Climate change duties - draft statutory guidance for public bodies: consultation

4. Putting the duties into practice

This chapter focuses on putting the climate change duties into practice. While certain actions are recommended, these should be undertaken in a way that is proportionate to the climate impact that the body has in terms of its size, assets, function and influence. Bodies are responsible for determining what is appropriate for their own organisation, and for taking such measures and actions forward in the most effective way.

The chapter starts by outlining a whole systems approach; provides a step by step model aimed at bodies who may be at a less mature stage in taking climate action; and covers leadership, governance and mainstreaming. The following chapters then look in more detail at implementing each of the three duties in turn.

4.1 A whole systems approach

Climate change is a complex problem. Coordinated actions across the whole of society are needed to achieve a just transition to net zero and make Scotland a climate resilient, healthy, equitable place to live, work and play. Aligned policy actions across a wide range of areas can deliver multiple social, economic and environmental outcomes while protecting and improving population health and wellbeing and reducing inequalities. This will support Scotland deliver against our national outcomes located within the UN Sustainable Development Goals.

Determinants and impacts are interdependent. Solutions that have positive impacts in one policy area can have unintended negative consequences in another.

Whole system approaches take systems thinking and tools and apply them to support collaborative action across a broad set of partners to address complex problems. This often involves challenging the effectiveness of current systems and focusing on the longer-term impacts, social injustices and power imbalances. These approaches involve stakeholders across the local or national system working together to build a shared understanding within a local context and agree aligned actions to deliver multiple outcomes, strategies to mitigate unintended consequences and make decisions about trade-offs.

Local authorities and other public bodies are well placed to work with communities and local partners to reduce emissions, adapt and act sustainably in a way that also maximises other policy outcomes. This will require collaboration and effective partnership working across national and local government, the public, private, third sectors, academia, and local communities. Collective and adaptive leadership will be required to agree priorities and secure commitment to deliver aligned shared outcomes.

The balance between a strategic approach to design and delivery, and enabling local solutions is challenging. Climate change plans and route maps should include mechanisms that support creativity and innovation and foster a learning culture to ensure spread and scale of effective local approaches.

A robust monitoring and evaluation framework, populated with timebound outcomes, is required to demonstrate impact on multiple policy outcomes. Monitoring and evaluation are key to learning and refining actions, ensure that intended outcomes are being delivered, equity maximised, and unintended harms minimised.

4.1.1 Key principles to a whole systems approach

There are several key principles to a whole systems approach. These characteristics are reiterated across the guidance in relation to meeting public bodies duties both within organisations and in the communities and geographical areas public bodies serve.

Principle 1: Shared outcomes

Scotland's public sector should play a key role and set an international example through:

• ensuring that the transition to a low carbon economy is a just one. Public bodies should embrace the opportunities the transition offers to realise multiple outcomes across sectors, for example delivering wider social, health and equity benefits consistent with the NPF outcomes and just transition principles. The Just Transition Planning framework may be a helpful resource to aid planning
• building a resilient Scotland prepared for the challenges of the changing climate, biodiversity loss, health, social and economic challenges
• using their wider influence to further climate action in the wider community through engagement with service users, suppliers, the third sector, local businesses, community groups and other stakeholders
• ensuring that we meet the needs of the present without compromising the ability of future generations to meet their own needs, in line with the UK Shared Framework for Sustainable Development (see section 7.3).

Principle 2: Leadership

Through exercise of their wider functions and community engagement, the public sector has a leadership role in Scotland's response to climate change. Local authorities, for example, are thought to have influence over around a third of emissions in their authority area^[20]. Public sector influence comes from procurement of goods, works and services; investments; Planning; policy making, regulation and wider partnership working; public engagement and place making.

As well as reducing their own corporate emissions, public bodies have a key role to play in leading by example and promoting climate change action more widely. Strong leadership at all levels will be crucial if Scotland is to meet its ambitious climate change targets.

Principle 3: Effective and efficient

Knowledge, intelligence and evidence should underpin adaptation and mitigation plans and route maps. This should include data and intelligence about climate risks and the effectiveness of climate actions. It should factor in social vulnerability, protected characteristics, the health of the local population as well as the building blocks for health - such as poverty, access to services, housing and natural capital. Community voices should feature in this data and intelligence.

Keeping abreast of data and evidence is essential if public bodies are to understand climate change issues and methodologies for tackling these. Public bodies should use evidence-based policy and decision making to identify priorities and in due course demonstrate compliance with the duties. It is also important that public bodies have information about the communities they serve, and the people they employ, in order to champion climate change mitigation and adaptation in the broader sense.

Public bodies may wish to make use of existing mechanisms in relation to corporate planning processes and existing reporting arrangements where possible, in order that planning and reporting on progress is done in an effective and efficient way, and so that public bodies are not required to duplicate work. The guidance also has regard to proportionality: what is expected of public bodies should be a reflection of their impact and influence, as well as the nature of what they do, in order to balance proportionality and flexibility with effectiveness and delivery.

This approach to implementing the climate change duties seeks to mainstream climate change action across organisations and make it a natural part of decision-making processes, with the aim of keeping associated potential costs as low as possible. Reducing emissions through, for example, improved energy efficiency may also contribute cost savings.

Principle 4: Collaboration and partnership working

Public bodies should ensure stakeholder participation when planning and implementing actions in relation to the climate change duties. Just transition principles include the need to develop and maintain social consensus on climate action, through engagement with workers, communities, NGOs, business, industry and any other relevant groups.

Public bodies are encouraged to work together through existing mechanisms, such as Community Planning Partnerships and Regional Transport Partnerships, or through devising new partnerships, and to explore opportunities for building capacity, sharing best practice and involving of a broader range of delivery partners.

Principle 5: Open and accountable

Public bodies should be open and transparent to enable the Scottish Government, the Scottish Parliament and the wider community to understand their plans in relation to climate change action and to determine progress.

Public bodies should determine their own priorities and plans in relation to climate change. The guidance aims to offer suggested actions which empower public bodies themselves to deliver the duties in a way which best meets their own circumstances and those that they deliver services to.

Principle 6: Building capacity and capability

Knowledge and research about climate change and what is effective in tackling it are growing all the time. While taking timely and effective climate action can be a formidable task, it also brings many opportunities and supports improved health, wellbeing and equity. In taking forward their responsibilities, public bodies should consider how best to build capacity both within their organisation and in the wider communities they serve. Building capacity to take action on climate change should be a core action for public bodies. This may mean looking at embedding new approaches and cultures across their operations or creating or improving capacity in relation to specific tools or projects.

Cultural and behavioural change among organisations and employees will be a key part of successful climate change action. Cultural and behavioural change have been shown to be most successful when seen as a joint endeavour where individuals are equal partners in collective action towards the same goal, with mutual benefits for both employer and employee. One example is encouraging and supporting employees to consider alternative methods of travelling to work, such as walking or cycling, which will not only help them to live longer healthier lives but also assist the organisation in reducing its carbon footprint. Public bodies should consider how they will work with their staff as joint partners in promoting cultural change, in order to achieve buy-in to action throughout the organisation, and identify those areas of activity which would both help meet their climate change duties and have positive effects on employees' everyday lives.

