What is Sustainability, and how is it relevant to the work of finance professionals

The most widely accepted technical definition of sustainability comes from the 1987 Brundtland report, which defines sustainability as the development that:

"Meets the needs of the present without compromising the ability of future generations to meet their own needs."

As finance professionals, we must consider why sustainability is relevant to us. To begin to understand it, let us believe that we bring five unique qualities to the table. We are adept at planning, managing, and evaluating processes, accounting for transactions and business decisions, advising, and challenging. These qualities make us integral to the sustainability discourse. ??

At the core of our role as finance professionals is the strategic planning for the right allocation of resources. We ensure that processes are in place for payments and receipts, account for income and expenses, and report on them in a meaningful and useful way. As internal business advisors, we play a crucial role in advising on the value for money and challenging decisions when necessary. This strategic role is directly linked to sustainability.

When we plan to allocate resources, we need to consider whether we are distributing our funding for activities to be delivered sustainably. Whilst accounting for income or spending generated from these activities, we must question if we are capturing the wider currency we must value, e.g., carbon dioxide emissions. An important connected consideration is ensuring that we have the skills for good data management and that our accounting is fit for audit.

When we report, those running the organization rely on the information we provide for decision-making. We have a duty to the shareholders and the taxpayers (in the public sector) to inform what actions are sustainable or not.

In this article, I have attempted to produce a concise guide for accountants & finance professionals to understand sustainability and its relevance.

What is Sustainability

Sustainability means a world in which thriving economies and just societies are based on what nature can afford. The definition provided above in the article is adapted from the Brundtland report, which provides a more technical definition of sustainability. Though this definition helps us understand the broader concept, to apply it in work practice, we need to have frameworks, goals, or categories for sustainability to help us break it down. This is where characterizations such as ESG (environmental, social, and governance) or ESE (environmental, social, and economic) factors can be helpful.

The United Nations developed a set of 17 Sustainable Development Goals based on the critical environmental, social, and economic factors required to ensure peace and prosperity for people and the planet. The 17 goals present a call to action for countries and governments to work collaboratively to achieve these goals. Meeting the Sustainable Development Goals requires reconciling development with environmental and social needs.

At a micro level, the SDGs also provide a valuable framework for businesses and organizations to understand, identify, and be aware of the ways in which they impact sustainability and how and where they can work towards specific sustainability goals that contribute to the achievement of these global goals.

To learn more about the UN Sustainable Development Goals, please see the United Nations Sustainable Development Goals website: https://www.un.org/sustainabledevelopment ??

The interconnected issues of climate change, biodiversity loss, and rising inequality are increasingly referred to as the ‘triple crises’ of our time. To understand this all, let us dive deeper into these concepts and frameworks.

Sustainable Development Goals That Require the Most Urgent Action

There is a broad consensus around four of the seventeen Sustainable Development Goals as requiring the most urgent action.

• Goal 13 - Climate action
• Goal 15 - Life on land
• Goal 10 - Reduced inequalities
• Goal 12 - Responsible consumption and production

The heightened sense of urgency to achieve these goals must not come at the expense of rendering the remaining goals redundant. World governments must be committed to tackling all of the SDGs. The goals seen as the highest priority for a particular central or local government will depend on the circumstances of the jurisdiction and population in question.

SDG 13 – Climate Action

Take urgent action to combat climate change and its impacts

Climate change disrupts national economies and affects every person and country worldwide. The lives and livelihoods of the most vulnerable are affected the most.

Entities in both the private and the public sectors already feel a significant impact of climate change. Extreme weather events damage infrastructure and disrupt service delivery. The impacts on health inevitably affect the social and healthcare budgets in the public sector.

The connected risks and opportunities can be managed effectively only if these are integrated into financial reporting, forecasting, and financial planning & analysis.

UN report Highlights

• Climate records were shattered in 2023 as the climate crisis accelerated in real-time. Rising temperatures have not abated, and global greenhouse gas emissions continue to climb. Communities worldwide are suffering from extreme weather and increasingly frequent and more intense disasters, destroying lives and livelihoods daily. Meanwhile, fossil fuel subsidies hit a record high.
• The global community faces a critical juncture. All countries must urgently speed up economy-wide, low-carbon transformations to avoid escalating economic and social costs. The upcoming 2025 cycle of nationally determined contributions (NDCs) presents a chance for ambitious climate action plans that drive economic and social progress. These must have increased ambition to close implementation gaps, cover entire economies and all greenhouse gases, and align with the target of limiting global temperature rise to no more than 1.5°C.
• The road map to halting warming at 1.5°C and avoiding the worst of climate chaos is clear but cannot afford any delays or half measures. Drastic reductions in global greenhouse gas emissions must take place by 2030 and reach net zero by 2050.

