DigitalCFO Newsroom | 26 August 2022
With their financial reporting background, accountancy and finance professionals with sustainability skills have an edge in driving the sustainability transition in businesses.
Sustainability is creating new roles for the accountancy and finance profession, according to “Sustainability – Jobs and Skills for the Accountancy Professions”, a joint study by the Institute of Singapore Chartered Accountants (ISCA), Ernst & Young Advisory Pte. Ltd. (EY), Singapore Management University (SMU) and Singapore Accountancy Commission (SAC).
Chief Finance & Sustainability Officer is an Emerging C-suite Role
The study identified the Chief Finance & Sustainability Officer (CFSO) as an emerging C-suite position. The CFSO could be placed above today’s CFO and CSO functions to oversee the integration of finance and sustainability into business strategy. The CFSO will require critical technical skills in sustainability reporting and target setting and integrating sustainability into corporate strategy. For example, the CFSO may be tasked to translate the environmental, social, and governance (ESG) impact of business activities, such as carbon emissions and pollution, into financial metrics to guide corporate strategy and meet sustainability targets. The CFSO will also require business partnership skills, such as stakeholder engagement and transdisciplinary thinking. Accountancy and Finance Professionals, with their financial expertise, are in an advantageous position to helm the emerging role of the CFSO.
ISCA President Mr Teo Ser Luck said, “The findings show that accountancy and finance professionals play a critical role in integrating sustainability into businesses. They are called to be stewards of corporate sustainability strategies by facilitating the sustainability transition for businesses. With their professional knowledge, they are able to take a leading role in helping businesses in the process. On ISCA’s part, we are committed to supporting the profession and equipping our members to seize new opportunities arising from the transition to a Green Economy.”
Decarbonisation, Sustainability Reporting and Green Finance Driving Expansion of Roles for Accountancy and Finance Professionals
- Decarbonisation of the environment
- More companies participating in sustainability reporting
- Expansion of green finance
With decarbonisation becoming a global imperative and a priority for governments, there is increased demand for carbon accounting, markets, and trading. International carbon markets are becoming better regulated and stakeholder demands to offset carbon emissions and achieve net zero targets will continue to grow. With the increased emphasis on sustainability and climate-related regulatory requirements, more companies are also adopting sustainability reporting. This is likely to continue with the establishment of the International Sustainability Standards Board (ISSB), which aims to introduce a global baseline for sustainability reporting. Green finance has also seen substantial expansion in green loans, bonds, and investment opportunities. [1]
“Sustainability, as a topic and a trend, covers more than finance. However, the role of sustainability in finance will soon be more than just a task and potentially one that requires focus, attention and perhaps even a separate full-time role to be carved out,” said Mr Samir Bedi, Partner, EY Asean Workforce Advisory Leader and EY Singapore Government & Public Sector Leader.
Accountancy and Finance Professional Need Additional Green Skills
Additional skills will be required to meet the demands of these three key trends in sustainability. The study identified additional skills required for preparers of financial reporting and assurance service providers. Examples of preparers of financial reporting include CFOs, Finance Managers, and Internal Auditors. Assurance service providers include audit professionals from accounting firms who help companies identify their reporting parameters.
For CFOs and finance managers, there will be increasing need for them to manage carbon trading. Accountancy and finance professionals need to be knowledgeable in carbon markets, credits, and measurement of emissions, as well as sustainability reporting frameworks, guidelines, and principles. A global perspective is needed to navigate different regulations and sustainability frameworks, both regionally and internationally. Accountancy and finance professionals in corporate finance roles also have to acquire skills in green finance and sustainability risk management. These skills are key to making the most of the burgeoning opportunities in green finance, while also assessing sustainability risks.
Audit and assurance professionals require upskilling in carbon accounting and assurance to ensure the quality of information to stakeholders. They will also be called upon to enhance internal processes. Audit professionals in tax must understand and apply carbon tax regulations and guidelines, to ensure compliance in diverse regulatory environments, both regionally and globally.
Commenting on the new and additional skills required of accountancy and financial professionals, Professor Cheng Qiang, Lee Kong Chian Chair Professor of Accounting, Dean of School of Accountancy, SMU, said, “To meet the rising demand of sustainability accountants, we have adapted our educational curriculum to include existing and emerging frameworks for developing corporate ESG performance metrics, assessing their reliability, reporting to stakeholders, and incentivising managers based on ESG performance metrics. We hope it will help to ease the skills gap in the accountancy sector.”
In support of this joint study, SAC Chief Executive Mr Evan Law said, “Sustainability is changing how businesses operate, and the professional accountant’s role is at the heart of this transformation. They know how businesses work and thus, they are well-placed to guide businesses in meeting their sustainability goals. As such, it is essential that they equip themselves with the skills to handle emerging areas in sustainability such as carbon and greenhouse gas accounting, green financing, and sustainability reporting; and support Singapore’s drive to a more sustainable future.”
The study involved in-depth interviews with 23 C-Suite leaders across 10 business sectors. The interviewees include corporate executives, financial professionals, and representatives of government agencies and non-government organisations (NGOs) in Singapore. The executives and financial professionals hold titles such as Chief Executive Officer (CEO), Chief Financial Officer (CFO), Chief Sustainability Officer (CSO), Head of Finance, Head of Sustainability, and Partners and Consultants.