4.2 Implementing the climate change duties: a step by step method

It is crucial that climate action and sustainability are mainstreamed in all public bodies' business processes and functions. To do this effectively, public bodies should set targets and milestones and integrate climate and sustainability into business practice, through their existing processes and procedures.

Many bodies will be at a mature stage, and will already have successfully integrated climate action into their corporate structures and processes. However, other bodies may be at a less advanced stage, or may have made more progress in some areas and less in others. The step by step approach outlined below is intended to assist those bodies requiring support. It is not intended to be prescriptive, or to replace approaches bodies may already have developed and successfully implemented themselves.

Chapters 5, 6 and 7 provide guidance on the actions that all public bodies are expected to take to help ensure compliance with each of the three climate change duties.

Further topic specific guidance will be contained in the supplements accompanying this guidance, aimed primarily at practitioners working in each field (see section 1.4).

4.2.1 A step by step method: key outcomes

Mainstreaming of climate change into strategic and corporate processes and actions is the overarching goal for public bodies to work towards. However, it is acknowledged that public bodies will be at different stages of development and understanding of climate change action, and that effective mainstreaming could require more time and effort for some bodies than for others.

Addressing climate change is an ongoing process. To reflect this, the step by step process has been developed into a cyclical diagram (with Step 1 following Step 4 in a new cycle), representing public bodies' continual evaluation of and building upon their climate change and sustainability action. However, the steps can also be undertaken concurrently as developing knowledge and individual areas of action inform new or revised approaches to embedding climate change action.

Figure 2: a step by step method

Further details on what is involved in each step are provided in figure 3 below.

Figure 3: A step-by-step approach for public bodies to climate change action

4.2.2 Step 1: Understanding the duties

In order to deliver the climate change duties effectively, public bodies need a good understanding of the legislative and policy context influencing action on climate change in Scotland, as set out in chapter 2. Public bodies should be mindful of key drivers to reduce greenhouse gas emissions, adapt to the changing climate and act sustainably.

The climate change context is continually evolving. For the latest position please refer to the Scottish Government website.

More information on:

• the importance of reducing greenhouse gas emissions can be found in section 5.2 below
• the importance of adapting to the changing climate in sections 6.2 and 6.3
• acting sustainably in section 7.2.

4.2.3 Step 2: Assess climate impacts

Public bodies are required by the 2009 Act to consider the climate change duties in 'exercising their functions'. Step 2 explores how to assess a public body's impact and influence on greenhouse gas emissions, how to understand the impact of the changing climate upon a public body as an organisation, and a public body's influence in preparing Scotland for a changing climate.

Impact and influence on emissions

Public bodies have a direct impact on emissions through management of their staff and estate, and how they carry out their daily operations. In addition, the way bodies carry out their functions, the decisions they make and their engagement with stakeholders means that they have a much wider influence on GHG emissions. It is important that public bodies understand this indirect impact and wider influence, and how they can address GHG emissions through their influence.

Chapter 5 provides further details on reducing GHG emissions, and chapter 8 provides guidance on reporting. Sections 4.6 and 5.5 provide further guidance on wider influence.

Adapting to the impacts of the changing climate

The impacts of climate change will be felt by all organisations, their staff and the communities they serve irrespective of their size, location, activities and services. Public bodies depend on secure supply chains, resource supplies (energy, water, materials) and infrastructure and these are likely to face risks related to the changing climate. To operate effectively, public bodies must become resilient to climate change. Understanding the changes and how these changes could impact on the day to day running of the organisation is a useful starting place (see chapter 6).

Through carrying out their functions, some public bodies will play a central role in preparing Scotland for a changing climate, for example planning authorities taking account of flood or drought risk in local development decisions. Public bodies can also influence Scotland's resilience by, for example, protecting ecosystem services such as natural flood management. Another key role for public bodies will be in influencing and supporting the resilience of individuals and communities to the impacts of climate change, for example by building adaptive capacity through raising awareness of impacts and community consultation as part of the adaptation planning process, and by ensuring people have the resources, skills and opportunities to adapt.

Chapter 6 provides further details on adapting to the changing climate. Section 6.3 is aimed at those at a lower level of maturity in relation to adaptation action, while section 6.4 provides more technical guidance aimed at public bodies with greater adaptation needs, owing to the size or nature of their organisation, or because they deliver essential services.

Functions

All functions of a public body need to be examined in relation to their impact and influence on GHG emissions, and how the changing climate could impact on those functions. The wide range of public sector functions can be grouped into three high level generic areas: corporate, policy and delivery. Public bodies should also consider how a changing climate might impact on the measures they have in place under each of these areas, and on action to reduce emissions.

• Corporate functions - include business planning, staff management, estate and fleet management, finance and budgeting, and procurement
• Policy – includes policy making, decision making, influencing and consultation functions of public bodies
• Delivery - includes regulation, spatial planning, education, advice, awareness, engagement, grants, funding, subsidies, licensing, research, monitoring, science and other service delivery such as waste collection, healthcare and recreation.

Acting sustainably

Public bodies must also ensure they are acting sustainably through their actions and through the decisions they make, including procurement decisions. To do this effectively, bodies should robustly and transparently integrate sustainability into their decision making and other processes.

One approach to integrating sustainability into the decision-making process could be through the use of appropriate impact assessments.

Further guidance is provided in chapter 7. The 'Sustainable Procurement' supplement will, in due course, provide guidance on procurement, the sustainable procurement duty and related tools and resources.

4.2.4 Step 3: Plan and Take action

Mainstreaming means integrating climate change into the everyday work of a public body at all levels including senior management, policy makers, service delivery and external partners. This will require strong leadership and robust and transparent governance, as outlined in chapter 4. Strong governance, leadership and commitment within the public sector is vital.

As outlined in chapter 5 below, bodies should develop appropriate strategies, plans and route maps, and set targets, to clearly lay out their journey to net zero carbon. Bodies should report on their performance against their targets, to track progress and ensure that they remain on course.

As detailed in chapter 6, bodies should undertake climate related risk assessments, and develop an adaptation plan. Climate related risks should be included in corporate risk registers.

Acting sustainably will mean building in sustainability principles across a public body's functions and decision-making processes and considering the principles of sustainable development in setting out plans and priorities, as outlined in chapter 7.

To take effective climate action, bodies will need to work with others: other public bodies, the third and private sectors, communities and the public. Bodies are encouraged to work together through existing mechanisms such as Community Planning Partnerships and, where applicable, regional adaptation partnerships; and to pro-actively seek out new opportunities and partners for collaborative action.

4.2.5 Step 4: Reporting

It is important that public bodies monitor how they are doing in respect of their climate change duties to gauge progress and to make adjustments if necessary. They also need to be accountable for this to stakeholders, Scottish Ministers, the Scottish Parliament, audit and regulatory bodies, and their communities. Transparent and open reporting is a crucial element of maintaining public confidence in the performance of a public body. It will also assist a public body in demonstrating that it has complied with its climate change duties.