The United Nations Sustainable Development Goals Report 2024 can be accessed on the following link: https://unstats.un.org/sdgs/report/2024/The-Sustainable-Development-Goals-Report-2024.pdf

SDG 15 - Life on Land

Protect, restore, and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss

The UN Sustainable Development Goals stress halting land degradation and biodiversity loss as vital for global prosperity while underlining the importance of economic growth in alleviating poverty.

The direct dependence of an individual entity on biodiversity is often challenging to determine. However, investor interest and action on biodiversity are increasing. Biodiversity regulation is scaling up globally, and investor/lender demands for disclosure are growing.

In the public sector specifically, this places pressure on the entities to understand how the communities they serve are affected by the changing state of biodiversity. The business case must include biodiversity risk for infrastructure and related projects or programs for economic regeneration that seemingly impact terrestrial ecosystems, including forests.

UN report Highlights

• Global trends underscore persistent challenges to biodiversity and forests, despite their critical roles as planetary life-support systems. Global forest area continues to decline, primarily due to agricultural expansion, despite notable progress in sustainable forest management. Alarmingly, species are silently becoming extinct, the protection of key biodiversity areas has stalled and global illicit wildlife trafficking has steadily increased, posing serious threats to biodiversity and the benefits it provides to people.
• Efforts are under way to tackle these challenges, with countries advancing implementation of access and benefit-sharing instruments and integrating biodiversity values into national accounting systems. There’s also a growing global commitment to biodiversity conservation, reflected in increased funding and the adoption of the Kunming-Montreal Global Biodiversity Framework.
• Urgent action is imperative. Addressing pressing environmental challenges and their underlying drivers and interconnections – including climate change, biodiversity loss, pollution, desertification and deforestation – demands intensified, accelerated efforts, and a comprehensive and integrated approach at local, national and global levels.

The United Nations Sustainable Development Goals Report 2024 can be accessed on the following link: https://unstats.un.org/sdgs/report/2024/The-Sustainable-Development-Goals-Report-2024.pdf

SDG 10 - Reduce Inequality

Reduce inequality within and among countries

Institutional investors investing in government bonds increasingly recognize that reducing inequality is critical to protect the long-term value. Public expectations are rising that public sector entities should reflect the communities they serve in their priorities. There is some empirical evidence that organizations serious about tackling inequality can better attract and retain talent.

It is often the most vulnerable who disproportionately get affected by the outcomes of environmental damage and climate change. For instance, flooding affects the poorest the most. Inequality, therefore, cannot be considered in isolation from environmental issues.

Inequality, increasing crime, and environmental degradation affect long-term social and economic development, directly impacting the environment, society, and economy. ?

The concept of a ‘social foundation’ is a set of 12 social boundaries, including water, food, health, education, and social equity, representing communities' basic needs. Above these boundaries, we can ensure that no one falls short of life’s essentials.?

Cost and benefit implications are inevitably connected with all these factors. Entities need to factor these into their operational analysis and strategy.

UN report Highlights

• Despite the economic disruptions of the pandemic, the global share of people living on less than half the median income has been declining due to social assistance programs. However, workers’ wages have not kept pace with productivity, and labor’s share of GDP has resumed its long-term decline.
• A historic reversal is threatening improvements in inequality among countries. The economies of half the world’s most vulnerable countries have been growing at slower rates than those of wealthy countries.
• More people died on migration routes in 2023 than in any other year on record. The number of refugees worldwide reached a historic high.
• Developing countries are not fairly represented in international economic decision-making. Strengthening their voice and participation is crucial to ensuring a more inclusive and equitable global economic system.
• Addressing inequality both within and among countries necessitates equitable resource distribution, investment in education and skills, social protection measures, efforts to stop discrimination, support for marginalized groups, and international cooperation for fair trade and financial systems.

The United Nations Sustainable Development Goals Report 2024 can be accessed on the following link: https://unstats.un.org/sdgs/report/2024/The-Sustainable-Development-Goals-Report-2024.pdf

SDG 12 – Responsible consumption and production

Ensure sustainable consumption and production patterns

The current level and pattern of usage of resources are clearly unsustainable. It is sometimes said that we are using the resources of nearly two planets. The idea of planetary boundaries stresses the limits for sustainable life on Earth, which should not be breached.?

