Study: Accountancy and finance professionals poised to drive sustainability transformation in manufacturing sector

• Only 37% of manufacturing companies surveyed have implemented sustainability initiatives; this is slated to double within one to three years.

• 10 skill sets identified to further sustainability transformation; accountancy and finance professionals well-positioned to upskill in these areas.

• ISCA launches ISCA Sustainability and Sustainability Assurance Professional certifications to plug gaps in sustainability skillsets

• Accountancy and finance professionals have important roles to play in the sustainability transformation of manufacturing companies.

• 5 Sustainability recommendations for manufacturing companies.

SINGAPORE – 29 November 2023 – A joint study by the Institute of Singapore Chartered Accountants (ISCA), Singapore Manufacturing Federation (SMF), Deloitte, and Singapore Management University (SMU) was unveiled on 29 November 2023 at the ISCA Conference.

The research report is entitled Sustainability Transformation: The Role of Accountancy and Finance Professionals in the Singapore Manufacturing Sector.

The report reveals that only 37% of companies studied have implemented sustainability initiatives, and only 21% have done sustainability reporting. However, this number is slated to double in the next one to three years, with 70% of the companies in the study sharing that they have already begun their sustainability transformation in one form or another, while many have reported initiating discussions to implement sustainability initiatives and sustainability reporting in the near future.

The study also found that manufacturing companies focus their sustainability efforts on six areas with sustainability reporting and sustainable finance the two emerging areas of concern.

To achieve their sustainability transformation objectives in these areas, new sustainability skill sets will be needed. The study identified 10 skill sets required for sustainability transformation in the manufacturing sector. These skillsets are:

1. Stakeholder and community engagement

2. Circular economy and resource efficiency

3. Carbon and decarbonisation strategies management

4. Sustainability data management and impact measurement

5. Sustainability reporting

6. Sustainability risk management

7. Sustainable finance

8. Internal audit on sustainability governance

9. Climate and nature financial implication qualification

10. Natural capital management

To enable accounting and business professionals who have a keen interest in sustainability, with the skillsets to advance their sustainability journey, ISCA has launched two sustainability certifications – the ISCA Sustainability and Sustainability Assurance Professional certifications.

Recognising that everyone is at different stages of their sustainability journey, the certifications take learners through the course in 3 progressive stages, consisting of the foundation, professional, and capstone modules.

The ISCA Sustainability Professional Certification aims to equip professionals who are supporting their organisations in sustainability reporting as well as those interested in kickstarting the decarbonisation journey for their organisation.

For those involved in providing assurance in sustainability reports, they will be able to equip themselves with essential knowledge of sustainability assurance and assurance standards through the ISCA Sustainability Assurance Professional Certification.

Accountancy and finance professionals are well-suited to pick up these skills and spearhead the sustainability efforts of their organisations due to their deep financial literacy and the growing demand for sustainability reporting. This enables accountancy and finance professionals to address the financial implications of sustainability-related issues, while collaborating closely with other business units to evaluate and document potential risks, impacts, and opportunities.

There is evidence that this is already happening in the Singapore manufacturing sector. The study found that 55% of manufacturing companies surveyed have either begun or planned to collect non-financial data pertaining to sustainability. Among this group, 90% expect their accounting and finance functions to shoulder high-value strategic roles for their organisations.

The study offers five ways for manufacturing companies and accountancy and finance professionals to further drive sustainability transformation:

• Recommendation 1: Create a C-suite position for the Chief Financial and Sustainability Officer (CFSO) – A CFSO can help translate sustainability measurements and data into the financial bottom-line.

• Recommendation 2: Integrate sustainability considerations into current operations – This will ensure that sustainability initiatives and business strategies are aligned.

• Recommendation 3: Leverage international/local communities of practice to stay informed on sustainability matters – Plugging into sustainability discussions will keep the company abreast of initiatives, best practices, and innovations by sustainability leaders.

• Recommendation 4: Assess upstream or downstream supply chain opportunities and risks – With value chains becoming more compliant with sustainability requirements, companies need to take advantage of ensuing business opportunities, and mitigate any related risks.

• Recommendation 5: Discover new business niches – These efforts can lead to the creation of innovative, marketable products that cater to the growing demand for sustainable solutions.

These recommendations stemmed from an analysis of quantitative and qualitative data from SMF’s spectrum of industry groups. This data was obtained through a survey of 115 manufacturing companies, one-on-one interviews with senior executives from 20 companies, and focus group sessions. Among the companies in the study, 18% are multinational companies, while the remaining 82% are small and medium-sized enterprises.

ISCA President, Mr Teo Ser Luck said: “As the business landscape takes a profound shift towards ensuring sustainable practices, accountants are increasingly positioned as key anchors in driving this transformation. Our joint study reinforces the notion that accountancy and finance professionals are well-placed to upskill themselves with the relevant skillsets which will stand them in good stead to steer sustainability transformation in companies, including those in the manufacturing sector. ISCA is committed to this cause as we launched two specialised certifications today – the Sustainability and Sustainability Assurance Professional certifications – designed to equip professionals with the expertise needed to navigate and lead sustainability transformation.”

Mr Lennon Tan, SMF President, said, “Our study with ISCA, Deloitte, and SMU underscores the critical role of sustainability in the advancement of Singapore’s manufacturing sector. The SMF is responding with initiatives like the CSO-as-a-Service (CSOaaS) and the upcoming green manufacturing mark, to be unveiled at the SMF Manufacturing Day Summit. These efforts, along with the pivotal contribution of accountancy and finance professionals, are key to driving our sector towards a sustainable and innovative future. We are dedicated to supporting manufacturers through this transformative journey.”

Brian Ho, Sustainability & Climate Leader at Deloitte Southeast Asia, said: “The manufacturing sector plays a crucial role in combatting climate change, and Accountancy and Finance professionals are increasingly expected to drive their organisation’s sustainability transformation. As outlined in this report, the Singapore manufacturing sector has an exciting opportunity to take the lead on climate action with their accountancy and finance professionals at the forefront of this effort.”

Professor Cheng Qiang, Dean, School of Accountancy and Lee Kong Chian Chair Professor of Accounting, SMU said, “As part of SMU’s sustainability education framework, every undergraduate will be equipped with the knowledge, skills, and mindsets to tackle a myriad of sustainability issues and become active global citizens. From 2024, sustainability topics will be embedded in the Bachelor of Accountancy curriculum. Armed with a specialised accounting degree and complemented with an intermediate knowledge of sustainability, our students will be well positioned to embark on accounting careers that are meaningful and impactful.”