Public bodies are used to reporting their performance across many aspects of their functions. Bodies are expected to ensure that their reporting addresses the progress they are making in relation to climate change and sustainability action. It is important that their reporting is linked to the outcomes, indicators and targets for climate action set through the body's business planning process (see Step 3: Take Action). This will enable public bodies to review when and where adjustments in policy and practice might be required over time.

All public bodies are expected to report annually on their climate and sustainability performance, and to ensure that such reports are publicly available. Refer to chapter 8 for further guidance on reporting.

4.3 Leadership and governance

4.3.1 Leadership

The public sector has a critical role in helping Scotland to reduce greenhouse gas emissions, make a just transition to a low carbon economy and prepare for the future climate. Strong governance, leadership and commitment within the public sector is vital to ensure that Scotland meets its targets and commitments.

Public bodies have an important leadership role to play as:

• corporate organisations with estates, fleet and staff
• bodies delivering national, regional and local services
• bodies with considerable influence over policy, infrastructure, stakeholders and the general public
• anchor organisations with significant influence on local places and communities through employment, environmental sustainability, land and assets, and service design and delivery
• bodies with significant collective annual budgets and buying power, as buyers with considerable influence over their supply chain, suppliers, logistics, the circular economy and waste management, and the related carbon emissions
• partner organisations working across wider regional areas or delivery programmes
• trusted messengers.

By showing clear leadership through the way that they deliver their functions and use their influence, public bodies can help drive wider positive change, fulfil their climate change duties, and in doing so make a significant contribution to delivering Scotland's climate change targets and programmes. Public bodies should become exemplar organisations in terms of climate action, driving innovation, stimulating the market and creating the culture and conditions to enable the private sector and wider society to take the necessary action.

Actions taken in response to climate change have the potential wider linked benefits of improving population health and wellbeing, reducing health and social inequalities, protecting health and improving air quality as well as enhancing biodiversity and protecting the environment. Public bodies should actively take impacts on these wider outcomes and the interconnectedness of ecosystems into consideration.

4.3.2 Corporate leadership

In addition to the essential points above, as best practice, public bodies could consider:

• appointing a Chief Sustainability Officer with board-level responsibility, or equivalent. This could help embed sustainability within the organisation by creating a structure similar to other corporate functions such as procurement, finance or HR
• implementing an Environmental Management System based on relevant ISO standards (ISO 14001, 26000, etc.) or equivalent to assist in the continuous improvement of environmental performance. With leadership at the centre of the model, it also allows for proactive management of environmental risks and opportunities, reducing impacts, increasing compliance, and a structured manner to evidence the achievement of environmental objectives
• applying for or complying with an external accreditation scheme, such as the Carbon Trust Route to Net Zero Standard
• ensuring that relevant staff receive communications training, to enable them to confidently communicate with non-experts around climate, sustainability and behaviour change.

4.3.3 Leaders as role models

In addition to their corporate role, senior leaders also have significant influence as individuals. Members of an organisation will look to their leadership, take cues from their behaviour and model their actions. The behaviour of, and choices made by, leaders influence organisational culture. It is essential that senior leaders 'walk the talk' and demonstrate a commitment to their organisation's climate action and targets through, for example, how they make and prioritise financial and other decisions, how they travel for business, and in their support for and compliance with internal environmental and climate policies. Organisational culture will not shift in relation to climate change if employees and stakeholders see leaders treating it as low priority or as optional.

4.3.4 Governance

Governance can be described as the system and processes by which organisations are led and controlled, including the processes for making and enforcing decisions. Good governance provides leadership, empowerment and strategic oversight.

It is also essential to ensure accountability and fairness. A key element of governance is risk management, enabling the organisation to plan and respond effectively to changes, both internal and external. Particularly for public bodies, good governance should ensure transparency and is vital to maintaining the trust of staff, stakeholders and the public.

Public bodies work within a wide range of statutory duties and compliance regimes, including the climate change duties. Governance should ensure that such obligations and compliance are met, including in relation to the conduct of the governance boards or committees themselves. Supporting the governance structure are governance processes: the systems and procedures used by the public body to provide oversight of risks and control measures. The systems used should monitor performance and alert boards and management if there is an increased risk of failing to meet statutory duties.

Public bodies should ensure that appropriate internal governance structures are in place in relation to climate change and sustainability. Climate change governance should be mainstreamed and embedded into the corporate governance structure. Such arrangements will vary by the size and nature of the body. For small bodies, oversight by their Board may be considered adequate. For larger or more complex bodies, extended lines of governance spanning different functions and management levels within the organisation are likely to be required.

In all cases it is essential that the climate governance structure is clear and that responsibility is assigned to named roles and individuals to ensure accountability. Ultimate responsibility and oversight should lie with the most senior level of leadership.

The governance structure should be clearly laid out in the body's corporate strategy or equivalent document, and should be available to staff, stakeholders and to the public.

Establishing a climate and sustainability steering committee or group can be a useful approach and provide a level of dedicated focus to drive climate action across the organisation. Steering groups should include representation from all key parts of the organisation, to ensure that climate change is embedded across all areas. These include both areas responsible for operational emissions and those that have a wider role in influencing climate action by the stakeholders, suppliers and communities that the organisation works with. They should have clear outputs or deliverables aligned to setting or meeting the organisation's targets. However, care should be taken to ensure that climate change is mainstreamed and not seen as the remit only of these specialist sub-groups: climate change action should be embedded fully into the corporate governance structure.

Public bodies should proactively engage with the audit process in relation to climate change, to help drive improvement, identify areas of weakness and increase the robustness and effectiveness of their climate governance. Taking action to strengthen a public body's governance, leadership and commitment in regard to climate change will significantly contribute to the successful implementation of the climate change duties. Further guidance on the role of audit is provided in section 4.7 below.

General guidance on governance has been published by CIPFA: International Framework: good governance in the public sector.

4.3.5 Risk and opportunity

Risk management is a key element of governance, enabling the organisation to plan for and respond effectively to changes. It is the process of taking actions to reduce, mitigate or avoid risk, for example by putting measures in place to decrease the likelihood of an event occurring, or to reduce the negative consequences if it does. In positive terms, it can also involve ensuring that bodies plan for and are ready to take advantage of the opportunities offered by an event or change.