The private and public sectors must recognize and attempt to mitigate the risks associated with unsustainable consumption and production. This includes:

• Reliance on finite natural resources for the basic needs of society, including food, water, shelter, and infrastructure
• Incentivized by the fossil fuel subsidies, the continued reliance on fossil fuels and fossil fuel-generated electricity
• Commitments by various governments to the frameworks and programs on Sustainable Consumption and Production and the connected obligation to annually report policy measures put in place to implement these commitments.?

Your skills as a finance professional, including data analysis, forecasting, and cost-benefit analysis, are critical for effective response formulation to these risks.

UN report Highlights

• Countries have made strides in meeting obligations under international environmental agreements on hazardous waste and other chemicals and implementing comprehensive approaches to combat environmental degradation. Patterns of unsustainable consumption and production persist, however. In 2022, global food waste reached 1.05 billion metric tons, yet only 9 of 193 countries included food waste in their nationally determined contributions (NDCs) on climate change actions. The rapid growth of global e-waste remains largely unaddressed, with only 22 per cent collected and managed sustainably.
• While domestic material consumption and material footprints continue to expand, growth rates have slowed. Regional disparities underscore the need for targeted interventions based on varying consumption patterns and environmental impacts.
• Achieving Goal 12 requires fostering circular economy models, sustainable production practices and responsible consumption. These approaches can take advantage of opportunities at every stage of production to reduce resource and fossil fuel use, drive innovation, conserve energy and mitigate emissions. Progress largely depends on robust regulatory frameworks, financial incentives and public awareness campaigns.

The United Nations Sustainable Development Goals Report 2024 can be accessed on the following link: https://unstats.un.org/sdgs/report/2024/The-Sustainable-Development-Goals-Report-2024.pdf

ESG & ESE

As accountants and finance professionals, we are all aware of ESG (Environmental, Social, and Governance), a frequently used terminology in corporate and investment communities. Let us now take a quick look from a different angle to understand how it differs from ESE (Environmental, Social, and Economic) and its limitations in the public sector context.?

The concept of ESG stresses three lenses (environmental, social, and governance) to look at sustainability issues and is nothing but another characterization of sustainability. These lenses can be used to analyze relevant sustainability issues. However, much debate exists about how ESG differs from ESE in concept and effectiveness.

As we have seen above, one way to define sustainability is to borrow from Brundtland report, which defines it as development that ‘meets the needs of the present without compromising the ability of future generations to meet their own needs’. However, ESG is more specific and focuses on how businesses and companies prioritize and monitor critical sustainability areas using suitable and effective governance structures. It is a valuable way to assess the risks which can directly impact the company's profitability.

The main emphasis is on the company's value, specifically how sustainability considerations affect the value of an organization. The organization's influence on the environment and society is not the main focus.?

Ensuring a safe operating space is Intrinsic to sustainability and the Sustainable Development Goals. ESG approach does not incorporate considerations for the planetary boundaries and social foundations, which must not be breached to ensure that we live sustainably on this planet. When we examine ESG ratings, we can observe proof of this. These ratings are designed to assess a company's susceptibility to long-term environmental, social, and governance risks. Rating agencies utilize them to evaluate how effectively these risks are handled compared to companies in similar industries.

ESG is an evolving field that lacks consistency and follows a continually changing check-box method. Ratings are derived from publicly accessible data and heavily depend on the quality of an organization's disclosures and the internal processes and controls that contribute to those disclosures.

Let us look at a real-life example to stress the point. The text below is from an actual news article highlighting the issues with ESG reporting and connected indices.

The concept of ESG has made significant progress in recent years, propelled by societal worries, involvement from the investment sector, and attention from a policy angle. Like any method, there are both effective and ineffective implementations, and finance professionals are increasingly tasked with adding more thoroughness and authenticity to the ESG concept.?

ESG and sustainability have subtle yet significant differences; however, many professional service firms and businesses often use the terms interchangeably or describe their sustainability efforts as ESG to communicate effectively with investors and rating agencies.

In the public sector, where the perspectives of shareholders and rating agencies hold less significance, the difference between ESG and sustainability becomes more noticeable, emphasizing public value and sustainability.

Environmental, Social, and Economic

The UN Sustainable Development Goals tend to frame sustainability as ESE or Environmental, Social, and Economic. ESE provides three lenses, including the economic lens, which focuses more on the public sector context than ESG.

