TAKEAWAYS
A joint study by the Institute of Singapore Chartered Accountants (ISCA), Singapore Manufacturing Federation (SMF), Deloitte & Touche Business Advisory Pte Ltd (Deloitte), and Singapore Management University (SMU), titled Sustainability Transformation: The Role of Accountancy and Finance Professionals in the Singapore Manufacturing Sector, was launched at the ISCA Conference on 29 November 2023 with over 1,000 delegates in attendance. The study used a mixed-methods research design to garner quantitative and qualitative data from SMFโs spectrum of industry groups. This included a survey of 115 manufacturing companies, one-to-one interviews with senior executives from 20 companies, and two focus group sessions.
The study investigated three areas of the Singapore manufacturing sector to, first, shed light on the current state of sustainability integration into the corporate strategies and business models of companies; second, understand the skills needed in sustainability transformation; and third, assess the role of accountancy and finance professionals in sustainability transformation.
The study found that sustainability is becoming a business norm in the manufacturing sector, with 70% of manufacturing companies surveyed already discussing sustainability transformation in boardrooms across industrial parks and factories. However, to date, only 37% of those surveyed have embarked on sustainability initiatives, and only 21% have done sustainability reporting. Despite this slow start, the statistics are expected to double in the next 1โ3 years.
Amid this rising tide of sustainability transformation, accountancy and finance professionals are emerging as the natural champions for companies to anchor their sustainability ambitions. There is evidence that this is already happening. Among manufacturing companies that have either begun or planned to collect non-financial sustainability data, 90% expect their accounting and finance functions to assume high-value strategic roles in their organisations.
Moving forward, the manufacturing sector will focus its sustainability efforts on six areas, with sustainability reporting and sustainable finance as two emerging areas of concern. New sustainability skill sets will be needed to achieve sustainability transformation in these areas.
Companies surveyed are focusing their sustainability efforts on these six areas โ circular economy, reducing greenhouse gas emissions, renewable energy and energy efficiency, preventing pollution, sustainability reporting and sustainability finance. In addition, there are two emerging areas of sustainability where resources are allocated to, namely, sustainability data and corporate governance for sustainability (Figure 1).
Figure 1 New sustainability needs and gaps in manufacturing and their corresponding sustainability skill sets
The research team distilled 10 skill sets from the existing and emerging areas of focus on sustainability. The study found that among respondents in the study, 42% reported having only โelementaryโ skills, 27% reported that they have โemergingโ skills, 15% reported having acquired โstrategicโ skills, and 16% reported having โleadingโ skills. This suggests that there is ample room for improvement for manufacturing companies to elevate their skills from โelementaryโ and โemergingโ to โstrategicโ and โleadingโ (Figure 2).
The report also studied each sustainability skill set closely, and presented a clear case on why accountancy and finance professionals are well positioned to take up each skill set for the sustainability transformation of their organisation in the manufacturing sector.
Figure 2 Sustainability skills maturity
The study offers five ways for manufacturing companies and accountancy and finance professionals to further drive sustainability transformation:
At the ISCA Conference, Dr Holly Yang, Associate Professor of Accounting, Co-Director (Academic Research), School of Accountancy Research Centre (SOAR), Lee Kong Chian Fellow, School of Accountancy at SMU, shared that a curious and open-minded approach is the foundation to unlocking opportunities in sustainability transformation.
โAs 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 skill sets which will stand them in good stead to steer sustainability transformation in companies, including those in the manufacturing sector,โ said ISCA President Teo Ser Luck, of the study.
Joshua Sim is Senior Research & Insights Manager, ISCA.
ยฉ 2024 Institute of Singapore Chartered Accountants