All public bodies will have risk management processes in place, and should ensure that climate related risks and opportunities are identified, assessed and managed as part of their mainstream corporate risk management system. Public bodies should take a broad and thorough approach to identifying climate risks. Examples relevant to public bodies may include:

• Compliance risks – the risk of being in breach of regulations, potentially resulting in regulatory action or fines. An example might include more frequent heavy rainfall events resulting in increased discharge of untreated waste water to sea by the water company, with subsequent fines from the water quality regulator, loss of stakeholder trust and reputational damage.
• Legal risks – the risk of being in breach of the law, leaving the body open to legal challenge. For example, if a public body made no attempt to reduce its greenhouse gas emissions, or made decisions that resulted in a significant increase in emissions, it could be open to legal challenge in the courts.
• Reputational risks – these are risks that threaten the public standing of the body, or trust in the body. For example, if a public body set corporate net zero targets but then failed to put in place action plans to work towards these or make any progress, this would likely result in loss of public trust and confidence, and damage to the reputation of the body.
• Strategic risks – strategic risks can occur when a strategy is flawed, or where leaders fail to follow the strategy. As an example, if a health board failed to consider the changing climate in its long term estate strategy, and did not consider the adaptation measures required, it could find in the future that its main hospital campus was no longer fit for purpose or able to cope with extreme weather events. This could result in the health board being unable to fulfil its primary purpose of delivering emergency and planned health care services.
• Financial risks – financial risks can occur when an organisation fails to undertake adequate financial planning and costing. It is highly likely that the changing climate will impose costs on organisations. These could include direct costs related to, say, repairing storm or flood damage; or more indirect costs such as the investment needed to adapt buildings and infrastructure to the changing climate or to relocate buildings away from flood plains. While the investment needed to upgrade and adapt assets to the changing climate can seem high, this often constitutes preventative spend, resulting in savings in the long term as the costs of retrospective action may be much higher. It is also important that public bodies understand the concept of 'spending to stand still' - i.e. the level of investment required to ensure that services can continue to be provided at the agreed level over the coming decades in the context of the changing climate - and incorporate this into their financial planning (see section 6.4.6.2).
• Operational risks – operational risks threaten business as usual activities. They can include damage to assets, or risks that threaten the delivery of a service. For example, an extreme weather event such as a major storm may cause flooding, knock out power lines and prevent public transport from running, all of which could prevent the delivery of at-home social care services as well as directly impacting on vulnerable service users. Operational risks may also impact on supply chains. For example, the manufacture of computer chips is a water intensive process, and global supply of such essential IT components could be impacted by drought in the country of manufacture. This could lead to, say, issues with sourcing laptop computers, which are now essential for the day to day running of many organisations.
• Physical risks – physical risks threaten physical assets including buildings and infrastructure, and people. As the changing climate increases the likelihood of hotter, drier summers, the incidence of wildfires is likely to increase. For a public body with large landholdings, this could result in commercial timber crops being lost to wildfire. The body would lose income from sale of the timber and could incur costs clearing and replanting the area and repairing damage to boundary fencing.

It is essential that climate risks and opportunities are incorporated into the existing risk management process. Public bodies are likely to manage risk at various levels, and have separate risk registers for different functions and activities ranging from project risk registers to overarching strategic risk registers. Climate risks and opportunities should, where appropriate, be escalated to higher levels within the risk management structure to ensure that they are given due consideration. Bodies will have different appetites to climate risks, dependent on the nature of their functions and on the risks they have identified. This appetite will, in turn, influence the measures bodies chose to take and the priority placed on specific reducing risks.

Refer to chapter 6 for further guidance on the assessment of climate risks.

Further general guidance on risk management can be found in the Scottish Public Finance Manual. Guidance on management of risk in government has been published by the UK Government. The HM Treasury Orange Book provides guidance on the principles and concepts of risk management.

4.4 Mainstreaming

If climate change is to be tackled effectively, it should be mainstreamed across all areas and decisions – public bodies cannot take a siloed approach. Mainstreaming the climate change duties means ensuring that climate and sustainability issues are considered in everything the body does, and in how it makes decisions. Climate and sustainability considerations should be integrated into the everyday work of the public body at all levels, including senior management, policy makers, service delivery, procurement functions and external partners. Historically, climate change has often been seen as the reserve of specialist functions such as facilities management. Public bodies should work to ensure that all functions understand how their work contributes to, and is impacted by, climate change; and how in turn they can contribute to the organisation's climate response and act in the most sustainable way.

The climate change duties can be used as a lever, alongside other statutory duties and obligations, to drive continuous improvement. A useful parallel can be drawn to equalities law, and the approach that public bodies have taken to mainstream the three needs of the Public Sector Equality Duty (PSED). In implementing the PSED, public bodies have worked to embed equalities into their leadership and governance structures, staff training programmes, organisational culture, internal processes and corporate performance indicators. Public bodies should build on approaches to delivering the PSED to ensure that climate change and sustainability are equally embedded across the organisation. Climate change and inequalities are interlinked, and bodies are recommended to consider them together, as outlined in chapter 3 above.

A second useful example can be drawn from the implementation of health and safety legislation. Health and safety is, rightly, seen as an area where compliance is essential – this is reflected in governance arrangements, and the clear assignment of overall responsibility to named senior leaders. Employees have a duty to contribute to both their own health and safety, and that of the overall organisation; and structures can be put in place to support this. General mandatory training is required for all employees, with further specialist training for particular roles.

There are clear links between an organisation's response to climate change – in particular the adaptation measures put in place to manage the risks posed by the changing climate – and aspects of health and safety. Public bodies should consider if the existing governance structure and processes that ensure their compliance with health and safety legislation could be revised to include relevant aspects of compliance with the climate change duties.

The examples above were selected, in particular, to illustrate the weight that public bodies should be giving to compliance with the climate change duties. The duties should, from a leadership perspective, be thought of as an area of compliance with equal weight to equalities and health and safety, and should be fully mainstreamed in an equivalent way. Under the 2009 Act, compliance with the climate change duties is a legal obligation.

4.4.1 Organisational capability and maturity

It is important that senior leaders have a clear understanding of their organisation's capability and maturity in relation to climate action. Leaders should undertake regular assessments to identify strengths and weaknesses in their organisational response to the climate and nature emergencies, and identify areas where further action is needed.

A useful tool for undertaking such an assessment is the Leader's Climate Emergency Checklist co-developed by Scottish Government, SSN, the Improvement Service, NHS and other public sector partners, published on the SSN website and illustrated in Table 1 below. Adaptation Scotland have produced an Adaptation Capability Framework which identifies four key capabilities for a body's adaptation journey, and the tasks to develop over four stages from starting to mature (refer to section 6.3.2).

The Leader's Climate Emergency Checklist is based on the mainstreaming of climate action within standard corporate structures and systems, and is designed as a capability framework. It facilitates assessment of performance in key areas including governance, finance, skills and delivery, and lays out a maturity pathway for each. Organisations are likely to find that their maturity varies across different areas, so regular assessments can help track improvements in performance and identify areas to prioritise action. The checklist will assist leaders to understand legislative responsibilities and align with national and local policy developments while ensuring a just transition that delivers sustainable benefits for Scotland's people and environment.

