Sri Lanka embraces sustainability reporting

Competitive advantage

‘This development involves not only traditional financial metrics but also ESG factors. Accountants need to ensure that disclosures are accurate, comprehensive and aligned with global standards,’ says Imantha de Silva, financial accountant at Rizing CI (EU), adding that this role shift empowers accountants to bring competitive advantages to the companies they serve, meeting evolving stakeholder expectations and extending accountability beyond the numbers alone.

For Nuwan Withanage ACCA, CFO at Softlogic LIFE, the transformation is equally profound. ‘In the past, the accountant’s role was confined to traditional finance. Now, the integration of non-financial data into financial reports has become essential,’ he explains.

He believes that the inclusion of ESG data will help accountants assess how sustainability impacts a company’s financial health over the short, medium and long term. ‘Accountants will need to work closely with sustainability teams, enhancing their data collection, analysis and reporting skills,’ he adds.

Adheesha Perera, chief manager – head of sustainability at Union Bank of Colombo, envisions accountants becoming ‘systems thinkers’. ‘CFOs have generally perceived strategy from a short-term financial perspective, but today’s accountants are expected to look beyond company-centric views, to the broader economy, business ecosystem and value chains,’ he says.

This expanded perspective means that accountants must engage with external stakeholders to assess the broader impact of climate risks and business sustainability on an industry level.

Data concern

For De Silva, the most pressing challenge is data management. ‘Gathering reliable and relevant ESG data can be complex,’ he notes, adding that it is important to set up strong data collection systems to maintain data integrity over time.

De Silva also identifies the need for continuous training. ‘Accountants should pursue professional development opportunities to stay updated, as these standards are not likely to remain static. Over time, methods for gathering and processing data will likely evolve, yielding more accurate information,’ he says.

Withanage highlights operational and cultural resistance as key hurdles, especially when introducing new policies and procedures. ‘The need for new policies and processes often encounters resistance,’ he explains, suggesting that accountants should take an active role in promoting awareness and securing leadership buy-in to ease the transition.

‘Expertise in risk assessments and sustainability will be crucial as we navigate these standards,’ he adds, recommending cross-functional collaboration to ensure accurate data reporting.

For Perera, the main challenge lies in illustrating the long-term benefits of national and industry-level engagement. ‘The inability to link investments in sustainability to potential improvements in risk, return and impact profiles could result in companies being inward-looking,’ he notes.

However, he believes that accountants can help by identifying the cost-benefit profile of these engagements, demonstrating that sustainability can enhance financial resilience.

Build a framework

De Silva suggests that organisations develop a comprehensive reporting framework that consolidates both financial and sustainability reporting, ensuring transparency and consistency. ‘A comprehensive checklist can be used to track what data is collected, processed, measured and finally reported,’ he explains.

Additionally, he advises accountants to actively communicate with stakeholders to ensure reports are accessible and aligned with expectations.

Having a long-term vision with a clear roadmap is essential, according to Withanage. ‘Define goals, set clear, measurable sustainability objectives aligned with ESG standards, and lay out a roadmap with timelines and resource allocations,’ he advises.

Staying updated on the latest interpretations of IFRS Standards is crucial, as these will likely evolve. ‘Continuous learning and adaptability are key,’ he asserts, urging accountants to collaborate closely with departments across the organisation for accurate data gathering.

At the same time, Perera advises accountants to engage top management in seeing the strategic benefits of sustainability initiatives. He recommends extending the planning horizon beyond the typical three-year cycle to a decade or more, encouraging organisations to consider the risks and opportunities presented by climate change within the broader national and global landscape.

‘Accountants need to push for strategy to be viewed at minimum from a business ecosystem and value-chain perspective rather than just a company viewpoint,’ he says.

Changing outlooks

De Silva notes that, in the manufacturing sector, adopting these standards has led to ‘comprehensive tracking systems for carbon emissions and waste management practices’, which has significantly improved the organisation’s environmental footprint and reputation among stakeholders.

Similarly, in finance, the standards have prompted a shift toward more responsible, ESG-aligned investment portfolios, allowing firms to blend financial objectives with ethical values.

‘We now conduct regular assessments on sustainability-related risks and how they impact our financial outlook,’ Withanage shares, adding that this approach has opened opportunities, including exploring green bonds and other sustainable finance options that support growth while aligning with ESG goals.

For Perera, the standards are reshaping how companies approach their portfolios. ‘If Sri Lankan corporates and SMEs don’t adapt to changing regulations, they risk losing competitiveness,’ he says. In response, Union Bank of Colombo has established a sustainability governance framework to integrate ESG criteria into its financing decisions, aiming to guide clients in managing their environmental and social risks.

Resources and support

Implementing IFRS S1 and S2 standards requires dedicated resources and support for accountants to adapt fully to the demands of sustainability reporting.

De Silva suggests that specialised training on sustainability reporting and IFRS Standards is crucial. ‘Training sessions should not just be for report preparers but also for users, broadening the understanding of these standards,’ he says.

He also recommends engaging with peer networks, where accountants can exchange insights on best practices and common challenges, and leveraging technology to improve the efficiency of data collection and reporting.

Withanage stresses the value of gaining expertise and guidance. ‘Engaging with professional bodies for networking opportunities and knowledge sharing is invaluable,’ he states, and he suggests that access to advanced tools for sustainability data management is essential to streamline reporting.

Finally, Perera advocates for access to national and industry-specific intelligence to better contextualise sustainability standards. ‘The Ceylon Chamber of Commerce is working to map climate risks and opportunities for different sectors. Accountants could benefit from engaging with these insights to understand sustainability beyond compliance,’ he concludes.

With IFRS S1 and S2, Sri Lankan accountants are now stepping into a new era where financial reporting goes beyond the numbers, to mirror the values and resilience needed for sustainable growth.