Climate change is no longer a distant or emerging issue for the public sector. Extreme weather events, rising insurance costs, infrastructure damage, and increasing demand pressures are changing how public sector entities operate today.
Mandatory sustainability reporting applies to 9 Queensland state owned companies this reporting year. Queensland Government departments, statutory bodies, local governments, universities, and not-for-profit entities registered with the Australian Charities and Not-for-profits Commission are not required to prepare sustainability reports. These entities should engage with Queensland Treasury and the Queensland Audit Office if they decide to voluntarily prepare a sustainability report.
In this blog, we outline why climate risk governance matters, what entities are reporting, and what good governance looks like.
Climate risk is already an important issue
The World Economic Forum’s global risk report for 2026 listed extreme weather events as a top 10 risk for the short term (one to 2 years), and for the longer term (10 years). It also identified that more frequent and intense weather events are significantly impacting critical infrastructure.
Climate risks include:
- physical risks such as floods, cyclones, bushfires, and heatwaves
- transition risks arising from changes in policy, regulation, and market expectations
- reputational and legal risks linked to climate-related disclosure and governance practices.
These risks can have direct financial and operational consequences, including unplanned expenditure, asset impairment (where an asset is worth less than what is recorded), accelerated asset depreciation, higher insurance costs, and impact overall service delivery.
For the public sector, climate change is much more than a corporate social responsibility issue. Strong climate risk governance should be a core element of public sector stewardship. While boarder reporting requirements are still evolving, it is better practice for all entities to effectively identify and manage their climate-related risks, regardless of their obligation to publicly report.
These risks are not confined to a single sector or function – no portfolio is unaffected.
The data already exists
Early sustainability reporters consistently show that they are not starting from zero. Information about climate exposure is often already captured in existing systems, including:
- enterprise risk management frameworks and risk registers
- asset management systems
- incident and disruption data
- maintenance and insurance records.
What is often missing is consolidation of this information. For example, entities may already track flooded infrastructure, service disruptions, heat-related hospital admissions, emergency response costs, and asset damage from extreme weather. And while these issues may not yet be labelled or grouped as ‘climate risks’, entities are already managing them through day-to-day operations. Linking data to forward estimates about the frequency of asset replacement, impact on costs and fees charged, and the financial prospects of the entity is the missing piece.
Sustainability reporting and stronger climate governance do not create new risks. They bring existing risks together into a more structured, forward-looking framework that links risk management, financial planning, asset management, and service delivery resilience.
Governance is the critical enabler
Good governance is central to managing climate risks. Where a risk is foreseeable, entities have a responsibility to consider and manage it. Strong governance supports entities in meeting their fiduciary responsibilities, financial management obligations, and emerging sustainability reporting expectations.
Effective climate risk governance typically includes:
- reviewing and consolidating climate risks within enterprise risk management frameworks
- clearly assigning accountability for climate related risks and opportunities
- establishing reliable data collection processes and internal controls
- using data to inform capital planning, asset investment, and resilience decisions.
These governance practices shift climate risk from being treated as a standalone environmental issue to being managed as a core financial, operational, and service delivery consideration.
Oversight matters – regardless of reporting obligations
Even where public climate reporting is not mandatory, public sector entities need clear oversight of climate-related risks and opportunities. Oversight responsibilities should be explicitly assigned, documented, and embedded in governance arrangements.
For statutory bodies, risk oversight may sit with the board, an audit and risk committee, or another designated committee that is established for this purpose, such as a sustainability or risk and sustainability committee. For departments, oversight may rest with the Director-General, an executive leadership team, or a governance committee.
What matters is clarity. Assigning and documenting responsibility for climate risk oversight strengthens accountability and reduces the risk that significant issues are overlooked or assumed to be managed elsewhere.
Governance bodies should also assess whether they collectively have the skills and capability to understand climate-related financial, operational, and service delivery impacts. Where they identify gaps, providing targeted training and ongoing professional development for board or committee members can support more informed oversight and decision-making. Recruiting new board and committee members with these skills, and assigning members to relevant committees, can also help ensure they can effectively manage climate-related risks and opportunities.
Asking the right questions
Strong governance starts with asking the right questions. Governance committees should ask entity management whether:
- climate risks are embedded in enterprise risk management frameworks
- climate considerations inform capital investment, procurement, pricing, and service delivery decisions
- both physical and transition risks, and their financial impacts, are understood and risks have treatment plans in place
- disclosures are balanced, evidence-based, and not misleading
- systems, controls, and assurance processes support reliable and defensible reporting.
For governance committees, the central question is: ‘are we confident that we have identified our climate risks, and assessed and managed them with the same rigour as other important financial and operational risks?’
If the answer is uncertain, this is where oversight attention should focus.
These are not operational questions. They are oversight questions focused on accountability, controls, and stewardship.
Entities that strengthen climate risk governance now by clarifying oversight, improving data quality, and integrating climate considerations into decision-making, will be better positioned to meet future reporting requirements. They will be more able to protect public resources, the essential services they are delivering, and the community’s safety.
Resources
Reports to parliament
Blogs
Related article
Our first blog in this series explored new climate-related financial disclosure reporting requirements, including which entities are in scope and when reporting will phase in.