Table 1: Leaders Climate Emergency Checklist (taken from the SSN checklist)

	Foundation (structured and focused)	Advanced (comprehensive and professional)	Exemplary (innovative and transformational)
Strategy	Action on climate change is a strategic corporate priority.	Key areas for action have robust strategies in place to inform delivery.	Climate change is embedded in all organisational strategies and plans, and shapes decision making and resource allocation.
Targets	Targets set with clear baselines, boundaries, inventories and interim targets, supported by delivery pathways and aligned with national policy objectives.	Targets and outcomes set for key functions of the body, including procurement and supply chains, upstream and downstream impacts of the body's functions.	Targets and outcomes go beyond net zero, aimed at regenerative and holistic sustainability transformations.
Governance	Structures are in place to ensure oversight, accountability and transparency in climate-related decision making.	Climate change embedded into decision making at all levels, with evidence reported of how this influences decisions on plans, projects and resources.	The body is proactively influencing partners, citizens and stakeholders to drive change at scale, locally, regionally and nationally
Delivery	Climate action incorporated in policy development and service design, with policies and projects in place and actively managed.	Coordination of delivery across service areas and projects to maximise benefits and avoid unintended consequences.	Working collaboratively to align and scale policies, projects and partnerships on climate action
Finance	Investigating how to align spend with targets and steps being taken to progress.	Understanding of how to align spend with targets. Finance gaps identified and work underway to secure resources.	Resource and spend clearly aligned with targets, climate impact of investments being managed, and collaborations in place to leverage in resources.
Performance	Mandatory climate change reporting used to inform delivery and communicate progress.	Progress on climate change is part of regular performance monitoring and accounts and corrective actions taken.	Monitoring is above and beyond mandatory requirements and reporting is shared and reviewed with stakeholders.
Skills	Key staff aware of how climate change is part of their roles and responsibilities.	All staff understand how climate change fits into their activity and key staff taking action to embed climate change.	All staff empowered to act and contribute to climate targets and outcomes.

4.4.2 Organisational culture

Organisational culture relates to shared values and behaviours in the workplace. Culture can include the way things are perceived in an organisation, and extend to the way that people think and act. Culture therefore effects the way that employees interact with each other and with stakeholders, and how a body fulfils its functions and influences its stakeholders.

Mainstreaming climate change and sustainability thinking within the culture of an organisation can be encouraged by:

• senior management demonstrating visible leadership in this area and by linking climate change and sustainability performance to the objectives of senior leaders to ensure clear accountability
• ensuring leaders undertake suitable carbon, biodiversity, sustainability and climate leadership training
• introducing mandatory climate, sustainability and biodiversity training for new staff as part of their induction, rolling out mandatory training to existing staff and ensuring that refresher training is delivered at regular intervals
• providing specialist training for roles where an additional level of knowledge is required, or where staff are keen to deepen their knowledge; and by creating opportunities and roles for staff at all levels to take a leadership role on climate or sustainability action
• cascading climate objectives down to team and individual level to ensure every role contributes to the organisation's climate response
• using points such as the development or revision of plans and programmes as an opportunity to reconsider how services are delivered and to actively engage with stakeholders to seek low carbon and more sustainable models
• using procurement as an opportunity to embed sustainability including circular economy aspects into contracts and ensuring ongoing supplier and contract management to realise and measure progress
• ensuring staff receive regular communications around the organisation's climate performance
• providing opportunities for staff to feedback to the organisation, to make suggestions and for innovation to be fostered
• reporting on climate change and sustainability initiatives such as training and integration into the staff performance management system in annual reports.

4.4.3 Capacity building

For climate change to be successfully mainstreamed, most public bodies will need to build the capacity of their existing staff. While use of specialist external consultancy will continue to be appropriate for some projects, public bodies are strongly encouraged to invest time and resource in building the knowledge and skills of their own staff. This should offer best value for money in the longer term, provide valuable opportunities for staff development and result in an appropriately skilled workforce, increasing the resilience of the organisation and the public sector as a whole.

Leaders should ensure that staff are given the time and training opportunities to ensure the workforce is climate literate. Public bodies should consider delivering general climate, carbon, biodiversity and sustainability training to all staff. In addition, practitioners working in functional areas are likely to require more specialist and technical training, for example Climate Literacy for Procurers e-learning is available on the Sustainable Procurement Tools website. It is important that all staff understand that every role and function has an impact on climate and sustainability, albeit some roles more directly than others. Staff should be given the time to consider the climate and sustainability impacts of their area's core functions, and managers should ensure that these are reflected in performance indicators and objectives.

Due to the importance of training across organisations some public bodies have worked with external providers to seek a 'Train the Trainer' approach, with a smaller group attending external training courses and then being able to train others within their organisation. This approach can be very effective and save costs while maximising impact. Examples include the Carbon Literacy Project and training offered by the Royal Scottish Geographical Society. Historic Environment Scotland are establishing a new national hub for retrofit of traditional buildings which will deliver training. Sniffer offer training on becoming climate resilient.

There is a depth and breadth of knowledge and experience across the Scottish public sector. Bodies are strongly encouraged to actively seek out opportunities to work with and learn from other organisations, and to share their knowledge in turn. Staff should be encouraged and supported to engage with practitioners' networks and forums, maximising opportunities for peer to peer learning. Opportunities may be found in membership organisations, professional groups, the Public Sector Climate Adaptation Network and through the SSN.

4.4.4 Organisational KPIs

To ensure that climate change and sustainable development are fully mainstreamed into an organisation, bodies should include climate change and sustainability performance in their key performance indicators (KPIs). These should have a clear link back to the body's climate change and sustainability plans and targets, but may also focus on more specific areas of climate and sustainability action that are the priority for the current period, for example those that form part of the action plans for the coming year.

For some areas, such as mitigation, it is easier to have directly measurable KPIs. For other areas such as adaptation, this is more challenging. In the absence of directly measurable KPIs, bodies should consider the use of intermediate or proxy indicators. Process or structural indicators can also be helpful in demonstrating change ahead of longer term outcome indicators.

KPI performance should be regularly monitored as part of the organisation's overall performance management, and action taken if performance is going off track. Annual performance against KPIs should be included in the body's annual corporate report or equivalent.

Examples of typical KPIs could include:

• Emissions reductions: reporting performance against targets for scope 1 direct emissions and scope 2 emissions; against specific targets relating to the decarbonisation of buildings and fleet; against an overall net zero target; and against specific targets that might be set for scope 3 emissions, for example those related to procurement, business travel or investments. Bodies could consider a targeted approach to procurement emissions, for example by focusing on their largest suppliers or priority product categories in terms of annual spend per year.
• Capacity building: reporting performance related to staff training, such as the number or proportion of staff who have received carbon and biodiversity training, or the number of senior leaders who have received climate leadership training.
• Adaptation: bodies could consider developing indicators that relate to SNAP outcomes they can contribute to, as illustrated in sections 6.3.4 and 6.4.6.1, e.g. the number or percentage of traditional buildings on their estate that have been climate risk assessed, or the number or proportion of third party organisations in receipt of grant funding, who are taking adaptation action.
• Sustainability: the number or proportion of staff who have received sustainability training; use of sustainable development impact assessments for relevant policies and plans; the number or proportion of buildings for which a sustainability assessment has been carried out.

Bodies could also set KPIs related to initiatives designed to engage service users or other stakeholders. Areas of priority focus could include, for example, procurement and contract management: KPIs could be designed to monitor use of the sustainable procurement tools, specialist training undertaken by staff, supplier engagement and the use of continuous improvement clauses within existing contracts to improve environmental performance.

