By MIA Sustainability, Digital Economy and Reporting Team
The call for sustainability adoption is currently in the global spotlight, simultaneously inducing the requirement for disclosure on sustainability and climate change-related areas from organisations. Stakeholders such as investors and the public at large are demanding organisations’ transparency on environmental and social impacts as this is critical to managing severe global risks. Based on the Global Risks Report 2023 published by the World Economic Forum (WEF) highlighting the top ten risks over a 2-year period and 10-year period, eight of these relate to environmental and societal risks.
The International Federation of Accountants (IFAC) states that with the establishment of the International Sustainability Standards Board (ISSB), the way forward for the accountancy profession is to lead climate reporting and other material disclosures on environmental, social and governance (ESG) matters together with their assurance.
IFAC in its February 2023 publication entitled Time for Action on Sustainability: Next Steps for the Accountancy Profession emphasised that accountants should advocate for smart sustainability-related policymaking and regulation starting with the support of the new ISSB and assurance of sustainability disclosures. The new role requires adoption of an integrated mindset by breaking down information silos within organisation and promoting interconnection.
By being proactive in sustainability-related reporting, accountants can help organisations to comply with industry best practice and imminent requirements. In order to achieve this, accountants need to demonstrate sustainability-related competencies to ensure the profession continues to expand its value-added capacity in future.
Furthermore, one of IFAC’s latest publications, Insights from IFAC’s Professional Accountants in Business (PAIB) Advisory Group, highlights that finance leaders need to ensure appropriate governance and management structures to balance between empowering team members to make critical decisions at frontline speed while still maintaining effective oversight, lines of authority and accountability.
Sanjay Rughani, Chair of the IFAC Professional Accountants in Business Advisory Group emphasised that organisations are turning to their accountants to help stay afloat and navigate a future pathway to resilience. As a result, accountants need to adapt and assume new roles and functions in sustainability for them to continue adding value to the organisation.
In response to these developments, the Malaysian Institute of Accountants (MIA) sustainability agenda is a two-pronged approach that advocates sustainability for the Institute and for the accountancy profession in order to be future relevant, by enhancing the profession’s competency, protecting public interest and supporting sustainable nation building.
“As the regulator and developer of the profession, MIA has identified climate change and ESG issues as game changers that will reset the global business ecosystem. As Malaysia pursues its pathway to a low-carbon economy, accountants are ideally positioned to be a strategic partner for companies’ transition towards a more sustainable future,” said MIA President Datuk Bazlan Osman.
“Needless to say, value-added capacity and competency building will be imperative to drive the MIA’s two-pronged sustainability agenda. In terms of competency building, MIA is evaluating how accountants can harness their ethics, professionalism, unique competencies and financial expertise to help drive the ESG agenda in the short, medium and long term to support business and economic sustainability, and integrating these components into our extensive professional development programmes,” said MIA CEO Dr Wan Ahmad Rudirman Wan Razak.
Among the areas the MIA sustainability agenda will focus on are governance, accounting, people, reporting, process, assurance, systems, regulation and guidance. These are fundamental areas relevant to the accounting profession and the Institute where the sustainability agenda needs to be mapped and addressed.
MIA is in the midst of developing the MIA Sustainability Blueprint for the Accountancy Profession (the Blueprint) and MIA Sustainability Framework and Targets (the Framework). The Blueprint focuses on advocating sustainability for the accountancy profession whereas the Framework outlines the MIA sustainability agenda for the Institute. The Sustainability Blueprint Task Force (established by the MIA Council) and the MIA Management Team will oversee the development of the Blueprint and the Framework respectively.
While developing the Blueprint and Framework, MIA will continue its advocacy and capability building efforts on sustainability for the accounting profession in Malaysia.