Building a Sustainable Future: Value Creation Through Sustainability Reporting and Assurance

Sustainability is no longer a choice but a business imperative. As global regulations tighten and sustainability standards increase (both internationally and locally), investors demand transparency, and stakeholders scrutinize ethical practices, accountants emerge as essential enablers of credible sustainability integration within corporations. 

According to the 2025 Global Risks Report issued by the World Economic Forum, it analyses global risks over one-, two- and 10-year horizons to support decision makers in adopting a dual vision that balances short- and long-term risks. Climate change and environmental-related risks (such as extreme weather events, biodiversity loss and ecosystem collapse, critical change to Earth systems, natural resources shortages as well as pollution) and societal risks (such as inequality and societal polarization) are regarded as top ten risks among the global risks ranked by severity over the long term (i.e. 10 years). Over the past decade, institutional investors have placed more demand on the corporate board and senior management’s efforts into sustainability and climate risks and opportunities. For instance, in 2021, ExxonMobil faced a challenge from an activist hedge fund in a climate vote, which accused the company of insufficient efforts by its board to combat climate change. This ultimately resulted in the loss of several board seats. As institutional investors and corporate management increasingly recognize the importance of sustainability, there are growing commitments of capital and effort toward sustainable initiatives. The accounting profession is set to lead this transformation while upholding its critical financial and treasury roles. 

Regulatory momentum is rapidly accelerating, with the issuance of global and local sustainability disclosure standards, specifically IFRS and HKFRS S1 and S2. These standards aim to enhance investors’ decision-making by integrating sustainability information, including associated risks and opportunities, into financial impacts. In addition, various jurisdictions and regulators have introduced sustainability roadmaps that impose new climate reporting requirements, mandate the adoption of IFRS S1/S2 standards, and establish sustainability assurance requirements. The HKSAR Government launched the Hong Kong Sustainability Disclosure Roadmap in December 2024, which sets out a three-phase approach for the adoption of the ISSB standards by large publicly accountable entities, with full implementation expected by 2028 the latest. Shortly after, the HKICPA published the Hong Kong Sustainability Disclosure Standards on a full alignment basis with the ISSB Standards, with an effective date of 1 August 2025. In 2025, several updates and changes are anticipated in Hong Kong’s sustainability landscape, including i) the expected release of a proposed local regulatory framework for sustainability assurance for public consultation by the AFRC, alongside the target publication of sustainability assurance and ethics standard by the HKICPA, ii) Main Board issuers to disclose information in accordance with the New Climate Requirements (which includes but are not limited to the disclosure of value-chain carbon emissions (scope 3), the financial impact of material climate risks and opportunities and scenario analysis) on a “comply or explain” basis for the financial year beginning 1 January 2025, and iii) the HKFRS S1 and S2 standards will come into effect in August 2025. Additionally, China's stock exchanges, including Shanghai Stock Exchange, Shenzhen Stock Exchange and Beijing Stock Exchange, have introduced sustainability reporting guidelines for listing companies, requiring larger-cap and dual-listed issuers to start mandatory sustainability disclosures for the calendar year 2025 by 30 April 2026. Moreover, in Singapore, the Climate Reporting and Assurance Roadmap indicates that listed companies will have to meet assurance requirements regarding their carbon emissions (Scope 1 and Scope 2) by 2027. In the future, sustainability disclosure standards will be strengthened, particularly in areas such as biodiversity, ecosystems and ecosystem services and human capital. Accountants possess a unique skill set, including expertise in accounting, finance, auditing and corporate governance knowledge, as well as rapid learning capacities, effective communication skills and cross-functional insight. These attributes position accountants as key contributors to the transformation and integration of sustainability into financial information. 

Accountants play a vital role in enhancing organizational value by integrating sustainability into operations and assessing the financial implications of sustainability risks and opportunities, while ensuring regulatory compliance. For instance, Hong Kong's insurance industry faced claims totaling HK$1.9 billion due to the "once-in-500-years"rainstorm and Typhoon Saola in 2023, which were events that directly correlate with climate change. Accountants can assist firms by: (1) modeling climate-related financial exposures under various scenarios, (2) redesigning business continuity plans, and (3) optimizing insurance premiums through risk mitigation strategies. They can also transform ESG commitments into tangible financial outcomes. For example, Unilever collaborated with ten manufacturing partners in India to address climate change and promote the use of renewable energy through a power purchase agreement. This partnership is expected to generate cost savings of about 25% over 20 years compared to  traditional grid electricity. By integrating ESG metrics into capital allocation and mergers and acquisitions due diligence processes, accountants are not only enhancing the strategic implications of sustainability but also elevating it from a mere compliance obligation to a significant competitive advantage.

The future belongs to corporations that embrace sustainability not just as a compliance obligation but as a strategic value driver. The accounting profession’s proficiency in data integrity, financial modeling, and governance has the potential to transform sustainability from an abstract commitment into a tangible competitive advantage. As sustainability disclosure and assurance standards continue to evolve, accountants who lead this integration will not only report on value – we will help create it. We must embrace this imperative: our expertise is the catalyst that turns sustainability ambition into financial reality.

____________________________________
About the author
Kingsley Cheng, CPA, CESGA, ACA, is a Partner at PAL Advisory Limited, which offers sustainability, corporate governance, internal control assessment, and corporate transaction advisory services, to listed and private entities across the APAC region.  He is also a member of the Young Member Committee, Sustainability Committee, Sustainability Assurance Advisory Panel, and Sustainability Ethics Advisory Panel of the HKICPA, as well as a member of the International Ethics Standards for Sustainability Assurance ("IESSA") Implementation Monitoring Advisory Group.