4.5 Taking climate into account in decision making

There are various methods available to assist with integrating climate thinking into the decision-making process, both quantitative and qualitative. A small number are outlined below. Bodies may choose to use a single method, or a variety, as best suits their organisation, its function, and the nature of the decision that requires to be made.

Integrating climate and sustainability into the decision-making process is important to meet the duties, but also to avoid unintended consequences that may increase carbon emissions, lock in high carbon behaviour or result in maladaptation.

Scottish Public Finance Manual and HM Treasury's 'Green Book'

It is important to develop policy and take decisions with an awareness that our climate is changing. Climate projections are clear: warmer, wetter winters, hotter, drier summers, more extreme weather events and rising sea levels are all set to increase for decades to come. Many policies, programmes and projects will be directly or indirectly affected by climate impacts. Appraisal should account for such impacts, where significant, and respond to them where cost-effective to do so. Otherwise decisions will not necessarily be being based on full understanding of how public value can best be delivered over time.

Well established and updated guidance is available on how to factor climate impacts into decision making. Key sources are outlined below. It is noted these guides support that global temperature scenarios below +2 degrees of warming may be more appropriate for analysing transitional risks rather than physical risks. The HMT Green Book, Defra Adaptation Reporting Power and the latest assessments of climate risk from the Climate Change Committee all use scenarios based on global warming levels focussed on both +2 and +4 degrees by the end of the century.

The Scottish Public Finance Manual (SPFM) is issued by the Scottish Ministers to provide guidance on the proper handling and reporting of public funds: Appraisal and evaluation - Scottish Public Finance Manual

HM Treasury's Green Book is guidance issued on how to appraise policies, programmes and projects. It is not a mechanical or deterministic decision making device. It provides established thinking models and methods to support the provision of advice to clarify the social – or public – welfare costs, benefits and trade-offs of alternative implementation options for the delivery of policy objectives.

Defra has issued supplementary guidance to HM Treasury's Green Book which is tailored to climate adaptation. This guidance supports analysts and policy makers to ensure, where appropriate, that policies and projects are resilient to the effects of climate change and that these are considered when appraising options: Accounting for the effects of climate change - Supplementary Green Book guidance

4.5.1 Climate change in impact assessments

The most commonly used impact assessments are outlined in section 2.2. While a small number of these explicitly include climate, such as Strategic Environmental Assessment (SEA), many decisions fall outside the scope of these statutory assessments. Public bodies should therefore ensure that their internal assessment process adequately accounts for climate.

Strategic Environmental Assessment

SEA is required when bodies are preparing a plan, programme or strategy that deals with issues that can be considered to be of a public character (the phrase 'public character' seeks to capture the full extent of the public sector) and where the plan, programme or strategy is likely to result in significant environmental effects, which can be positive or negative. As noted in the SEA guidance, 'significance depends on the character, quality and sensitivity of the environment which will be affected by the plan as well as the scale, magnitude, frequency and certainty of the effects occurring.' ^[21] Examples of plans where full SEAs have been undertaken include Local Development Plans, Climate Change Strategies, Transport Strategies, Corporate Plans and Flood Risk Strategies.

Some plans or programmes, where the environmental effects will be minimal, can be 'pre-screened' out of the SEA process. However, the majority will require to be screened and the requirement for a SEA confirmed with assistance from the consultation authorities. Guidance on SEA is provided on the Scottish Government website, and by NatureScot, Historic Environment Scotland and SEPA. Further enquiries can be directed to the SEA Gateway mailbox.

Climate change impact assessment

One way that bodies can incorporate climate thinking into their decision-making process is through the use of climate change impact assessments (CCIA). These can use both qualitative and quantitative data to help inform and shape the decision-making process. As with all impact assessments, CCIA should be undertaken early in the overall process, and can be used iteratively as the project develops over different stages. CCIA is suitable for use on all types of projects, plans and policies, and including procurement.

Similar to the way that equality impact assessment seeks both to minimise potential harms and to maximise positive opportunities, CCIA aims to help understand and then remove or minimise potential negative climate impacts, and to maximise and promote the opportunities for positive interventions and outcomes. For example, carrying out a CCIA would typically involve minimising carbon and other greenhouse gas emissions from the project, avoiding maladaptation, and actively seeking to contribute to effective adaptation and create wider benefits that may include enhanced biodiversity, cleaner air and improved public health.

Without a CCIA or equivalent assessment no quantifiable judgement can be made, with any impacts only being captured retrospectively at best, when it is too late, increasing the risk of negative consequences on the climate, environment and other policy areas; and missing opportunities to mitigate risks.

Guidance on project or programme climate resilient appraisal is provided in the HM Treasury Green Book and the accompanying supplements.

An alternative approach could be to develop an integrated impact assessment process, where climate change is considered alongside other aspects such as sustainable development, equalities and public health. This is a more complex approach, but can ensure that issues are considered in the round. It can also be an effective method of identifying wider, less tangible benefits or unintended consequences than if climate is considered alone. This approach may be particularly suitable where a place based approach is being taken.

4.5.2 Financial decision making

It is vital that public bodies understand the climate impacts of their financial decisions and embed carbon into their business cases, budgetary processes, financial planning and reporting. If climate change is treated as a corporate priority, it will impact on how the body allocates and spends its budget, and ensure that spend is directed to where it will have the greatest impact. Public bodies' strategic planning and major budgetary decisions should be consistent with their net zero and wider climate goals, over both capital and resource expenditure.

Finance teams should be actively engaged in this process. Achieving net zero will be dependent on the processes, skills and knowledge held by the finance team. Where net zero targets and pathways have been set, finance teams will be well placed to contribute to the development of budgets and investment programmes, report on progress and to integrate climate change into the decision-making process.

Public bodies should, as best practice, align with appropriate good practice guidance. The Accounting for Sustainability Net Zero Practical Guide for Finance Teams outlines appropriate actions bodies should adopt such as:

• embedding net zero targets into decision-making processes, including budgeting and capital planning processes
• recognising the broader influence and impact that your organisation can have on local development and investment planning
• incorporating sustainability into your organisation's financing strategy and communications.

Public bodies subject to the statutory reporting duty should include information on their financial decision-making processes and alignment with net zero in their annual reports. Following a robust process, including use of the tools and methodologies outlined below or others, can help demonstrate compliance with the climate change duties.

As best practice, public bodies could consider reporting to external frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD).

4.5.2.1 Tools and methodologies to aid financial design making

Often, more sustainable and energy efficient products, services and assets carry a price premium. The principle of 'spend to save' means spending more initially to obtain a better quality product, asset or outcome that costs less to run, is likely to last longer and is future-proofed to a reasonable degree. It is important that carbon and wider sustainability factors are taken into account when making such decisions, to ensure that best value over the useful life of the asset is achieved.

CCIA, explained above, can be a useful tool to aid the financial decision-making process and could be a suitable starting point for bodies unused to integrating climate explicitly into their thinking process.