A hard and fast categorization of ESE issues is not always possible, as one topic can simultaneously have environmental, social, and economic aspects. For instance, access to clean water, pollution-free air, or a stable climate are also human right issues, besides being environmental issues. The lack of a stable climate, resulting in flooding that impacts local crops or livestock and the supply chain, can hinder communities' access to food. This could then have a knock-on effect by impacting health, the standard of living, and, ultimately, the right to life. An unstable climate is also intrinsically linked to social issues like inequality, as it tends to affect minorities disproportionately.

To stress the above point further, let us briefly examine a sample of some topics related to policy areas pertaining to ESE issues to illustrate how each topic can relate to multiple aspects of ESE. This is by no means an exhaustive list of ESE issues and topics.

Taxes and Incentives

Funding for policies and programs is primarily provided by taxation. However, behavior can also be influenced by taxes and incentives, such as by imposing a cost on environmental damage or promoting the generation of new jobs.

Accountability

Budgeting, internal controls, monitoring and evaluation, and reporting are all subject to accountability. Public officials are entrusted with a fiduciary responsibility to use public funds prudently. This is crucial for maintaining public confidence impacting tax adherence.

Employment and Wealth Generation

Creating jobs, ensuring job security, providing training opportunities, and making financial commitments to promote upward social mobility are essential for decreasing poverty and disparities. These investments help improve living conditions and generate wealth over time. A robust economy leads to a better-educated workforce and increased productivity, resulting in higher and more consistent tax revenues.

?Circular Economy

Policies, such as tax adjustments and rewards, are essential for shifting economic operations from using limited resources to fostering a sustainable and equitable circular economy. Policy issues, therefore impacting the circular economy, are connected with all three ESE dimensions.

Anti-bribery and Corruption

Bribery and corruption disrupt the operation of economies by diverting financial resources toward activities that do not create value or may even cause harm. This behavior significantly erodes public trust. Corruption weakens democracy, public policy, and markets and poses a significant obstacle to sustainable development.

Innovation

Encouraging and backing innovation through policies, initiatives, and ventures that allocate funds to innovative entities and promote knowledge exchange. Innovation can contribute to society by generating new job opportunities. Furthermore, innovations are crucial in reaching environmental goals, such as implementing more efficient climate adaptation and mitigation strategies.

Biodiversity and Land Use

Considerations about how the organization affects ecosystems and biodiversity can be made by examining actions that lead to changes in land use, such as extracting natural resources, expanding agriculture, and constructing infrastructure. In addition, it's essential to consider efforts to address damages, such as site remediation.

Waste

The organization's management of waste is a significant concern. This encompasses the handling and proper disposal of solid waste and wastewater resulting from activities such as manufacturing, agriculture, and other industrial processes, as well as compliance with regulations.

Resource Usage

Concerns regarding the utilization of natural resources, such as whether resources are being utilized in a manner and at a pace that does not result in long-term adverse effects on the environment, for example, links to deforestation or detrimental impacts on biodiversity. Are efforts being made to enhance and streamline the rate of resource consumption?

Air Quality

Air quality management issues pertain to various sources such as factories, vehicles (land, air, and sea), and industrial processes. These issues are distinct from greenhouse gas emissions (contributing to climate change) as they involve different emissions, including particulate matter, CFCs, nitrogen and sulfur oxides, and volatile organic compounds. Poor air quality significantly affects public health, particularly impacting lower-income communities.

Climate Change

Concerns regarding handling: The organization’s greenhouse gas (GHG) emissions, adherence to regulations related to GHG emissions, and the potential disruptions to the organization's operations and value chain due to the physical risks posed by climate change.

Climate change concerns also have implications for health and quality of life and tend to have a greater impact on minority communities.

Health and Safety

Creating and upholding a workplace that is safe and promotes good health, with no injuries, deaths, or illnesses. This is usually accomplished through training, safety management plans, and audits.

Workers’ Rights

Concerns regarding policies, laws, and rules aimed at safeguarding the entitlements of individuals engaged in various types of employment, self-employment, or entrepreneurship. Workers' rights are interconnected with other concerns like human rights (for example, modern slavery) and disparities in social and economic status.

Diversity and Inclusion

Considerations regarding the fair and just treatment and inclusion of all individuals impacted by policies and the provision of services. This involves questioning assumptions and comprehending the viewpoints of individuals from various genders, racial backgrounds, religious beliefs, and socioeconomic statuses. Deliberate efforts may be necessary to confront long-standing disparities, acknowledging that economic and environmental results may impact distinct individuals in varying ways.

