NBS Knowledge Lab Webinar: Navigating the Green Wave: The Role of Accounting in Sustainability Management

In today's ever-changing business landscape, sustainability has become a strategic imperative. Accountants, armed with specialised training and exposure, occupy a pivotal position in driving sustainability initiatives and shaping the trajectory of businesses. During this webinar, our panellists discussed how accountants contribute strategically and the tangible benefits that extend beyond the balance sheet.

The panellists were Ms Anne Liew, Chief Financial Officer and Company Secretary of Chuan Hup Holdings Limited; Mr Uantchern Loh, CEO (Asia Pacific) of Black Sun Global; and Ms Phang Xin Yi, Sustainability Director of Coca-Cola.

Moderating the session was Mr Goh Kia Hong, Senior Lecturer at NTU Singapore’s Nanyang Business School (NBS) and Deputy Director of the Centre for Accounting & Auditing Research (CAAR).

 

The following is an edited transcript:

 

Goh Kia Hong: I invite the panellists to share their journey and provide their perspectives on today's theme.

 

Uantchern Loh: I'm glad to share. I guess there are two facets to this. First, the traditional role of an accountant. We are seen as being focused on counting tangible assets. And I guess in the past, it's really been about counting the countable, if I can use that phrase. In the ESG world, the age of sustainability, we are now dealing with managing the uncountable. There is a perception issue: how can someone who counts manage something that's uncountable? The challenge of greenwashing arises from the disconnect between tangible and tangible metrics. When the alignment is achieved, greenwashing can be effectively addressed.

 

Phang Xin Yi: I graduated from NBS in 2009 and began my career in EY [Ernst & Young], and then I did internal audit for about eight years in total. After that, I pursued a two-year MBA programme in Tokyo. Finally, I joined Coca-Cola's head office in Atlanta in the global IA [international audits] team, where I travelled extensively and networked with leaders, paving the way for my current role. Because I'm always passionate about sustainability, I volunteered to audit sustainability programmes and engaged with sustainability leaders across the world. When this vacancy opened, I successfully transitioned to my current role as the sustainability lead in packaging for ASEAN and South Pacific.

I think there are many transferable skills that we as accountants can bring to sustainability roles, which is essential as many functional and soft skills are required for a sustainability professional. Building this pool of talent is essential, and I'm happy to share my experiences here.

Goh Kia Hong: Quite interesting indeed, moving from accounting to a more business-oriented role. You started with external audit, then transitioned to internal audit, and now you've pivoted into something very business oriented. My question to you is: how do you find your skillset as an accountant and auditor relevant to what you're doing today?

 

Phang Xin Yi: When people think about sustainability, they often think about traditional efforts such as CSR [corporate social responsibility] programmes. But it's no longer that simple. Now, we really need to come up with goals to meet investors' demands. For instance, my company focuses on packaging goals related to collection, recyclability, and so on. For the team to devise strategies to reach these goals, the skills that we learn in auditing or in accounting become very relevant. Critical thinking is essential in developing strategies; project management is crucial to implementing them; and this ultimately enables us to achieve our goals. There is also reporting, which we are all very well-versed in. These are all important skills.

I also want to share that many sustainability teams lack strong financial and strategic skills typically found in accounting roles, highlighting the complementary strengths our background brings to strengthen interdisciplinary teams.

 

Goh Kia Hong: Thanks. As accountants, we are trained in reporting, crunching numbers, meeting targets, and meeting timelines. Anne, would you like to share your experience and your take on this topic?

 

Anne Liew: Good afternoon, everyone. I am glad to share my experience in the accounting field. Accounting goes beyond bookkeeping; it involves dynamic roles in financial management, reporting, and now, sustainability.

I graduated in 2005 with a bachelor's in accountancy. Equipped with fresh technical knowledge, I was enthusiastic about diving into the real world to practise my skillset. My first significant opportunity came at a European MNC, where I worked as an account supervisor, handling tasks like payment, closing, reporting, taxation, and budgeting. This was where I learned the fundamentals of financial management and reporting.