Other tools and methodologies are available. Bodies should consider and implement a proportionate approach which will best suit their own organisation. Examples include:

• carbon budgets
• including the cost of carbon in business cases
• assessment of whole life carbon, for example using the Net Zero Public Sector Building Standard, the UK Net Zero Carbon Buildings Standard, the RICS whole life carbon assessment or by following PAS 2080 (2023)
• The Institute for Climate Economics (I4CE) methodology for the climate assessment of local authority budgets
• Sustainable Procurement Tools.

4.6 Functions and wider influence

The public sector plays a vital role in enabling Scotland's transition to net zero and climate resilience. Through their varied functions, public bodies can have a wide and significant influence on emissions and climate action far beyond their organisational boundaries. Public bodies can and should act collaboratively to create the conditions by which national, regional and local targets and outcomes can be achieved.

The 2009 Act places duties on all public bodies to use the range of their functions to address climate change. Public bodies have a wide range of functions that can influence emissions and adaptation. These include spatial and transport planning, service delivery, place-making, investment, infrastructure development, economic development, funding, regulation, communications, education, community development, and partnership development and facilitation.

Public bodies must ensure that the policies and plans they develop to take climate and sustainability action encompass their wider functions.

At a local authority area level, community planning is a statutory requirement to support and enable community empowerment and place making. Local authorities have planning and financing powers, and at national and regional levels a range of public bodies have powers and responsibilities for planning, development, investment and public engagement. All of these functions need to be brought to bear to enable Scotland to increase the scale and pace of climate action and support a just transition to net zero.

The wider influence of public bodies on emissions can be categorised, in part, as the scope 3 upstream and downstream impacts of their functions. For example, when developing new housing in a locality, there will be upstream impacts due to the resources used in the construction of the housing, and there will be downstream impacts due to the emissions generated by the new households. Housing should be developed with these upstream and downstream impacts in mind, and action taken to have a positive influence along the value chain that public bodies can influence.

Another way of addressing these wider influence emissions is through the lens of place making and the need to transition to net zero places. In many local authority areas, for example, public bodies are working together to develop net zero plans and partnership on area wide emissions. Local authority place based emissions work is guided by the Greenhouse Gas Protocol for Cities and the Global Protocol on Community-Scale Emission Inventories, and can often be linked to local authority commitments, such as the Global Covenant of Mayors.

The sections below outline key areas where public bodies are likely to wield wider influence and how the climate change duties can be incorporated into these.

Anchor institutions

Public bodies, particularly larger bodies including the NHS, colleges and universities, central government bodies and local authorities, are often anchor institutions in the places they are located. They tend to have significant physical assets and influence with other bodies that operate in the area including public transport providers, businesses and the local authority. Their assets and daily operations can be used to meet the climate change duties, support the local community and bring wider benefits, for example through employment, procurement, training and educational opportunities, and land and building use.

As anchor organisations, public bodies can influence development in their locales, for example by connecting to or developing district heat networks.

Policy setting

All public bodies will have a policy setting function. For some bodies, such policies will relate to and primarily influence corporate operations only. For others, their policies will have a much wider influence, impacting on for example, local businesses and industry, land use or land management practices, local and regional transport, delivery of services, service users and the general public.

Public bodies should in all cases consider the climate impacts of their policies and routinely assess these alongside other impacts, such as on equalities, health, biodiversity and business. This could be achieved using the climate change impact assessment process outlined above in section 4.5.1.

Bodies should also consider how their policies can contribute to wider priority policy objectives such as the just transition and tackling poverty, and maximise opportunities for wider linked benefits such as enhanced biodiversity, improved public health, reduced fuel poverty and reduced inequality.

Planning and delivering services

Many public bodies are involved in planning and delivering services. Bodies should consider how services are delivered, and look for ways to reduce emissions and make the service more resilient. The changing climate is highly likely to pose risks to the delivery of essential services in the future, and it is vital that bodies assess and take appropriate steps to mitigate these risks (see section 4.3.5 and chapter 6).

In some cases delivery of the service will be undertaken by others, and public bodies should use the procurement or funding award process to drive positive climate and sustainability action. Where bodies are responsible for delivering services themselves, they should mainstream climate change into the delivery model and actively seek opportunities to reduce emissions, adapt for the impacts of the future climate and act in the most sustainable way.

Education

Scotland's learning for sustainability action plan, Target 2030: A movement for people, planet and prosperity, aims to build an inspiring movement for change so every place of education for learners aged 3 to 18 years becomes a Sustainable Learning Setting by 2030. Local authorities and other public bodies involved in places of education should integrate the 2030 commitment into their improvement plans, strategic plans, curriculum frameworks, corporate plans and activities. Refer to section 7.6 for further details.

Higher and further education institutions, and other public bodies involved in adult and further education, should consider how a similar commitment and aims can be integrated into the work of their organisation. In considering their wider influence, this is particularly important in relation to the range and content of courses that are offered, and to the local community and place within which the body works.

Procurement

Public sector procurement in Scotland is worth over £16 billion annually. It is essential that public bodies work to reduce the climate impact of this spend. Procurement, supplier management and ongoing contract management processes can be used to drive carbon reductions and improve environmental and sustainability performance through the supply chain. Procurement can be used to support the move to a circular economy, reduce waste and improve resource efficiency.

By carefully considering if, what, how and how much they buy, public bodies can contribute to the delivery of emissions reductions and ensure that they are acting sustainably. Further detailed guidance will be provided in the 'Sustainable procurement' supplement in due course.

Grants and other funding

Many public bodies are responsible for awarding or distributing funding to other organisations across the public, private and third sectors. This may be in the form of grants, loans or other funding mechanisms. Public bodies should embed climate and sustainability action into this funding where appropriate, for example through eligibility criteria, terms and conditions, and service level agreements.

Investments

Public bodies may have investments. These are most likely to include pension funds, but may also include forms of trust funds or endowments. Some bodies may have commercial investments in joint ventures or companies. For example, a local authority may be a major shareholder in a company that provides sports or public transport services in the authority area.

In all cases, public bodies should consider the climate impact of their investment. Bodies should consider developing and adopting an ethical investment policy and, over time, may wish to align their investments with their net zero and other climate targets. Examples may include divesting from fossil fuels or prioritising investments in renewables and sustainable technologies. Bodies are strongly encouraged to minimise any negative climate impacts from their investments, and to actively seek out opportunities for their investments to contribute to wider sustainability aims.

For example, a body could use its pension fund to invest in the development of new, high quality low carbon social housing or a district heating system, which would benefit local communities, help tackle fuel poverty and contribute to the delivery of wider national policies and outcomes including improved health and reduced reliance on health services.

Working together

It is vital that public bodies collaborate to achieve the scale and pace of action needed to reduce emissions and adapt to the changing climate. Bodies should proactively seek opportunities to work with other public bodies to share knowledge and practical learning; to develop larger scale investable projects; and to benefit from economies of scale and shared resources.

Public bodies can influence the implementation of the climate change duties by other bodies. Wherever possible, public bodies should facilitate benefits for others, for example, a body may generate waste heat that could be offered to and utilised by another public body located in the area.

