According to a recent poll conducted by NTUC LearningHub on 200 business leaders in Singapore, almost all businesses believe in the importance of integrating sustainability objectives into their overall business strategy. However, more than half do not have well-defined sustainability goals in place.
When it comes to challenges in implementing sustainability strategies, 39% of those surveyed are unsure of how to measure outcomes while 34% cite they struggle to allocate sufficient time and priority. For those that did not have sustainability strategies, 41% pinpointed low budgets as the top reason, 30% cited they had insufficient knowledge of the issue, while 41% lacked specialised expertise.
The changing role of accountancy
As a start, businesses must acknowledge the changing role of accountancy – accountants are no longer there to just manage your finances. The profession has evolved into one that can help harmonise and simplify non-financial reporting standards and frameworks, as well as align international finance reporting standards (IFRS) more closely to the reporting standards and frameworks. At the heart of the accountant’s role is the battle to make and keep businesses sustainable.
Accountancy has been the driving force behind the development of the integrated reporting concept. Historical financial statements are essential in corporate reporting, but they provide only limited information about business value. They do not recognise the broader scenario in which the non-financial capitals—such as sustainability, goodwill, land and equipment—are deployed by organisations, and the ways in which these interact with the external environment to contribute to organisational performance.
Through integrated reporting, accountants can dissect and explain how an organisation’s strategy, governance, performance and prospects lead to the creation of long-term value. In 2013, the International Integrated Reporting Council (IIRC) released a framework for integrated reporting, following a three-month global consultation and trials in 25 countries. The framework establishes principles and concepts that govern the overall content of an integrated report, which sets out how an organisation’s strategy, governance, performance and prospects lead to the creation of value.
The impact of changing climate and achieving ESG goals
In essence, the accountants of today can and should provide your business with a holistic view of all risks, efforts, and factors – including those which often seem hard to quantify. While integrated reporting has been around for close to a decade now, budgets for this kind of reporting have remained low. ACCA (the Association of Chartered Certified Accountants) believes that as the climate crisis worsens, more businesses need to leverage accountants trained to conduct integrated reporting in order to build resilience, secure their futures and most importantly, flourish.
Additionally, organisations often face myriad challenges while responding to environmental, social, and governance (ESG) goals. They include:
- Designing and implementing new data-governance requirements for capturing non-financial and ESG data that is aligned to the strategic objectives of the organisation.
- Regular reporting and the provision of information to manage ESG-related issues.
- Obtaining an enterprise-wide view of aggregate risks aligned to organisational ESG goals.
- Integrating climate risk and other non-financial sources of risk into investment analysis and valuation.
- Accurately assessing the material impacts of the different risks organisations face.
These business challenges can be addressed by accounting professionals of today, by:
Delivering sustainable performance – through pursuing sustainable business practices that create long term societal value through enhanced performance management processes and increased transparency, on top of ensuring accountability.
Strengthening ethics and trust – by steering the business so it operates in public interest, on top of enhancing the quality of corporate reporting and disclosures.
Accountants are a win-win for business
This frees up a lot of your time as the business owner. Now, you can focus on building a better tomorrow, be it through strategising what your next sustainable business model should be, or by empowering your diverse and equitable teams with pertinent, in-demand skills. This is a model tested and proven by successful business owners who have weathered through economic challenges.
Organisations today need to navigate a business landscape dominated by socially responsible investing, and are under great pressure by all stakeholders to invest and operate sustainably. Hence, it’s important to empower your accountancy team who are well equipped to steer organisations through all the above.
The onus to build a better tomorrow is on all stakeholders. Accountants—existing or aspiring—when you recognise that you account for more than numbers, with a scope that goes beyond simply churning out audits and financial statements, you’ll be able to take on the advisor role knowing the impact you’re going to make.
Business owners – you need to start thinking about how to involve your finance professionals and truly incorporate sustainability into your business. Across almost every aspect of a business, professional accountants help organisations navigate challenging and competitive operating environments, thereby creating new value streams. The profession retains fundamental stewardship responsibilities that protects the value created for the long-term business goals, and communicates organisational action and performance in a transparent, reliable and responsible manner.
Business owners need to tell stakeholders their story, and accountants are well placed to communicate one that is ‘true and fair’. Whether it is how the organisation is adapting to the challenges set out in the United Nations Sustainable Development Goals, or reporting the impact it has on the environment and society, accountants validate the story.
For more insights on how the accountancy function can play a part in addressing sustainability challenges to help organisation build a better tomorrow, read here.
Daniel Leung FCCA
Daniel Leung is the Country Manager for ACCA Singapore where he is responsible for leading ACCA's external engagement with regulatory bodies, government agencies and partners. He works closely with ACCA's membership, employers, learning and policy teams to deliver ACCA’s Singapore strategic priorities and deliver change for public good. He is a fellow of ACCA and qualified during this training contract with Deloitte London. Prior to joining ACCA, Daniel spent over 15 years working at Deloitte, HSBC, Barclays and Santander across London and Singapore.