In 2009, I decided to join a Singapore-listed company, marking a new chapter in my career. In a listed environment, there are numerous compliance requirements and shareholder engagements, as well as the need for transparent information disclosure. In the past, this was mainly financial, but today, in a sustainability context, we're talking about non-financial disclosure. Working in a listed environment for 15 years has equipped me to add value as an accountant by providing technical knowledge and insights in data analysis to aid decision-making.

The role of accounting in the current wave of sustainability is significant, if not entirely pivotal, in sustainability reporting in four key areas. Firstly, in terms of data collection, accountants are vital in collecting both financial and non-financial data. For example, in the case of electricity bills, capturing not just the amount to pay but also quantitative consumption metrics is crucial for sustainability reporting.

Secondly, data analytics skills are essential. Accountants analyse data financially, identify opportunities and weaknesses, and propose improvements to management. Thirdly, reporting is inevitable in accounting. After data collection and analysis, accountants report back to stakeholders such as management, board directors, auditors, and shareholders during AGMs. Lastly, accountants certainly play a significant role in ensuring that the sustainability reporting landscape continues to evolve.

 

Goh Kia Hong: Thanks, Anne, for detailed sharing with us how your role has transformed over the years.

Historically, people have said that we don't add value because we report historical data. However, with the emerging role and the shift from the quantitative to qualitative in sustainability reporting, we add more value by focusing on forward-looking data such as energy consumption. This isn't just about cost savings; it's also about reducing carbon emissions, benefitting society as a whole.

Let me now post this question: How can we effectively communicate the value of these metrics and initiatives to stakeholders, such as investors, consumers, and employees? What are some ways that organisations or consultants like yourself help convey this value?

 

Uantchern Loh: Value is always relative. Take, for example, a painting. I may evaluate it at $10 because I think it's worth $10, while you may evaluate it at $1,000 because you like it. In the accounting world, when we talk about valuation, the basic valuation of typical financial statements is the numbers. The value of a company depends on its profits and losses. If it is making more money, the valuation goes up.

This concept extends to intangibles like brand and intellectual property (IP). How much is an IP or a brand worth? Once again, it is relative between individuals. In the sustainability world, much of the data is non-numerical. How do you value emissions? How do you determine what is high or low, good or bad for carbon emissions? And don’t forget the social aspect of ESG. How do you value staff loyalty, retention, or customer engagement? In this sense, valuation is very relative.

It's important to educate stakeholders — customers, employees, investors, the community — about this relative perspective. This is often overlooked in sustainability literature. Relativity hasn’t been discussed much because the notion of “how good is good” is very subjective. This is an area where academic research can contribute significantly to, understanding the relative value of sustainability. While everyone's sustainability reports strive to present them in a positive light, if everyone appears good, how do we differentiate what's truly outstanding from what's satisfactory?

So what is greenwashing, and what is green-hushing? Green-hushing involves not disclosing information, which lacks transparency. This ambiguity calls for deeper research into distinguishing genuine sustainability efforts from superficial ones.

This is where the role of accounting can be crucial. Accountants, skilled in valuations including intangibles and metrics like earnings per share, play a crucial role here. They understand how to evaluate and communicate these concepts. They can educate stakeholders on evaluating sustainability practices accurately, paving the way for a more informed approach to sustainability reporting and valuation. This, in turn, creates a new field of practice for accountants. I think this is where sustainability will really take off, as people will understand how to measure and value good in sustainability.

 

Goh Kia Hong: Maybe let me take this question one step further and ask about Scope 3 reporting. As you know, it is up-and-coming. Regulations are emerging, and EFRAG [European Financial Reporting Advisory Group] is making it mandatory. The ISSB [International Sustainability Standards Board] will also make it mandatory very soon.

My question is: how do you work with your supply chain to integrate Scope 3 reporting and the value of sustainability considerations across the whole value chain?

 

Phang Xin Yi: Supply chain management has evolved beyond being solely cost-focused, with an increased emphasis on sustainability today. Most large- and medium-sized companies have external commitments to climate, water, and waste targets. We are not the only ones approaching our vendors with such requests to improve sustainability credentials.

