New Deloitte Sustainability Reporting Series: Chief Financial Officers emerge as pivotal leaders in sustainability reporting across Asia Pacific

BANDAR SERI BEGAWAN, 27 September 2024 – A new three-part series on sustainability reporting released by Deloitte titled “Asia Pacific Mandatory Sustainability Reporting” highlights the critical role of Chief Financial Officers (CFOs) in navigating complex and evolving sustainability reporting requirements, ensuring assurance-ready sustainability reporting, and driving business value through effective sustainability practices.

With new and evolving reporting requirements set to be implemented across the Asia Pacific region by 2027, CFOs have a leading role in meeting these obligations. As sustainability performance gains greater visibility among boards, regulators, investors and the public, CFOs must take the lead to ensure their organisations are prepared for assurance-ready reporting.

The first paper “What CFOs need to know today”, highlights crucial steps for CFOs to understand their company’s reporting requirements within their respective markets, assess current resource capabilities, and evolve governance and controls to adequately address the accountability and assurance of sustainability reporting.

In a recent Deloitte global study, 32% of organisations report that the CFO is the accountable executive, with a further 16% having joint accountability between the CFO and Chief Sustainability Officer (CSO) . However, CFOs face the challenge of achieving compliance while also navigating complex economic conditions and balancing multiple other priorities.

“Mandatory sustainability reporting requirements are not only new and complex, but also diverse and varied across different geographies, especially within the context of Southeast Asia. These requirements combine a high degree of visibility and obligation on the business with challenging requirements on a relatively new topic. It is unsurprising that few organisations report that they are ready to meet the increased standards, or are confident in their underlying capabilities and processes,” said Josette Soh, Sustainability & Climate Assurance Partner, Deloitte Singapore.

While organisations are starting from different points, most need to improve their sustainability reporting and governance capabilities to become assurance-ready. In fact, 60% of organisations surveyed are unsure of the resources required to meet these new reporting obligations, and those that do estimate their resource needs will double . This is further compounded by key skills gaps in areas such as data, finance, and sustainability, along with a general lack of familiarity with sustainability across the business.

Commenting on the report, Will Symons, Deloitte Asia Pacific’s Sustainability Leader said, “The challenge for the CFO is to maintain a focus on integrating sustainability reporting into business value creation. By looking internally for existing capabilities and externally for leading practices and support, CFOs can develop a strategic plan to not only achieve compliance, but also embed sustainability reporting into the organisation's decision-making and performance rhythm over time. The focus is on building confidence today, with an eye on tomorrow.”

Developing a mature model for sustainability reporting and readiness

The second paper “The CFO’s building blocks for success” examines the critical areas where organisations must focus—across people, processes, and data—to evolve their reporting processes. By identifying key areas that need to mature and implementing targeted, pragmatic interventions, organisations can meet compliance deadlines while laying the groundwork for long-term sustainability success.

The paper indicates that over 45% of organisations have identified gaps that impact their reporting capabilities . Even when companies hold the data they need, this is often in multiple systems across geographies adhering to multiple standards; and, in many cases, may lack the quality and controls required to meet assurance standards. Data acquisition, consolidation and automation will be key capabilities to efficiently manage sustainability data for reporting.

Instead of investing in entirely new systems to meet sustainability needs, many organisations are opting to leverage their existing systems, making targeted investments to address capability gaps.

“Deloitte’s SustainNext^TM solution, which leverages Gen-AI analysis and combines expert input and assessments, has been instrumental in assisting our clients. By analysing existing company disclosures to assess each requirement and provide a view on overall performance against standards, SustainNext^TM enables organisations to identify where they need to focus most,” added Andrew Kerris, Partner, SustainNext^TM, Deloitte Asia Pacific.

Creating business value beyond compliance

The third paper “How CFOs drive impact and realise value” emphasises the need for CFOs to move beyond compliance and create business value by harnessing robust sustainability data and insights to drive better business decisions.

The potential for long-term value creation will vary across organisations, ranging from identifying emerging consumer trends to addressing potentially stranded or exposed product-lines and assets. 35% of organisations are already seeing increased revenue from sustainability initiatives, and another 35% report business innovation .

The paper also highlights clear pathways to enhancing employee value, as talent in organisations with a strong focus on ‘people and planet’ are twice as likely to be engaged. This is because sustainability reporting makes tangible efforts more visible. Moreover, investment in capability and resource development to address sustainability challenges can equip employees with the skills they need for future challenges, positioning the organisation as an industry leader and attracting top candidates.

Throughout the series, the importance for organisations to get to the finish line with assurance-ready sustainability reporting is underscored. The near-term benefits are clear: meeting the right standards not only mitigates the risk of regulatory penalties, but also enhances organisations’ reputation and business resilience, therefore attracting stakeholders and reinforcing trust. The data gathered from sustainability reporting processes can also be leveraged to drive significant business value.

“As boards and leadership teams sharpen their focus on sustainability, there is a significant opportunity for CFOs to create positive impact by applying a value creation lens,” commented Ho Kok Yong, CFO Program Leader, Deloitte Asia Pacific. “While the practical approaches for each organisation will differ according to their business, sustainability ambition, and maturity level, our view is that it is important to ensure that they are able to develop tangible pathways to value – for example, shareholder, employer, customer, environmental or societal value – at every stage of their compliance journey. That is where CFOs can truly lead.”

To access the full report series and learn more about the findings, please visit https://www.deloitte.com/global/en/offices/apac/perspectives/sustainability-reporting.html.

ⁱ Deloitte, ESG Reporting Benchmark, 2024
ⁱⁱ Deloitte, ESG Reporting Benchmark, 2024
ⁱⁱⁱ Deloitte, ESG Reporting Benchmark, 2024
^iv Deloitte, CxO Sustainability Survey, 2024

Methodology

Deloitte ESG benchmark

Deloitte ESG benchmark is based on surveys of 19 clients around the world. The survey focused on experiences, efforts and challenges around ESG reporting to key market trends. This was complemented by interviews with 14 Deloitte project teams to qualitatively understand challenges firms are facing around ESG reporting. The benchmark is focused on six ESG reporting themes and four priority areas that firms are facing challenges in.

Deloitte 2024 CxO Sustainability Report

The report is based on a survey of 2,100 C-level executives, conducted by KS&R Inc. on behalf of Deloitte, and was administered in a double-blind manner during May and June 2024, ensuring impartiality and confidentiality for both respondents and researchers. The survey polled respondents from 27 countries: 46% from Europe/Middle East/South Africa, 17% from North America, 9% from Latin America, and 28% from Asia-Pacific. All major industry sectors were represented in our sample. Additionally, KS&R and Deloitte conducted select, one-on-one interviews with global industry leaders.

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