate change) all need to be thought about. Cities and regions need to be resilient to a wide range of different scenarios. 

Sustainability in the public sector is an exciting space to be in

The panel agreed that sustainability in the public sector is an exciting space to be in, as it is helping to link core public sector activities to common goals. Budgeting, procurement (including on infrastructure), devising social, fiscal and economic policies and the reporting of those are core functions of government. The pace of change is fast. The political sensitivities surrounding reporting on public services was raised but the response was that this is an argument for more transparency, not less. 

There was a recognition that new skill sets are required and that training on sustainability and risk management is going to be more important going forward. However, there needs to be a tailored approach, as it would not be cost-effective for smaller entities to apply all the TCFD requirements as they would lack the expertise to do so. Bruce commented that the public sector should consider whether some elements of sustainability reporting, such as data modelling, could be carried out centrally to support smaller public bodies. 

All three panellists underlined the importance of sharing experiences and joining up internal stakeholders from operational teams across finance, risk and procurement, as well as working across all levels of government. 

The reporting of sustainability will not only have to meet demands for better scrutiny by those to whom public bodies are directly accountable, in particular Parliament, but also the wider public who want to know what is being done to ensure our institutions and communities are resilient to a wide range of potential risks.

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