Building a sustainable world

As the global consensus on the importance of sustainability grows, it is becoming evident that action that goes beyond financial reporting can fuel its practice further.

‘We need to be transparent, accountable and responsible for our organisations’ impact on the planet and its people,’ said Ada Leung, director of ACCA China, during a sustainability reporting discussion at the recent ISSB-ACCA joint stakeholder dinner in Beijing.

‘I hear the voice of capacity building very strong everywhere, and this is the common field that we can work together,’ said Zhang Zhengwei, director of the International Sustainability Standards Board’s (ISSB) new Beijing office. ‘Collaboration between ACCA and the ISSB can enhance our impact, particularly in capacity building and promoting sustainability.’

The company line

Zhang Shaofeng, CFO of China Petrochemical Corporation (Sinopec Group), said that annual sustainability reports have been issued since 2006. Over the years, Sinopec has also continued to benchmark the regulatory requirements and best practices of domestic and international counterparts, integrating sustainability disclosure into internal control processes.

Zhang believes that, in the long run, high-quality sustainable disclosures will help the business to develop in a high-quality way. However, some key challenges remain, and overcoming them requires collaboration with other parties as well as guidance from experts.

‘How can enterprises solve the problem of increasing inputs and costs in the process of promoting green transformation? How can they effectively transform inputs and costs into long-term benefits?’ he asked.

Ding Quansheng, dean of the Financial Institute at Guotai Junan Securities, said the organisation has ramped up efforts to cultivate more specialised talents. The company set up a carbon finance business unit in 2014, and in 2015 it was in the first batch of carbon trading brokerage firms in the China Securities Regulatory Commission.

‘All ESG and sustainable development strategies need to be accomplished by people; we have invested a lot of effort in the cultivation of green financial talents,’ Ding said.

Positive change

Tina Chiang of Ant Group said that technology and environmental, social and governance (ESG) are integral to their DNA and business strategies, and the organisation has invested heavily in research and development and human capital in order to contribute to building a better world.

‘We employ remote sensing technologies to survey agricultural land, allowing us to gather information on its size, distance and potentially its value. This enables rural farmers to access micro-lending opportunities that may not be available to them through other channels in China,’ said Chiang.

Risks and opportunities

Sustainability is not driven by cost or reporting alone. It is about managing risk and seeking opportunities that arise from sustainability issues, said Eddie Ng, partner, ESG consulting services at KPMG China.

Companies need to monitor emerging regulations, market preferences and technological advancements driven by sustainability. ‘Sustainability is not a separate aspect; it should be integrated into business decision-making,’ she said.

Patrick Chu, ESG reporting and assurance services partner at KPMG China, emphasised the importance of interoperability between global and jurisdiction-specific sustainability reporting standards.

While certain aspects of sustainability reporting may vary based on jurisdictional requirements and local priorities, core principles are often uniform. ‘Consistency, comparability and transparency are key objectives that can be achieved through interoperability between global and jurisdiction-based standards,’ Chu said.

As for implementation, ESG is not an optional consideration; it is a necessity for long-term success and should be aimed for in the future, said Yvonne Kam, partner in capital markets and accounting advisory services at PwC China. ‘ESG is not a matter of cost/benefit; it’s like buying insurance for the company’s survival,’ said Kam, adding that companies need to have a mechanism to make sure the green objectives are in place.

‘Use ESG to drive strategy by streamlining management responsibilities, building capabilities and allocating budget. Ensure your internal structure supports ESG implementation and empowers all levels of the organisation,’ she said.

Enablers’ efforts

Efforts from enablers will also accelerate the pace by offering professional guidelines and advocating for clear regulations among others.

The Shenzhen Green Finance Association promotes the development of green finance and has led more than 161 financial institutions to disclose high-quality environmental information reports locally.

Chen Haiou, secretary-general of the association, said that Shenzhen’s Green Finance Regulation sets clear requirements for financial institutions in terms of establishing a green finance system, promoting product and service innovation, and mandating environmental information disclosure.

‘The banking sector performs the best in environmental information disclosure, while the fund industry, including public and private funds, has room for improvement,’ she said, adding that environmental information disclosure should be both a top-down and bottom-up effort.

As the discussion turned to the importance of professional accountants in environmental preservation and social justice through advisory and assurance services in sustainability disclosures. Leung had this to say: ‘Accountants play a key role in advancing the global agenda for a greener, fairer and more sustainable world. We are all here to make a difference in this new era of sustainability disclosure.’