Our suppliers are aware that sustainability is the new norm, and we need our vendors as much as they need us. As part of our sustainability commitments, we have engaged with them extensively to build capability on these topics, which may be new to them. We help them set aligned targets and provide the support they need to work on their commitments. For example, we need to build mutual trust with suppliers with whom we have long-term relationships. This encourages them to invest in CapEx, such as buying equipment to increase energy efficiency or installing renewable energy sources like solar panels. Even if some suppliers don't have enough budget for CapEx, there are alternatives to improving efficiency, such as fixing water, energy, and gas leaks, correcting power issues, or simply switching off lights when not in use to reduce carbon emissions.

Accountants play a role in vendor relationships by managing credit terms carefully while balancing cash flow considerations.

 

Goh Kia Hong: Coming back to the point about valuation and putting a number to really demonstrate the benefit or value to society, let me take this question further:

How do you quantify cost savings? I'm sure there are opportunities for cost savings that can really demonstrate the benefit of sustainability. At the same time, this is where the skills of accounting, particularly management accounting, intersect with societal benefits.

We also have a question from the audience about the techniques used and how they are incorporated into capital investment appraisal decisions. Anne, in your role, you handle costing, cost-saving, budgeting, and investment/divestment decisions. How does your role as an accountant help to demonstrate the benefits of these changes?

 

Anne Liew: First of all, a typical accountant will always conduct a cost-benefit analysis. Going back to what Xin Yi mentioned about reducing the credit terms, this change can have benefits from a sustainability perspective. While we also consider cash flow, it's ultimately the accountant who has the visibility to balance the entire ecosystem in a way that is healthy for the business.

Accountants have comprehensive knowledge of the company, as they handle all aspects of the business. This enables them to find a balancing point to meet compliance requirements while achieving a win-win situation for both sustainability and profitability.

As for capital appraisal and investment decisions, if you operate in Singapore or plan to expand overseas, having sustainability reporting capabilities positions you as a market leader. This adds significant value to your organisation or investment, as it shows you understand and comply with sustainability standards. It makes your company a more attractive investment because you are at the forefront of this journey.

Being well-equipped with the necessary key management skills to comply with environmental regulations adds synergy and value to your investments, demonstrating that you are a mature and responsible company.

 

Goh Kia Hong: Someone asked: "Would it be too mundane to stay in an accounting job for over 15 years?"

 

Anne Liew: I don't think it's mundane. In fact, it's been exciting. Accounting is never the same. It keeps evolving. With sustainability reporting requirements, around 50 to 75% of people are aware of them now.

Beyond that, accountants can add value to decision-making processes. When you perform data analysis, you gain insightful information about departmental issues and root causes. This allows you to collaborate with teams to find proper solutions that improve the bottom line.

You also get exposure to various aspects of the organisation before issues arise, enabling you to mitigate risks or implement solutions. Additionally, you need to keep yourself updated with the latest financial reporting standards to avoid penalties. The continuous learning and adaptation make the role very dynamic and robust.

 

Goh Kia Hong: If you look at accounting as just bookkeeping, you probably can't do it for 15 years. But accounting is more than that. It's about risk management, getting involved in strategy, and participating in investment decisions. A good accountant is consulted on anything the company touches. If you're not consulted, then you're probably not adding value in your accounting role.

So far, we've talked about costing and investments, and now let's shift gears a little and look at the top line. Xin Yi, you're in Coca-Cola, a multi-national corporation running a huge business.

How does your organisation leverage sustainability initiatives to create new revenue streams?

 

Phang Xin Yi: One of the lowest hanging fruits is installing solar panels. In the long run, the revenue created will offset the initial CapEx cost. Another example is lightweighting the packaging, making existing bottles lighter, which helps save on packaging costs.

Setting up collection centres to collect packaging back is another example, including PET plastic bottles and aluminium cans. We pay people to bring these packaging items back, whether through informal sectors prevalent in Southeast Asia markets or formal sectors like Singapore through waste management companies. Then, we sell the bottles to recyclers, creating revenue for us.

