A continuous learning mindset is necessary for accountants to stay relevant as the sustainability landscape evolves.
As standard-setting bodies like the International Accounting Standards Board (IASB) implement new and improved standards, such as IFRS S2, which applies to annual reporting periods beginning this year, practitioners, academics and standard-setters will need to develop relevant skills. Accountants will also have to leverage interdisciplinary expertise when contributing to sustainability reporting.
‘We might need interdisciplinary experts in a team to provide more insights – not just financial but non-financial as well, bearing in mind that the accounting standards cover things that are non-financial,’ said associate professor Dr Fung Chorng Yuan FCCA during ACCA Singapore’s Technical Symposium 2024, held virtually last month. ‘We will need people from other specialisations to be involved in a team to give that insight, to determine what is relevant and what is not relevant.’
The International Sustainability Standards Board (ISSB) is actively collaborating with other professional organisations to ensure standards are implemented effectively in various subject areas, according to Yoshiko Shibasaka, director of the Asia and Oceania Office at the IFRS Foundation.
Reskilling in sustainability topics will help accountants seize opportunities
‘The sustainability field requires many kinds of experience, not just in the accounting area, but in the agriculture and chemical areas. We are collaborating with them to get them to understand and implement our standards,’ she told delegates at the symposium.
Skills
There are growing opportunities for accountants to play an important leadership role in companies’ sustainability journeys through reskilling, said Susan Foong FCCA, assurance partner for Baker Tilly.
‘We do have an initial set of skills within us – analytical skills, organisational skills, [the capability to] understand our stakeholders and communicate with them,’ Foong said. ‘How do we now learn to adapt that and apply that to sustainability information as well?’
Reskilling in sustainability topics will help accountants seize the opportunities emerging in this dynamic field, Foong added. ‘We look forward to moving forward so we can grab those opportunities ahead for us. We can then apply the skills we already have, and we will definitely have a place to play a key role.’
Key datasets
A primary challenge accountants will face is educating shareholders and stakeholders about sustainability reporting and why it matters, said Azizan Abdul Aziz FCCA, group chief financial officer of BIMB Holdings. ‘They are still looking at the normal ways of measuring the performance of each organisation or each investee company. Profit matters for them.’
To meet reporting requirements while avoiding greenwashing, accountants will need to carefully determine which datasets provide useful insights rather than superficial information, Azizan said. ‘We have the complexity of the reporting structure and the reporting requirements that we need to meet,’ he added.
Banks will now have to look at their customers’ full value chains. Azizan cited the example of data centres in Malaysia, which consume significant energy and water.
‘From a bank’s perspective, where can we find opportunities to assist not just the data centres but the energy providers and water management companies? How can they help companies transition towards managing both energy and water more effectively, to achieve that objective of having sustainable data centres to be established?’ he said.
‘If you are reporting something that is not meaningful, it won’t help decision-making’
Relevance
Accountants will also have to understand which sustainability issues matter most to their organisations and design reporting that is meaningful, Azizan said. ‘At the end of the day, if you are reporting something that is not meaningful, it won’t help from a decision-making perspective.’
Identifying the relevance of data – or materiality – is key. If carbon footprint is a critical issue for a business, that should be clearly identified as such in reporting, said Shibasaka.
The IASB recognises this challenge and has recently started a project to review IAS 38 on intangible assets, Shibasaka added. ‘This very critical project to implement such intangible assets, including carbon-related issues and related impact figures, would be crucial for companies reporting their carbon footprint and other intangible issues, including their greenhouse gas emissions.’
Many SMEs in supply chains may be asked for sustainability data
Guidance
Smaller firms often struggle with sustainability reporting requirements due to limited resources, pointed out Aucky Pratama, regional lead for public affairs at ACCA. ‘Smaller firms often face challenges with sustainability reporting due to limited resources. However, many of these SMEs are part of the supply chain for larger businesses, which may request sustainability data to meet their own reporting requirements, even if the SMEs themselves are not directly obligated to report.’
Azizan agreed that incentives are needed to bring SMEs on board for sustainability. ‘There’s a lot of dimensions. We can look at incentives guiding them and look at how we [larger firms] can help them. When it comes to SMEs, we can always put their size as part of the metrics that we want to achieve for a bigger organisation, helping a smaller organisation as part of the KPIs that we put in.’
Fung highlighted how firms can partner with universities and academia in equipping future professionals with sustainability capacity. ‘I look at what’s changing in the profession and the challenge for myself is: how are we going to equip our graduates for their future jobs? It always requires us to go back to the profession and ask what is needed.’
‘We can make a difference, so let’s not forget our purpose’
In cultivating the next generation of accountants, Fung advocates experiential learning through real-world case studies and assessments. ‘We regularly bring practitioners to the classroom to talk about specific topics, like sustainability in an energy company, so that our students are aware of what’s going on and they’re not getting outdated.’
Given the heightened focus on climate change and sustainability, Fung also encourages his students to get certification to boost their employability and awareness of relevant topics.
Start now
Organisations should start their sustainability reporting journey immediately, even if the initial steps seem daunting, Foong said.
‘When we see what we need to reach the end goal, I think all of us will feel like we can’t get there,’ she said. ‘Instead of focusing on the end goal, perhaps we can take progressive steps. This is not meant to be a compliance exercise. We can make a difference, so let’s not forget our purpose.’
More info
Find out about resources and support at ACCA’s sustainability reporting hub and Accounting for a better world hub.
The symposium is available on-demand at www.accapdhub.com from November.
