What does GFOA recommend governments evaluate and disclose regarding environmental risks?

The recommendation from the Government Finance Officers Association (GFOA) to evaluate and disclose environmental risks focuses primarily on risks that are pertinent to municipal issuers and their bonds. This approach highlights the importance of understanding how environmental risks can affect the financial stability and bond ratings of municipalities. Such risks may include factors like climate change, regulatory changes related to environmental protection, and the potential impact of environmental disasters on local economies.

By evaluating these risks, governments can not only ensure compliance with increasing regulatory demands but can also provide more transparency to bondholders and investors about potential impacts on their financial health. This transparency fosters trust and can lead to more stable financing opportunities.

In contrast, the other options are more narrow in focus and do not capture the broader obligations and considerations that municipalities face when assessing environmental risks in their financial reporting and decision-making processes.