To support delivery of the statutory Public Engagement Strategy for Climate Change, many public bodies, including the NHS and local authorities, can act as trusted messengers and encourage positive climate action in the community through communication and engagement with their stakeholders and service users. Public bodies should maximise opportunities to influence and encourage behaviour change in the wider public, local businesses, third sector organisations and other stakeholders through leadership, community engagement, communication and partnership working, including through Community Climate Action Hubs. This may include participating in or promoting national initiatives such as Scotland's Climate Week.

Local authorities may also want to reach out to third sector organisations with a focus on climate change or environmental activities that are active in their local area. The Scottish Communities Climate Action Network and Transition Network Hub which supports community-led action in Scotland to address the climate and nature emergency and work for a just, thriving and resilient Scotland might be able to assist to make these connections.

4.7 The role of audit

Auditing climate change is becoming increasingly important internationally. The International Organisation of Supreme Auditing Institutions for example, conducted a survey in 2021 showing that climate change and environmental auditing of national governments is increasing ^[22]. In Scotland, Audit Scotland has published a strategy setting out how it will audit climate change across the public sector. Internal auditors are increasingly focussing on climate change within their work.

Climate change auditing standards, methods, and expertise is growing, and public sector audit increasingly treats climate change as an inherent and embedded key aspect of good governance and effective management.

4.7.1 Climate change and the role of audit

Audit has a vital role to play in supporting public bodies to comply with their climate change duties and to improve the design and delivery of public sector climate action. Both internal and external audit in Scotland is embedding climate change duties as a key focus.

Audit plays an important role in reviewing and supporting:

• effective responses to legislative requirements in the Climate Change (Scotland) Act 2009, and related policy and legislation, including mandatory public bodies climate change duties reporting
• embedding climate change into organisational decision making, assurance, management and governance systems and structures across all areas of activity
• transparency of actions and spend, and assessment of the impact and value for money of plans and projects
• leadership, risk management and public sector transformation.

Both internal and external audit can help enhance the planning, performance, improvement and accountability of public bodies' climate change action.

4.7.2 Understanding the various forms of public sector audit

Internal audit

Internal audit undertake a systematic and continuous review of an organisation's internal controls, risk management and governance arrangements in line with regulations, legislative obligations and Public Sector Standards for Internal Audit, through delivery of a risk-based annual plan.

Internal audit supports public bodies to meet their climate change responsibilities by:

• ensuring that climate change is embedded into decision making at all levels within the organisation and across all business areas
• providing independent assurance on the completeness, accuracy and timeliness of management information on progress and risks
• providing effective challenge about the extent to which policy development integrates climate change and on internal collaboration across disciplines
• helping ensure targets are clear and transparent and that there is a clear understanding of the gaps between climate change targets and policy objectives and the actual plans, policies and resources in place to achieve them
• helping ensure that governance and risk management processes are working effectively
• providing an objective assessment of the capacity, knowledge and skills required to support decision making on climate change.

The recommendations that internal audit make are a fundamental part of supporting continuous improvement and ensuring that risks are managed effectively. ​That includes managing the risks of the organisation failing to respond effectively to the climate emergency, of not making sufficient progress towards emissions reduction goals, or of failing to build resilience and prepare for the impacts of climate change.

Internal audit could also assist by assessing a body's legal compliance in relation to the climate change duties. For example, the audit could review evidence relating to decision making, and whether decisions have been clearly and robustly made 'in the way best calculated' to meet the duties. If this cannot be demonstrated, the audit should highlight this as governance failure, and the body can work to strengthen their systems and processes accordingly.

The SSN Leaders Climate Emergency Checklist provides an effective overarching framework for public body leaders and practitioners to scope, assess, and track performance improvement and transformational change. It will help support internal audit processes as public bodies seek to assess their climate change performance.

External annual audit

The Auditor General for Scotland and the Accounts Commission for Scotland are responsible for securing the independent audit of the accounts and performance of public sector bodies in Scotland. Audit Scotland, the national public sector audit agency, supports them in delivering their work programmes, appointing auditors and undertaking two-thirds of the annual audits of public bodies (the remaining one-third is undertaken by external firms appointed by Audit Scotland).

External audit perform the statutory audit of a public body's annual report and accounts in accordance with the requirements of various public sector audit regulations.

External auditors have a role in assessing whether climate-related risks are considered as part of the accounting carried out by public bodies for areas such as property, plant and equipment and provisions. They also assess whether accurate, relevant climate-related disclosures are included in bodies' annual report and accounts.

Current guidance on climate related disclosures required in public bodies' annual reports and accounts is limited but is likely to expand over the next few years.

Guidance on disclosure requirements are emerging and beginning to be applied to bodies including the following:

• Task Force on Climate-related Financial Disclosures (TCFD) – aligned disclosure application guidance
• IFRS S1 – General requirements for disclosure of sustainability related financial information
• IFRS S2 – Climate-related disclosures.

Certain Scottish central government and arms-length bodies must comply with the TCFD aligned disclosure application guidance from 2023-24. Other public bodies may adopt the TCFD aligned disclosure in full or in part. Required climate-related disclosures to be included in annual reports and accounts are likely to be expanded across the public sector in the coming years. Auditors will review compliance with any existing and emerging standards that apply to Scottish public bodies.

Until new standards emerge, the work of external auditors will be determined by their local risk assessment processes. The latest guidance for external auditors is on the Audit Scotland website.

External performance audit

Audit Scotland undertakes performance audits on behalf of the Accounts Commission or the Auditor General. They produce national reports that focus on efficiency and effectiveness in the use of public resources across the public sector.

The challenge of tackling climate change is hugely complex and requires a whole-systems approach, with effective collaboration between public bodies, the private sector and communities. Public audit can look across the public sector to consider these complex relationships and assess how well public money is being spent and how services are performing, and identify opportunities for improvement.

Audit Scotland has a programme of performance audit work on climate change, which includes consideration of:

• roles and responsibilities, governance arrangements, key risks and risk management
• the development and implementation of plans and strategies to reduce emissions
• progress in integrating climate change adaptation into policies, strategies and implementation plans
• investment, alignment of spend across policy areas, and value for money
• partnership working and collaborative leadership
• good practice, barriers and challenges.

Performance audit reports and recommendations can support public bodies in meeting their climate change responsibilities by providing assurance, offering constructive challenge, supporting decision-making and sharing learning to help drive change and improvement.

4.7.3 Public sector climate change audit examples

Examples of performance audit work undertaken by Audit Scotland include the following:

• Scotland's councils' approach to addressing climate change (September 2022) - This briefing on behalf of the Accounts Commission highlights the critical role of councils in helping Scotland achieve its national climate change goals and includes recommendations for councils to consider to help improve their response to the climate emergency.
• Decarbonising heat in homes (February 2024) – This report on behalf of the Auditor General highlights the significant increase in the scale and pace of domestic heat decarbonisation required, if Scotland is to be able to phase out fossil-fuel home heating systems by 2045.
• How the Scottish Government is set up to deliver climate change goals (April 2023) – This report on behalf of the Auditor General focuses on how effective the Scottish Government's climate change governance and risk management arrangements are in supporting it to drive the delivery of Scotland's national net zero targets and climate change adaptation outcomes.