Human Rights

Considerations regarding the effects on human rights and the handling of indigenous communities. Human rights should be considered during research, engagement with stakeholders, legal advice, development of policies and programs, and provision of services.

Drivers of Sustainability Growth

The evaluation, disclosure, and investment in sustainability used to be considered a specialized area, but now investors and other interested parties are realizing more and more that sustainability data is crucial for gaining insight into an organization's strategy, leadership, and mission, and for effectively creating and executing successful policies, initiatives, and projects. This rise in sustainability can generally be linked to two main drivers:

Underlying Environmental and Social Conditions

• Climate Change. Whilst the Paris Agreement and COP 26 in Glasgow boasted global awareness of climate change, extreme climate events recurring worldwide with increasing frequency and severity have heightened the sense of emergency.
• Poverty and Inequality. The COVID-19 pandemic has brought greater attention to the growing social inequalities within our society and the profound impacts these disparities have on the overall well-being of individuals and communities.
• Scarcity of Natural Resources. The finite nature of the world’s natural resources is becoming increasingly apparent across various industries and the general public. This awareness is driving a growing concern about the sustainability and conservation of these resources for future generations.
• Biodiversity Loss. Whilst historically, it was viewed more as an environmental concern only, reports such as WWF’s Living Planet Report and increasing media focus have increased awareness of the business risks associated with biodiversity loss.

The Institutional Response

• Disclosure Requirements. The demand for voluntary sustainability standards such as the Global Reporting Initiative, CDP, CDSB, and the Value Reporting Foundation has grown rapidly. Sustainability disclosure is becoming mandatory, especially following the recommendations of the Taskforce for Climate-related Financial Disclosure (TCFD) on a global scale and specific requirements in different jurisdictions. The establishment of the International Sustainability Standards Board (ISSB) in 2021 and the introduction of their initial two standards in 2023 (S1 and S2) have solidified sustainability reporting as an increasingly mandatory and expanding field.
• Sustainable Investing. As sustainable investing becomes more popular and traditional investing acknowledges the importance of addressing sustainability risks and opportunities, an increasing number of investors are requesting comprehensive sustainability and/or ESG reports. These expectations also apply to the responsibilities and requirements of government bodies, which are the primary users of public sector financial statements.
• Sustainable Finance. The competition for investment capital focused on sustainability is growing, with Europe, the UK, the US, and China leading the global push for green finance. More stringent regulations around sustainable taxonomy are set to enhance the credibility of this sector.
• International Agreements and Initiatives. The Paris Agreement, also known as the Paris Climate Accord, is an international treaty that aims to limit global warming to well below 2 degrees Celsius above pre-industrial levels, with an aspirational target of 1.5 degrees Celsius. The Glasgow Climate Pact, which was agreed upon at COP26, outlines specific actions and targets for countries to address climate change, including reducing greenhouse gas emissions and supporting developing nations in their efforts to adapt to the impacts of climate change. Additionally, the Global Goals for Nature seeks to conserve and sustainably use the Earth's biodiversity, recognizing the interconnectedness of ecosystems and the need for urgent action to protect the natural world.

Together, these initiatives catalyze a profound transformation in global economies, ushering in a shift towards sustainability and resilience on a scale not witnessed since the industrial revolution.

The pressure from stakeholders is increasing for companies to be more transparent about their sustainability strategy and progress. Sustainability is now a concern at the government level, and finance professionals play a crucial role in integrating sustainability considerations into decision-making by providing the required information, systems, processes, and governance.

Sustainability and The Role of Finance Professionals

Finance is fundamental to how businesses operate and how governments deliver. In the public sector, entities need funding to respond to challenges like climate change, inequality, and biodiversity loss.?

Finance becomes sustainable by considering long-term environmental, social, economic, and governance factors, promoting improved long-term results. Sustainable finance integrates environmental, social, economic, and governance factors into financial decision-making. By doing so, sustainable finance aims to promote positive long-term outcomes for the financial system and the broader society. This approach considers the interplay between financial activities and their impact on the environment, society, and the economy, intending to foster resilience, stability, and positive development over time.

The finance functions of the public sector, in particular, are obligated to aid nature, the environment, and its crucial role in biodiversity. This is a concern not only for society but also poses a risk to the long-term financial sustainability of governments.

