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Growing Importance Of “S” In ESG

Huge Potential For Accountants In Social Sustainability

The permeation and importance of ESG (environmental, social, governance factors) in businesses has never been as significant as it is today. However, the “social” element is often overshadowed by the “environment” element, given global paradigms and narratives around climate change. This is about to change as, since the COVID-19 crisis, neglected social factors are moving up fast in the corporate agenda, with increasing attention on social sustainability.

The Monetary Authority of Singapore (MAS) has a vision for Singapore to be a leading centre for green and sustainable finance in Asia and globally, and Singapore is expected to take the lead in sustainability reporting. The Sustainability Reporting Advisory Committee, an industry-led committee set up by the Accounting and Corporate Regulatory Authority (ACRA) and Singapore Exchange Regulation (SGXRegCo), provided recommendations including mandatory climate reporting from financial year (FY) 2025 for Listed Issuers and from FY 2027 for Large Non-Listed Issuers. While the adoption of sustainability reporting is accelerating, focus is still centred on climate-related disclosures. However, social sustainability reporting has always been on the agenda. The SGX sustainability report includes “material ESG factors” which list the reporting entity’s interaction with its social environment. Standards such as the Global Reporting Initiative (GRI) standards on reporting for Diversity, Opportunity, Forced Labour and Employment, for example, are existing social sustainability standards. A KPMG survey between 1993 to 2022 showed that the GRI remains the most dominant standard used around the world, adopted by 68% of the N100 and 78% of the G250, with the Americas demonstrating the greatest uptake. Social sustainability standards have therefore always been in play as part of GRI reporting around the world.

In fact, companies have, for a while, focused on their social impacts and contributions to society. Since 1990, corporate social responsibility (CSR) reporting has become more common globally – a trend that is predicted to continue and likely to be embedded as part of social sustainability reporting. Some 90% of companies on the S&P 500 index published CSR reports in 2019, up from 86% in 2018, 75% in 2014, and only 20% in 2011. Companies historically disclose such information to show their legitimacy in society and social purpose, with numerous corporations adopting standards such as the Business for Societal Impact (B4SI) and Social Accountability Standard 8000. CSR reporting is expected to be largely integrated with the sustainability reports of companies. SGX has indicated that Singapore will adopt the International Sustainability Standards Board (ISSB) standards when they are issued, which will include reporting on social sustainability.


There is huge potential for accountants to play a role in the increasingly important social sustainability agenda. Accountants are well versed in existing and emerging reporting standards that include reporting on sustainability. Such skills can enable the accountant to collect, analyse, and also direct the narrative surrounding social sustainability reporting. However, measuring, recording and analysing a company’s social impacts can prove complicated and costly, and the accountant would need to continuously develop expertise in this field. For instance, where companies sell products that foster or enable financial inclusion, they can employ usage indicators that measure the amount and type of inclusive financial products sold to the targeted segments of society. However, quality measures of social impact that assess whether these inclusive financial products have improved the lives or livelihoods of the customers, or customers’ awareness and understanding of financial products, remain challenging.

In addition, the social impacts of community investments are, in particular, highly challenging to measure. For example, a company may invest in a road safety campaign but yet, notice that traffic accidents are still on an upward trend. It is challenging to assess the causal link between road safety socialisation and driver behaviour, followed by the impact on traffic accident rates, as the incidence of traffic accidents could be influenced by the growing population or vehicles on the road. Another challenge is that reputational and financial impacts on the company from social sustainability strategies are challenging, complicated and also costly to measure and analyse. Impact measurement therefore requires significant investment and, with limited resources, there is only so much data available to evaluate such impacts. Despite the complexities and challenges, however, accountants – who are trained to be adaptable and analytical – are well suited to make the best use of available data to link the dots and tell the best possible story.

On the flip side of the spectrum are third-party assurance and advisory roles which are experiencing an uptrend, in conjunction with the increasing social financing and regulatory requirements for sustainability reporting. A benchmarking study of global practice in sustainability disclosure and assurance conducted by the International Federation of Accountants (IFAC) found that in 2021, 95% of large companies around the world reported on ESG, up four percentage points from 2019 (91%). Of those, 64% of companies obtained assurance over some of the information they provided, compared with 51% in 2019. The accountant is therefore well placed to seize the opportunities in the assurance and advisory space as well.

Accountants can influence or drive a company’s social sustainability strategies. Accountants, as stewards of the company’s finances, can help management identify social sustainability risks and strategies, and advise management on their financial impacts.

As the CFO of a corporate foundation, my role is to ensure that every dollar achieves the maximum social return possible. But it is not just this – there is a need to consider the reputational and stakeholder partnership impacts to our company from social sustainability strategies that are employed. Our approach to community investment entails identifying the greatest social need in the communities we operate in, taking a long-term approach, and building strong partnerships across a myriad of stakeholders encompassing governments, non-profit organisations, local communities, distribution partners and even employees. The impacts we aim to achieve include both macro-systemic impacts, on-the-ground implementation impacts and thought leadership and advocacy. In view of these considerations and our corporate principles, the allocation of resources requires a careful balance between the desired social outcomes and return on investment.

An accountant’s skill set is well placed to effectively identify appropriate social sustainability strategies and allocate resources based on the desired outcomes for communities, customers and the company. Driving the company’s social sustainability agenda could include areas where the company’s strategies can achieve optimal impacts in the communities where it operates. This means that accountants in the social sustainability field will also need to keep abreast and be knowledgeable about pertinent social issues across geographies, especially the societies their company operates in.

Indeed, there are many pressing social issues today. Approximately 1.19 million people die each year as a result of road traffic crashes, and road traffic injuries are the leading cause of death for children and young adults aged five to 29 years of age. UNICEF reports that a total of 67 million children missed out on vaccinations between 2019 and 2021 during the COVID-19 pandemic, with vaccination coverage levels decreasing in 112 countries. Climate change impacts health in a myriad of ways, such as leading to death and illness from increasingly frequent extreme weather events such as heatwaves, storms and floods; the disruption of food systems; incidence of water and vector-borne diseases, and mental health issues.

Being in the social sustainability space means that the accountant would need to consistently be aware of which social issues matter and, more importantly, use the skill set to advise and direct management on how the company’s allocated resources can tackle the targeted issues at hand.

As an accountant progresses in career and leadership, he or she may advance to senior management or board director positions which include governance over a company’s ESG strategy, or as adviser to organisations. Accountants have to be adept and continually hone their leadership and governance skill set in the area of social sustainability as this can help prepare them for senior leadership or advisory positions.

Social bonds and loans are aimed at financing projects that create positive social impact, such as driving diversity and social mobility within the community, improving socioeconomic advancement and empowerment. The positive impact could also include other social aspects, including the provision and promotion of basic infrastructure such as clean drinking water, sanitation and energy, and access to healthcare and education, among others.

Accountants, with their corporate finance knowledge, can support the structuring and assessment of financial impacts from social financing and provide advice on the issuance or subscription of social financing instruments. Additionally, accountants can also build up expertise to evaluate the feasibility and validity of social impacts that social financing purports to achieve. This is extremely important, and accountants can play this role either in assurance or third-party advisory, or by providing buy-side advice or decisions.


With the increasing importance of social sustainability, there is potential for accountants to play a myriad of roles in this space. As Singapore’s sustainability landscape evolves, and as the social sustainability agenda gains increasing prominence and importance around the world, accountants are well placed to ride on the exciting opportunities ahead.

Philip Shin is Chief Financial Officer, Prudence Foundation, Prudential plc.

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