One further example is setting up collection programmes with our customers, such as 7-Eleven or Grab. We place collection bins at 7-Eleven stores so consumers can bring back empty bottles and cans. Such activities motivate consumers to be more eco-friendly and improve brand reputation for both Coke and our customers like 7-Eleven and Grab. This enhances the products or services we offer to our customers.

 

Uantchern Loh: So how can sustainability be profitable? That's a big question. Currently, the connection is tenuous at best, and it is often seen as isolated. It needs to be more integrated into operations.

 

Goh Kia Hong: It must be an extension of what you're already doing. Then it aligns with your long-term strategy. I've seen many companies produce sustainability reports with lots of positive messaging, but when you compare these reports to their annual reports, they don't seem to align quite well. If you have a sustainability strategy aligned with your corporate strategy, then the enterprise will thrive.

 

Anne Liew: For this win-win situation can happen, you have to consider revenue streams that can attract potential clients while also playing a role in sustainability. For example, with the AEI or Asset Enhancement Initiative, you can opt for a fully green building, where electricity is generated entirely by solar panels. If you have ideas surrounding your property that align with green initiatives, you can attract target tenants who want to be part of a green environment, which can also help them comply with environmental regulations. We've seen a high pickup rate when we have more buildings available for rent. So, when you package a product like Coca-Cola, you have to include this thinking in your product engagement and elements so that when they buy your product, they become part of it. I think that can help.

 

Goh Kia Hong: The next question is on technology. With technology, analytics, and AI, the question is: How can a modern accountant, with evolving technology advancements like AI and blockchain, leverage this technology to enhance their role — whether it's in financial forecasting, building a case for sustainability, or improving reporting?

 

Uantchern Loh: Technology is definitely important in data gathering. We don't have enough data. Historically, we've been gathering numerical financial data for a long time with ERP systems. But we need newer technology to gather not just numerical data like emissions, but also non-numerical data like loyalty and purpose. How do we quantify purpose? How do we quantify loyalty and engagement?

Companies like Workiva, for example, are technology companies with interesting solutions for data gathering for sustainability. Companies should look into these new technologies. With data, you can leverage AI to do more interesting things.

 

Goh Kia Hong: We've got a good sense of where accountants can play a role in sustainability — from financial penalties to reporting, data gathering, analytics, valuation, and investment.

So my question to the panellists is: Is the role of sustainability and sustainability management confined to the accounting profession? Who else do you think is also vying for this piece of the cake in the organisation?

 

Anne Liew: I think it's not confined to only the accounting profession. There's a concerted effort across the board from stakeholders and also from the board of directors, vendors, and upstream participants. Everyone plays a role. However, I think accounting can be the project leader in the data collection process. Also, to answer one of the audience’s questions, technology or ERP can come in to help moderate this data collection process. But communication and understanding are crucial. All the key players, the heads of departments, need to understand or be updated about this. At the end of the day, the whole organisation needs to align with the same vision to achieve the goals set by the board and the company. So I guess it's a concerted effort, and no one can escape it. Everyone needs to participate. And I think eventually, the individual department KPIs will also involve this sustainability element.

 

Goh Kia Hong: The question that I always get every time I run a seminar is, who is the right person in an organisation to champion sustainability reporting? Of course, in bigger organisations, we have a CSO [Chief Sustainability Officer], and a CSO is the one who champions sustainability. In the absence of a CSO, who should be the one championing sustainability?

 

Phang Xin Yi: Although we do have a CFO, however, the reporting responsibilities in my company are being shared by the operational people like me. I do strategy and operations.

We currently lack sufficient involvement of finance, which I believe is a gap. It's being done by people like me. It's fortunate that I have finance and audit knowledge, but most of my colleagues don't. There's room for improvement. I think people on the ground doing the actual work would be the gatekeepers and the persons to do the reporting because we are the ones collecting all the data. However, there may be stronger controls being implemented by finance or somebody to conduct additional review processes, ensuring that all the data eventually reported externally is assured.

