Accountants play crucial role in driving sustainability: Grace Fu

Accountants must increasingly consider risks brought on by climate change and help their companies understand and mitigate them.
Accountants must increasingly consider risks brought on by climate change and help their companies understand and mitigate them.PHOTO: ST FILE

SINGAPORE - Accountants can go beyond balancing the books and promote green goals and help their companies mitigate climate change-related risks, said Sustainability and the Environment Minister Grace Fu on Thursday (Aug 19).

Ms Fu told a conference: "Being stewards of capital and corporate reporting, accountants play a crucial role in accelerating business practices in sustainability."

She added that they must be equipped to verify sustainability reporting as more stakeholders and investors adopt environmental, social and financial performance metrics.

The Singapore Exchange introduced sustainability reporting on a "comply or explain" basis in 2016. Its recent review showed an improvement in the quality of the reports over the years, noted Ms Fu, adding: "Accountants are expected to communicate a much broader set of performance metrics than a purely financial one."

She noted that accountants must increasingly consider risks brought on by climate change - including new regulatory requirements - and help their companies understand and mitigate them.

They also play a crucial role in assessing the environmental, social and governance costs or benefits in major business decisions, added Ms Fu.

"This could be in the form of putting an explicit cost on CO2 (carbon dioxide) emission through an internal carbon price, or in projecting future costs of climate impact such as flooding or extreme heat."

Accountants are also well-positioned to drive transformation by identifying areas where companies can reduce their carbon footprint - for example, by optimising water and electricity usage and reducing waste, said Ms Fu, who was speaking at the Professional Accountants in Business conference, a virtual event organised by the Institute of Singapore Chartered Accountants (ISCA).

Industry experts said in a panel discussion that accountants are well-versed in their companies' finances and so can help them understand how environmental considerations affect their businesses.

Mr Goh Yin Shian, finance director at logistics and supply chain firm Teckwah Industrial Corporation, said: "The role of the accountant is changing. We are no longer (just) the keepers of the books but we also give strategic advice to the management... and we have to be aware that we need to address sustainability issues as time goes on."

Mr Ian Hong, who chairs ISCA's Sustainability Reporting Quality sub-committee, said such reporting helps companies build trust among the public and investors.

"But apart from external validation, it's just as important for companies to make sure the targets they've set for themselves are meaningful for them, so it's not just a reporting exercise, but to look at how these targets are embedded within their whole strategic process."

The panel was moderated by Ms Fang Eu-Lin, who chairs ISCA's Sustainability Excellence Sub-Committee. It also featured Olam Food Ingredients managing director and chief financial officer Rishi Kalra and Mr Michael Tang, Singapore Exchange Regulation's head of listing policy and product admission.

The conference also featured the release of a joint ISCA report with AI Singapore - a national artificial intelligence programme under the National Research Foundation - and the National University of Singapore Business School on intelligent automation in finance functions.

Intelligent automation uses technologies such as artificial intelligence to streamline information and offer insights.

The study found that the process has helped companies augment their employees' capabilities and reduced work loads.

It noted that the accounts payable and accounts receivable functions, with their established routines, are the ideal candidates for automation.