Emerging New Roles In Corporate Finance And Assurance
• New roles are emerging in corporate finance and assurance as sustainability becomes entrenched as a business norm.
• Accountancy and finance professionals are well placed to be the emerging champions of sustainability.
• They need to be equipped with additional sustainability skills to handle the new and emerging responsibilities.
Sustainability is creating new opportunities for the accountancy profession. Businesses everywhere will need preparers and assurance service providers to undertake more sustainability-related responsibilities. Preparers in the corporate finance function, which include job roles such as Chief Finance Officer (CFO), Finance Manager (FM), Treasury, and others, are increasingly tasked with sustainability-related accounting, risk management, and reporting. Meanwhile, assurance service providers are expected to keep up with the demands for sustainability assurance across various industries. The demand for accountancy and finance professionals with relevant sustainability skills is growing, and it is expected to remain high in the foreseeable future.
The burgeoning of responsibilities has seen the creation of new and emerging job roles, with one of them being Chief Finance & Sustainability Officer (CFSO). The CFSO is a C-suite position that could be placed above today’s CFO and Chief Sustainability Officer (CSO) roles. The CFSO is uniquely placed to translate the impact of environmental, social, and governance (ESG) considerations in
business activities into financial metrics. Accountancy and finance professionals, with their financial expertise, are in an advantageous position to assume the CFSO position. There is also evidence that accountancy and finance professionals are already playing important roles in sustainability for businesses, where CFOs are taking the lead in key sustainability matters.
These are some of the key findings from a recent 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). The exploratory study set out to understand the impact of sustainability on emerging job roles, skill gaps, and skill needs for accountancy and
finance professionals. The study conducted interviews with 23 C-suite executives from 10 different business sectors. The 10 business sectors are: Professional Services, Banking & Finance, Manufacturing, Technology, Materials & Building, Real Estate, Energy, Transportation, Food & Beverages, and Forest Products & Agriculture.
The report, titled “Sustainability – Jobs And Skills For The Accountancy Profession”, was launched at the annual ISCA flagship Professional Accountants in Business Conference (PAIB Conference) 2022 on August 25, where over 900 delegates were in attendance. Commenting on the study and ISCA’s support for its members in this area, ISCA President 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.
THREE KEY SUSTAINABILITY TRENDS
The study uncovered three key sustainability trends with significant impacts on business. They are: decarbonisation of the environment, more companies are participating in sustainability reporting, and there is an expansion in the green finance sector.
Decarbonisation of the environment is becoming a global imperative and a priority for governments. Globally, reducing carbon dioxide (CO2) and other greenhouse gas (GHG) emissions has been accelerated to meet the goal of the 2015 Paris Agreement to limit global warming to below 2-degree Celsius above pre-industrial levels. The decarbonisation effort has been given a boost as global
rules and regulations stabilised through agreements on an international standard of measuring carbon. This has hastened the development of a global system of carbon markets and made carbon trading much more attractive.
Sustainability reporting is becoming commonplace and this trend is likely to grow more prominent alongside the establishment of the International Sustainability Standards Board (ISSB). The ISSB aims to develop a comprehensive global baseline of sustainability-related disclosures to meet capital market needs. There is evidence that this baseline would improve information usability and
Regarding the expansion of green finance, according to a Bloomberg report, in the past two years, the green bond market has already tripled and yet, investors’ appetites for green bonds remain high; it is likely that green bonds will be oversubscribed by twice the supply.
NEW AND EMERGING JOBS; ADDITIONAL SUSTAINABILITY SKILLS
In light of these sustainability trends, the accountancy profession would be required to pick up additional skills to meet new business needs. As SAC Chief Executive Evan Law pointed out, “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”.
Preparers in the corporate finance function would need additional sustainability skills, such as an indepth understanding of carbon accounting, carbon trading, and sustainability reporting. Both the CFO and FM would be expected to know and operationalise carbon accounting and the different approaches to measure GHG emissions. In addition, the CFO would need additional skills to
understand and keep abreast of developments in the global carbon markets and carbon trading, to identify potential risks and opportunities. Assurance service providers are also expected to understand carbon accounting and trading. As carbon trading becomes integrated into business strategy, companies would come to rely on sustainability assurance to adjust, augment, and authenticate the information for stakeholders. They would be vital partners in the efficient allocation of capital across global carbon markets.
Sustainability reporting and sustainability risk management are two other skill sets that would be expected of job roles in the corporate finance function. There are various global sustainability reporting frameworks and guidelines, which the CFO and FM must be familiar with, to navigate different disclosure standards for different stakeholders and purposes. At the same time, the corporate finance function as a whole must upskill in sustainability risk management to identify risks and opportunities. For instance, there should be general understanding of sustainable investment principles and best practices to better prepare and position the organisation for opportunities in
Commenting on the new and additional skills required of accountancy and finance professionals, Professor Cheng Qiang, Lee Kong Chian Chair Professor of Accounting and Dean, 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.”
WHAT DOES THE CFSO DO?
Today, the CFSO is emerging in companies with a well-developed sustainability drive. The CFSO is a C-suite position that could be above the CFO and CSO functions, to oversee the integration of finance and sustainability into the business strategy of the organisation. The CFSO brings end-toend strategic and financial leadership to the company’s sustainability strategy and will translate the ESG impact of the company’s activities into financial metrics. The CFSO must be familiar with sustainability reporting and target setting, as well as possess sustainability business partner skills. Accountancy and finance professionals have an advantage in assuming this leadership role due to
their financial expertise. This career option would be attractive to those who seek to provide financial oversight and steer organisation-wide sustainability initiatives, investments, and interests.
As Samir Bedi, Partner, EY Asean Workforce Advisory Leader and EY Singapore Government & Public Sector Leader, was of the view that “sustainability, as a topic and a trend, covers more than finance. 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”.
Accountancy and finance professionals are the emerging champions of sustainability in organisations. It is imperative that they are properly equipped with additional sustainability skills to spearhead sustainability transition in companies. As sustainability becomes more entrenched as a business norm, accountancy and finance professionals will find themselves tasked with sustainability reporting and disclosures, as well as the identification of sustainability risks and opportunities.
Author’s name: Institute of Singapore Chartered Accountants (ISCA), Ernst & Young Advisory Pte Ltd (EY), Singapore Management University (SMU) and Singapore Accountancy Commission (SAC)