 

Goh Kia Hong: Linking back to our earlier question about greenwashing, Uantchern, you're in consulting. Given a choice, how best do we recommend that a company organises itself to do the sustainability role well? A lot of time, in our experience, it's a public communication issue. Sometimes you end up with the CFO [Chief Financial Officer]. The CFO might be a good guy to do it, but then he might not be the best person. How best should we organise the sustainability team?

 

Uantchern Loh: It shouldn't be isolated. I believe that sustainability should be embedded within the organisation, just like risk management. Risk management has evolved over the past decades. It used to be very siloed, and Chief Risk Officers could even be appointed externally by banks.

There's definitely a role for a CSO, especially in industries where it's more challenging, like agriculture, extractives, and oil and gas. But in other industries, sustainability should be everybody's responsibility. Once again, sustainability should be an integral part of the organisation.

 

Goh Kia Hong: I totally agree. It cannot be siloed, it cannot be compliance-focused, it cannot be a checkbox. If all our company's ERM is a checkbox, then it doesn't achieve the purpose of value creation, right? Okay, now that we've discussed and reached a consensus that there is a great opportunity, a great role for an accountant to play in the organisation in the area of sustainability management.

But what exactly is sustainability management? A lot of sustainability early on was taken up by the science people, the engineering people, and every time they talk about sustainability, they show charts of what is going to happen when the temperature increases by 1.5 or 2 degrees Celsius, when the sea level increases by 0.5 metre. They give you very exciting but very scary scientific charts, but nobody understands that.

In the role of an accountant, we can marry this data with a business perspective. Let me tell you the implications to our cost, to our revenue, to our opportunities, risks, and opportunities. So then, the question, I think, from many of these audiences is, how to start.

 

So how do you recommend that an accountant who is now, or a graduate, a fresh graduate who has just graduated as an accountant, who is working in this core financial management accounting role, pivot into this exciting area?

 

Anne Liew: I guess for those who have just graduated, they prioritise understanding sustainability reporting requirements. It might be mundane at the start, but eventually, this will prove to be essential. The biggest challenge is to convince the stakeholders to embrace sustainability. It goes beyond compliance or checkboxes. How do we communicate its value to stakeholders?

So we must understand sustainability reporting inside-out, stay up-to-date, and continuously grow. In today's digital environment, we have many to learn. In this way, you can add value to the organisation or to your own post-graduation career journey.

 

Goh Kia Hong: And I'll come back to that later to sum up. But let me ask Xin Yi, you have pivoted from pure accounting to a totally green field to you — literally green. Surely, there were a lot of fears, anxieties, and doubts. Your passion was paramount to overcoming all these. Tell us about your approach to dealing with them.

 

Phang Xin Yi: Firstly, networking is very important. Whenever you get a chance, speak to all the leaders, especially the sustainability leaders, so that they know who you are and you have the chance to showcase your skillset, your soft skills, or your transferable skills. Even if you don't know too much in terms of the content, everything can be learned. What matters most is your desire to contribute.

To share a bit more, in every company, there is at least one person or one team working on sustainability. So always put your hand up. Don't be afraid to work hard. Just go speak with them, and ask them: "Hey, can I shadow you for this project? Can I participate? Can you include me?" You cannot report what you don't know, so you need to first put in the time and effort to understand what's going on and to even go the extra mile. No matter the role, you have to participate in these projects. I am always in need of an extra pair of hands, so whoever comes to me, I will be very glad to let them follow me and learn.

Also, as an auditor-accountant, there are always ongoing processes that you can participate in. Put your hand up and say: "I want to audit this. I want to participate in this reporting." Today, there are so much mandatory regulations, not just in Singapore, but also the rest of the world. For an MNC, there's the SEC, the European Commission, and a lot of mandatory reporting. We always have a lack of people to do the data collection. These things may be a little boring, but starting with the boring things can help you learn so much.

 

Goh Kia Hong: Anne spoke about with lifelong learning — I'm going to pick a skill and learn it. And Xin Yi, you talked about networking. The thing is that in every project that the company engages in, they need a finance guy, they need an accountant to add value. here is a role for us to play in any project. We just need to put our hands up and be part of the project.

