As Hong Kong prepares to implement sustainability standards, the demand for finance professionals with expertise in the field is accelerating. There are concerns, however, that a skills gap remains.
Hong Kong Financial Reporting Standards (HKFRS) S1 and S2 fully align with the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards, and large, publicly accountable entities are required to adopt them by 2028. However, employers have struggled to find candidates with sustainability knowledge, business exposure and change management skills, according to analysis by recruitment firm ConnectedGroup.
‘We need to provide training on how IFRS S1 S2 are drafted and should be interpreted’
The firm notes that, while some businesses have well-established in-house reporting systems in place, others are lagging behind and outsourcing their reporting needs to third party providers. In the longer-term, and with increasingly complex compliance requirements, organisations will need to build their in-house capacity and resources.
Patchy preparation
Recruitment and training patterns are not universal across the Special Administrative Region (SAR). Many larger firms have been investing in sustainability capabilities for several years, says Barry Man, audit and assurance partner for Deloitte China. ‘Firms have been recruiting sustainability professionals, enhancing internal training and building specialist units,’ he says.
Deloitte is also recruiting people with strong sustainability backgrounds, who may not be trained in financial reporting or assurance standards. We need to provide training on how IFRS S1 and S2 are drafted and should be interpreted,’ Man says.
‘There are more challenges to retaining senior staff’
Likewise, BDO has been actively addressing the issue. ‘We are building the service team for sustainability reporting according to local requirements and clients’ needs,’ says Andrew Lam, managing director at BDO. ‘This will be one of the areas attracting higher growth in terms of staff numbers and skill sets.’
Higher level concern
According to Man, while entry-level recruitment isn’t particularly challenging, as universities have been offering sustainability-related programmes for some time, ‘there are more challenges to retaining senior staff as they have more opportunities outside professional firms,’ he says.
Edward Au, president of the Hong Kong Institute of Certified Public Accountants, says that the HKFRS standards present significant opportunities to accounting firms, and accountants are well positioned to deliver premium sustainability reporting and assurance services, drawing on their deep expertise in financial reporting, auditing, internal controls and risk management. ‘Sustainability disclosure is a key extension of financial reporting, linking sustainability and climate factors to an organisation’s financial performance,’ he says.
‘By demonstrating leadership in sustainability reporting, firms can gain a competitive edge’
‘Companies that proactively adopt international standards can differentiate themselves in the market and showcase their commitment to sustainability,’ Au continues. ‘By demonstrating leadership in sustainability reporting, firms can gain a competitive edge and strengthen their relationships with key stakeholders.’
The SAR has taken steps to address the shortfall. In mid-February, the Labour and Welfare Bureau added accountants and experienced professionals in environmental, social and governance (ESG) to its list of in-demand talents that can enjoy fast-tracking immigration.
HKICPA has welcomed the government’s decision. ‘By facilitating immigration for non-local talent, this update will help expand the pool of accounting professionals,’ says Au, adding that the institute still values nurturing local talent and has continued to update its curriculum to meet market standards.
Embracing automation
Hong Kong’s accountancy talent crisis goes beyond the need for sustainability skills. A 2023 HKICPA survey revealed that 10% of firms had a vacancy rate of over 50%, 61% rated the talent shortage as a seven out of ten in severity, and 62% found that junior-level positions were the most difficult to fill.
‘We prioritise strong school-company partnerships by forming strategic alliances’
Firms are implementing multi-faceted approaches to address these staffing challenges, says Lam. ‘We are relying more and more on office automation and AI technology’ to allow staff to focus on higher-value work requiring professional judgment, he says. ‘We are also hiring from mainland China and abroad to complement our local workforce.’
While looking outward may help ease firms’ short-term needs, attracting, nurturing and retaining people are still key to the sustainability of accounting firms in the SAR, says Andrew Wong, partner in audit quality and professional practice at KPMG China. ‘We prioritise strong school-company partnerships by forming strategic alliances with universities to accelerate the development of a robust talent pool,’ he says.
KPMG has made alliances with universities – such as the Hong Kong University of Science and Technology, the University of Hong Kong, Renmin University of China, Central University of Finance and Economics, and Nankai University – to nurture future accounting and business analytics talent, Wong says.
‘Over the years, our people have become more tech-confident and data-literate as a result, and are increasingly competent in unlocking the power of Big Data, automation, AI and other advanced technologies,’ notes Wong. ‘This is instrumental in developing and retaining talents in the profession, to empower every one of us to expand our strengths to evolving areas such as sustainability.’
