ESG Reporting and Natural Capital: ESG BROADCAST shares key takeaways.
The International Public Sector Accounting Standards Board issued IPSAS 51 on January 22, 2026. This standard provides the first global accounting framework specifically for Tangible Natural Resources held for conservation purposes. It addresses a long-standing gap in public sector financial reporting by bringing environmental assets onto the balance sheet. Governments and public entities now have clear guidance to measure and disclose the value of their natural stewardship.
IPSAS 51 defines Tangible Natural Resources as naturally occurring items with physical substance that embody service potential or economic benefits. The scope primarily covers assets such as water bodies, subsoil resources, and living organisms like forests when they are held for protection. This standard distinguishes conservation assets from those held for commercial exploitation, which other standards already cover. By formalizing these definitions, IPSASB ensures that public wealth includes the environmental legacy managed by states.
The recognition criteria established in the standard require that service potential must flow to the entity and be reliably measured. Additionally, the entity must exercise control over the resource as a result of past events. For initial measurement, resources acquired in orderly markets are recorded at cost. In contrast, those acquired through non-exchange transactions or outside orderly markets are measured at current value. This flexibility allows for the accurate valuation of diverse ecosystems.
Subsequent measurement offers entities a choice between the historical cost model and the current value model for each class of Tangible Natural Resources. A significant feature of the standard is the rebuttable presumption that these resources have indefinite useful lives. Consequently, entities generally do not need to depreciate these assets, reflecting their regenerative nature. This approach aligns financial reporting with the biological reality of conserved natural systems.
IPSAS 51 includes a specific disclosure exemption to protect vulnerable environments. Entities may omit certain location or quantity details if such information could lead to the further degradation of rare or endangered species. This provision balances the need for financial transparency with the ethical responsibility of conservation. The standard becomes effective for annual financial statements beginning on or after January 1, 2028. Earlier application is encouraged to accelerate the adoption of green accounting.
The development of the standard involved years of global consultation following the initial Exposure Draft 92. IPSASB Chair Thomas Müller-Marqués Berger said: “Decisions about why a public sector entity holds natural resources have long-term financial and social consequences. IPSAS 51 helps governments better connect environmental stewardship with public finances, improving transparency around how today’s choices affect public wealth and future generations.”
Strategic significance lies in the integration of environmental stewardship into the core of public financial management. By requiring the recognition of Tangible Natural Resources, IPSAS 51 forces a move away from “invisible” natural capital toward transparent asset management. This standard provides a rigorous framework for tracking how policy choices impact national wealth and ecological health over decades. It enables market participants and citizens to evaluate the sustainability of public finances through a comprehensive ESG lens.
Image Credit: IPSASB