The terminology related to sustainability issues may be unfamiliar, but it is closely linked to the skills and expertise of finance professionals, some of which are listed below:

• The Identification and Management of Risks and Opportunities. Looking at risks and opportunities through the lens of sustainability can be perceived as just another perspective, which can sometimes be intricate and detailed.
• Design and Operation of Management Control Systems. Understanding the design and operation of management control systems is essential for ensuring the accuracy and reliability of sustainability data.
• Financial Planning & Strategy. Financial planning and strategy are evolving to include a greater emphasis on integrating sustainability measures. This integration is becoming increasingly crucial for effective long-term financial planning and strategic decision-making.
• Governance. Effective management of sustainability-related risks relies heavily on good governance.
• Information Reporting and Assurance. The thorough analysis and critical evaluation of data to report on performance can enhance the credibility of sustainability information, especially as sustainability reporting standards continue to develop.

The following diagram provides an overview of the essential skills and expertise that finance professionals acquire through their training and further cultivate as they progress in their careers. Alternatively, it could also be interpreted as outlining the critical skills necessary for incorporating sustainability into public sector processes.

As finance professionals, it's essential to have a high-level yet comprehensive grasp of how sustainability affects your organization and incorporate this knowledge into financial analysis, planning, and reporting using the abovementioned skills. This will equip organizations to handle related risks, help them spot and take advantage of opportunities, and develop sturdy and sustainable business models to succeed in an evolving world.

Below is a list of specific roles explaining how having a high-level understanding of sustainability will help you integrate sustainability into your particular roles.

Management Reporting

Possessing a solid understanding of sustainability can assist you in incorporating the impact of relevant sustainability issues into ongoing financial management. Specifically:

• Create reports for the board that provide insight and analysis of significant sustainability considerations, aiding decision-making encompassing climate and broader environmental and social risks and opportunities.
• Generate monthly management accounts that adhere to the relevant frameworks and accounting principles, incorporating recent guidance such as the Taskforce on Climate-related Financial Disclosures.
• Develop other standard financial reports/dashboards that incorporate climate and broader sustainability risks and opportunities when relevant.

Finance Business Partnering

Possessing a solid understanding of sustainability can help financial business partners effectively manage finances by allowing them to comprehend the financial implications of sustainability factors and incorporate them into decision-making. This includes:

• Encouraging long-term planning, budgeting, and forecasting by prompting these activities to consider the financial effects of climate change and broader sustainability risks and opportunities.
• Offering analysis and insights into the financial implications of sustainability factors when presenting financial information and reports.
• Assisting and scrutinizing investment evaluations and business proposals to fully include financial costs and benefits for sustainability-related activities.
• Aiding the business in finding answers to complex business questions that involve integrating sustainability and its associated financial costs and benefits.

Risk Management

A solid understanding of sustainability can help effectively manage an organization's risks and integrate sustainability-related risks into the risk management framework.

This knowledge will allow you to:

• Collaborate closely with other corporate departments, stakeholders, and customers on climate change and broader sustainability risks, ensuring that these risks are effectively monitored and managed.
• Effectively handle the uncertainties stemming from climate and other sustainability risks, leading to better decision-making and improved outcomes.

Strategic Finance

In the public sector, it is vital to have a strong understanding of sustainability to gain deeper insights into a government department's financial situation in relation to the financial impacts of climate and broader sustainability issues. This will help integrate sustainability into the core of departmental decision-making processes. Specifically, this involves:

• Effectively engaging with government treasury to discuss the costs and benefits of any spending related to sustainability. Similarly, justifying and supporting the use of public funds for sustainability-related matters to parliaments and the public.
• Providing advice and raising questions about integrating sustainability into the commercial assessment and investment approval process.
• Incorporating the analysis of sustainability factors into relevant strategic-level management information.

Financial Accounting and Reporting

A solid understanding of sustainability principles is essential for grasping how technical accounting concepts may be influenced by sustainability issues, especially those related to climate change. This understanding is crucial for accurately reflecting the increasing climate and other sustainability-related risks and opportunities in annual reports and accounts.

Specifically:

• Gain insight into sustainability-related risks and opportunities, their materiality, and their integration into decision-making processes, ultimately impacting financial reporting.
• Prepare annual reports and accounts that truthfully disclose the effects of climate-related financial matters.
• Conduct analysis and interpretation of annual reports and accounts that effectively address and communicate the implications of sustainability-related issues.
• Provide accounting guidance that incorporates an understanding of how sustainability, particularly climate-related factors, can impact technical accounting concepts.

Finance professionals apply a structured and analytical approach to address sustainability's intricate and multifaceted aspects.