 

Uantchern Loh: There is no clear line demarcating where one is involved in sustainability or not. We are all involved.

We can get caught up with the acronyms and the technical terms. We need to distill that into, once again, valuation. Accountants play a pivotal role in complex areas like carbon trading.

There are a lot of arguments about the morality of carbon credits and offsets, but that aside, I think the contribution to the capital market is interesting. It's worth 2 billion dollars at this point in time, and I think it will grow. There was an interesting article by Michael Bloomberg in The Business Times today. It discusses making carbon trading transparent and combatting greenwashing.

Sustainability offers diverse opportunities where basic trading skills apply—whether in stocks, bonds, or carbon credits—it's a realm where we're already deeply involved.

 

Goh Kia Hong: You brought up another interesting point. Carbon trading is still relatively unregulated, much like the cryptocurrency market — very exciting, growing, but nobody exactly knows where to go, except that we must get involved.

I just want to take one more question about regulation. The question is: What do you think about regulation shaping sustainability practices and reporting? Should we have more regulation or less regulation, especially in the context of greenwashing? Any comments about regulation and how you think it is playing in this space?

 

Anne Liew: I think the regulation is enough for now. I think everyone will agree with me that it's enough for the start, for beginners to get into this journey. But it's also to get everyone to understand how the standards are set and the correct benchmarking, because the data can be very subjective. For companies across different industries, or even within the same organisation, the standards can be very different. A guideline, a parameter, a clear implementation journey can be very helpful for the beginner. So I think it's more about the assistance to help all the businesses to navigate this, and to be right onto the journey together rather than regulations.

 

Goh Kia Hong: What is your final takeaway from today's session? And what do you want to recommend to the users who are trying to get into the space?

 

Phang Xin Yi: Sustainability reporting standards are evolving, and there are now globally accepted standards for sustainability reporting such as IAASB [International Auditing and Assurance Standards Board]. Rather than the voluntary nice-to-have disclosure of the past, many regulatory organisations like the SEC [U.S. Securities and Exchange Commision] and ASIC [Australian Securities and Investments Commission]have already made ESG reporting mandatory. The risk of misstatement is equivalent to financial reporting in those markets. So I believe that as accountants, we need to build our capability and knowledge on ESG metrics, the reporting standards, so that there is accuracy in what we report. As I mentioned earlier, one cannot report something that we don't understand.

Furthermore, sustainability returns require new thinking. For instance, how can profits, costs, and income be linked to make projects viable and encourage the use of new technologies. It's hard for accountants, or CFOs, or CEOs to evolve their thinking on sustainability. They don't want to really spend money on sustainability, as always seen as a cost centre. But we need to evolve, to understand that it's no longer just a nice-to-have but a licence to operate. There are so many sustainability aspects that each company can work on, it really needs a cross-functional team, including accountants. It is vital to identify the risks and critical problems, develop strategies, and implement cost-effective solutions to ensure that sustainability remains viable in the long run.

 

Uantchern Loh: I would say, continue to do what you are doing, and you will evolve. I mean, we will evolve, and we will do better in terms of how we count the so-called uncountable. Although it may take time — not long, probably another 20 years — I think we'll get there. Enterprise risk management is the evolution of where we are right now. 30 years ago, we didn't have risk committees, but now people are beginning to see their value.

 

Anne Liew: I think it’s to really understand how ESR is going to affect our businesses and also to really have our business strategy surrounding sustainability, to be part of it and embrace it.

 

Goh Kia Hong: We talked about education and lifelong learning. NBS is also rolling out two very exciting new programmes. One is an undergraduate programme — a new 4-year Accountancy for Future Leaders programme where we package sustainability and analytics into the whole accounting module. And this is really the skillset we expect our Accountancy graduates to be equipped with so that by the time they graduate, they are able to engage in conversations on Scope 1, Scope 2, Scope 3, to get involved in sustainability reporting.

Our Executive Master of Science in Sustainability Management is akin to an EMBA programme. Professionals attend one-to-two-week segments followed by returning to work, then returning for more in-house learning. It upskills professionals looking to pivot into the green economy.

Watch the webinar here: