2025 Issue 4 Volume 21 DRIVING BUSINESS SUCCESS GLOBAL CPAS Institute members share how their experiences abroad have shaped their careers THE INVESTOR’S PERSPECTIVE What do investors really care about when it comes to sustainability disclosures? SECOND OPINIONS How can accountants lead in Hong Kong’s emerging stablecoin economy? PLUS: IFAC President Jean Bouquot takes the pulse of accounting on the move SHAPING TOMORROW’S PROFESSION
Programme highlights ∙ 5 interactive modules + final online assessment ∙ Earn certifiable digital badges and an e-Certificate to showcase your achievements ∙ 15 CPD hours – fully online A comprehensive programme designed to equip professionals with the skills to implement HKFRS S1 & HKFRS S2, building capacity in Hong Kong’s transition to sustainability reporting Master HKFRS S1 & HKFRS S2 – Be future-ready Enrol now Reimbursable under the Pilot Green and Sustainable Finance Capacity Building Support Scheme
PRESIDENT’S MESSAGE APLUS DEAR MEMBERS 2025 Issue 4 1 Edward Au, President “ The progress made in sustainability, talent development, Mainland and international engagement, and member wellbeing has positioned the HKICPA to thrive in a rapidly changing world.” As I mark nearly a year as President of the Hong Kong Institute of CPAs, I am pleased to share a summary of our collective achievements and milestones. Guided by the HKICPA Strategic Plan 2025, this period has been defined by collaboration, learning, and progress for our profession. Hong Kong continues to position itself at the forefront of global sustainability reporting. After the publication of HKFRS S1 and S2 in December last year, our commitment was recognized in the IFRS Foundation’s Jurisdictional Profiles, with Hong Kong among the first to target full adoption of ISSB Standards. To further equip members for HKFRS S1 and S2 implementation, we hosted the inaugural HKICPA Sustainability Forum, launched the Certificate on Sustainability Reporting (now eligible for subsidy under the Pilot Green and Sustainable Finance Capacity Building Support Scheme), and released HKFRS S1 and S2 Guidance – Part 1. A highlight this year was the ISSB Preparer Readiness Training in October, held with the IFRS Foundation and supported by CLP Holdings, and led by Sue Lloyd, Vice-Chair of the International Sustainability Standards Board (ISSB) and Neil Stewart, Director of Corporate Outreach of the IFRS Foundation. To accelerate digital adoption across the profession, we’re also launching the Digital Transformation Roadmap in November – a strategic framework designed to empower SMPs and SMEs to navigate the complexities of digitalization through six pivotal stages, supported by essential resources. This initiative underscores our commitment to equipping members and the profession with future-ready capabilities. Future-proofing the profession remains a top priority. We renewed Mutual Recognition Agreements with CPA Australia and ACCA, enhancing international mobility and career development. The new Certificate in Accounting and Business was rolled out to help professionals build futureready capabilities, and members have embraced these digital credentials, inspiring the next generation to pursue the Qualification Programme (QP). We were pleased to host over 150 participants, including strategic partners, employers, academia, members, and students in October to showcase key features and celebrate the launch of this important qualification. We also strengthened our connection with future talents, with over 30,000 students from primary to tertiary levels in 2024/25 academic year engaged to strengthen talent pipelines and sustain the profession. The Greater Bay Area Conference and delegation to Foshan promoted cross-border growth and collaboration, while the launch of the Alliance of CPA Firms Dedicated to Financial and Tax Guidance for Businesses’ Global Expansion united 123 firms to support outbound enterprises. In October, I was honoured to represent the Institute to take part in the official launch of the government-led Task Force on Supporting Mainland Enterprises in Going Global, further strengthening support for Mainland enterprises expanding internationally. This year, HKICPA strengthened its global presence through high-profile collaborations and events in recent months. We welcomed leaders from the International Accounting Standards Board, International Federation of Accountants (IFAC) and the Global Accounting Alliance, hosting strategic meetings and joint member events that reinforced Hong Kong’s role as an international accounting hub. The HKICPA x IFAC SMP Conference in November also brings global expertise directly to our members, fostering valuable exchange on digitalization, sustainability, and quality assurance. We recently concluded the Council Election 2025, during which members were elected to serve for the next two years. A total of 6,333 valid votes were received, and I am grateful for your engagement and participation. While it is not possible to list every achievement in this message, I want to emphasize that together we have laid a strong foundation for the Institute’s future. The progress made in sustainability, talent development, Mainland and international engagement, and member wellbeing has positioned the HKICPA to thrive in a rapidly changing world. As my term as President draws to a close, I am deeply encouraged about the future of our Institute. The groundwork we have established over the past year sets a strong foundation for ongoing advancement and achievement. It has been a true privilege to serve as your President and to help guide such an innovative and forward-looking organization. I am grateful for the opportunity and look forward to remaining actively involved as a Council member and Immediate Past President.
CONTENTS 2025 Issue 4 NEWS 01 President’s message 04 Institute news 07 Business news FEATURES 08 A profession on the move Jean Bouquot, President of IFAC, on key issues member organizations face, and his take on the future of the profession 14 The investor effect: What’s really driving sustainability reporting? What matters most for investors when looking at sustainability information, and what constitutes as “meaningful” disclosure 22 Making their mark globally From Japan to Denmark, Institute members are taking on broader strategic roles around the world SHORT PROFILES 34 Q&A with a PAIB Grant Pan, CEO of Noah Hong Kong and CFO of Noah Group 35 Q&A with a PAIP Karen Lau, Head of Tax at Forvis Mazars 42 Young member of the month Ian Lee, Group Opportunities and Risks Manager at Cathay Pacific COLUMNS 31 Thought leadership: Ken Siong The Programme and Senior Director at IESBA on the necessity of practitioners to be subject to clear ethical and independence requirements when preparing or assuring sustainability information 32 Second opinions How can accountants lead in Hong Kong’s emerging stablecoin economy? Investors reveal what they look for in sustainability disclosures 34 Q&A with a PAIB 35 Q&A with a PAIP 14 The investor effect: What’s really driving sustainability reporting?
Six Institute members based abroad share how the CPA qualification provides a strong foundation for an international career DRIVING BUSINESS SUCCESS About our name A Plus stands for Accounting Plus. It represents a profession that is rich in career options, stays relevant amid rapid changes, and adds value to business. This magazine strives to present the global mindset and varied expertise of Institute members – Accountants Plus. Editor Gerry Ho Email: gerry.ho@mandl.asia Managing Editor Jemelyn Yadao Registered Office 2/F Wang Kee Building, 252 Hennessy Road, Wanchai, Hong Kong Advertising enquiries Advertising Director Derek Tsang Email: derektsang@mandl.asia ISSN 1815-3380 President Edward Au Vice Presidents Stephen Law Jasmine Lee Chief Executive and Registrar Margaret W. S. Chan Director of Corporate Communications Rebecca Tam Publication Manager Michael Wong Editorial Coordinator Maggie Tam Office Address 37/F, Wu Chung House, 213 Queen’s Road East, Wanchai, Hong Kong Tel: (852) 2287-7228 Fax: (852) 2865-6603 Member and Student Services Counter 27/F, Wu Chung House, 213 Queen’s Road East, Wanchai, Hong Kong Website: www.hkicpa.org.hk Email: hkicpa@hkicpa.org.hk 44 Institute insights: Highlights from the HKICPA Ethics Conference 2025 Challenges and opportunities that arise when ethics intersect with technology, trust, and professional integrity SOURCE 36 A new chapter – Ethics in sustainability assurance H ighlight features of the Sustainability Ethics Standards 37 A review of lessee accounting A summary of the Institute’s response to the IASB Request for Information on the lessee accounting of IFRS 16 38 Navigating tax deductions for intellectual property-related expenditures in Hong Kong Current rules and recommendations for enhancing deductibility 40 Technical news 42Young member of the month A Plus is the official magazine of the Hong Kong Institute of Certified Public Accountants. The Institute retains copyright in all material published in the magazine. No part of this magazine may be reproduced without the permission of the Institute. The views expressed in the magazine are not necessarily shared by the Institute or the publisher. The Institute, the publisher and authors accept no responsibilities for loss resulting from any person acting, or refraining from acting, because of views expressed or advertisements appearing in the magazine. © Hong Kong Institute of Certified Public Accountants 2025 Issue 4. The digital version is distributed to over 47,000 members, and around 12,000 students of the Institute and over 2,000 business stakeholders every quarterly. 22Making their mark globally
On 11 September, the HKICPA was honoured to host a cocktail reception for Jean Bouquot, President of the International Federation of Accountants (IFAC) during his visit to Hong Kong. Institute President Edward Au delivered a welcome address, highlighting the robust partnership between the Institute and IFAC since its founding in 1977. Joseph Chan, Under Secretary for Financial Services and the Treasury, also shared a speech. Kelvin Wong, Chairman of the Securities and Futures Commission (SFC); Janey Lai, Chief Executive Officer and Executive Director of the Accounting and Financial Reporting Council (AFRC); Herbert Hui, Group Chief Financial Officer of the Hong Kong Exchanges and Clearing Limited (HKEX); Edmund Wong, Legislative Councillor representing the accountancy sector; and Nancy Tse, member of the IFAC Professional Accountants in Business Advisory Group, were also in attendance. Council members were also present to show their support at the event. During Bouquot’s visit, the Institute facilitated dialogue between IFAC and key Hong Kong stakeholders, including the HKEX, the AFRC and firm representatives. These engagements are crucial for aligning IFAC’s global vision with Hong Kong’s dynamic financial ecosystem. Bouquot also shared valuable insights on the transformations of sustainability and digitalization at a seminar on 12 September exclusively to Institute members. ISSB Preparer Readiness Training The Institute, in collaboration with the IFRS Foundation and with generous support from CLP Holdings, successfully concluded the ISSB Preparer Readiness Training on 13-14 October. Following an opening address delivered by Institute President Edward Au to introduce the Institute’s capacity building efforts, Sue Lloyd, Vice-Chair of the International Sustainability Standards Board, and Neil Stewart, Director of Corporate Outreach of the IFRS Foundation, provided keynote insights and facilitated discussions and deep dive sessions over the two-day event. This included a panel discussion facilitated by Eddie Ng, Chair of the Institute’s Sustainability Disclosure Standards Committee, with panellists from SFC, HKEX, Hong Kong Monetary Authority, Hang Seng Investment and CTF Services, and a case studies session delivered by Hongkong Land. The technical programme NEWS Institute news Business news 4 2025 Issue 4 HKICPA welcomes IFAC leadership The Institute hosted a cocktail reception for Jean Bouquot, President of the International Federation of Accountants during his visit to Hong Kong.
APLUS brought together around 120 ESG practitioners from listed companies, multinational companies, accounting firms, consultants, government and regulators, with the aim of strengthening understanding of IFRS S1 and IFRS S2, equipping participants with practical insights to enhance sustainability reporting quality and consistency. GAA board meeting held in Hong Kong The Institute hosted the Global Accounting Alliance (GAA) board meeting on 7-8 October where Board members of all 10 GAA member bodies convened for strategic discussions focused on advancing a high-quality, global accounting profession. It was the first ever joint member event that the GAA has arranged. The guest speakers included Paul Chan, the Financial Secretary; Carlson Tong, Chairman of HKEX; and Crystal Fok, Director of AI Application at Cyberport Hong Kong. They shared perspectives on Hong Kong’s development as an international financial centre, the development of HKEX, and local and regional AI development. The event culminated in a cocktail reception attended by nearly 130 participants from GAA member organizations, demonstrating the international nature of Hong Kong, where many professional accountants from around the world have chosen to develop their professional careers. To help promote Hong Kong, GAA Board members and alternates enjoyed a guided tour of Hong Kong’s iconic sights, arranged by the Institute. The 2025 Greater Bay Area Conference Over 250 accounting professionals, business leaders, and government representatives from Guangdong, Hong Kong, and Macau came together for the 2025 Greater Bay Area Conference on 22 September. The conference was jointly organized by the HKICPA and the Hong Kong Association of Registered Public Interest Entity Auditors Limited, and supported by the Guangdong Institute of Certified Public Accountants and the Union of Associations of Professional Accountants of Macau. The half-day event explored how the accounting profession across the Greater Bay Area can empower enterprises to navigate the complex global landscape. A key highlight was the launch of the Alliance of CPA Firms Dedicated to Financial and Tax Guidance for Businesses’ Global Expansion. The initiative unites 123 firms across the region to provide robust cross-border support for outbound enterprises. Read the press release to learn more. HKICPA welcomes the latest 2025 Policy Address The Institute welcomed the diversified initiatives outlined in the Policy Address on 17 September to boost the local economic development. The HKICPA believes that the initiatives for enhancing the capital market, attracting talents and supporting the development of green finance and innovative technologies would enhance Hong Kong’s connectivity with the Mainland China and global markets, reinforcing the competitiveness of Hong Kong economy. “We welcome the initiatives proposed in the Policy Address to Board members of all 10 Global Accounting Alliance (GAA) member bodies convened at the GAA board meeting on 7-8 October, held in Hong Kong. 2025 Issue 4 5
boost the economy and enhance the capital market development, believing that these efforts will help Hong Kong maintain its competitive edge in the new global economic and trade landscape. In particular, we are delighted to see a focus on promoting green and sustainable finance and low-carbon transition, including expanding cooperation in the Greater Bay Area carbon market and strengthening green infrastructure,” said Institute President Edward Au. “These initiatives will accelerate the development of green finance ecosystem, driving progress toward Hong Kong’s 2050 carbon neutrality target. The HKICPA will continue to foster the Hong Kong accounting profession’s commitment to professionalism, providing highquality professional services to various industries, and solidifying Hong Kong’s status as a leading international financial centre.” Read the press release to learn more about the Institute’s responses. Members’ Forum and networking reception More than 240 members took part in the Members’ Forum on 4 September. Edward Au, the Institute’s President, along with Stephen Law and Jasmine Lee, Vice-Presidents, and Margaret Chan, Chief Executive and Registrar, shared insights on the Institute’s latest progress, strategic direction, and upcoming initiatives. The forum was followed by a lively networking reception where members, Council members, and the management team continued the conversation. HKICPA Student Awards The HKICPA Student Awards 2025, held on 27 September, brought together almost 200 participants to celebrate exceptional student achievements. The event recognized top performers from the Qualification Programme, scholarship recipients, Online Quiz winners, and top achievers in the BAFS exams. Embracing the theme, “Connect & Celebrate,” the day highlighted the importance of recognizing excellence and building strong connections across the profession, academic partners, and tomorrow’s talents. Under Secretary for Financial Services and the Treasury Joseph Chan was the guest of honour. HKICPA Teen Money Survey 2025 reveals new directions for financial education The Institute announced the results of the Institute’s Teen Money Management Survey 2025 at a press conference held on 2 October. At the event, Institute President Edward Au and HKICPA Accounting Ambassador Debbie Pak presented key findings from the survey along with the Institute’s recommendations. Moses Wong, Vice Principal of S.K.H. St. Peter’s Primary School, was invited to share real-world insights into financial literacy education and discuss how professional bodies can offer meaningful support. Based on the survey results, Hong Kong students’ financial literacy was ranked at a “B-” level, indicating students possess basic financial knowledge, while there is an urgent need to help them better manage the risks of cyber fraud. Key findings include: • Most students demonstrate basic financial knowledge • Positive attitudes towards saving and tracking spending • Nearly 10 percent of respondents reported falling victim to fraud, resulting in financial loss • Lending and borrowing activities are common among students, reflecting a need to strengthen budgeting skills The survey was conducted from May to June 2025, with over 2,000 responses received from Primary 4 to Secondary 3 students. Read the press release to learn more. Council meeting minutes The abridged minutes from the June, July and September 2025 Council meetings are now available. 6 2025 Issue 4 The HKICPA Student Awards 2025 recognized top performers from the Qualification Programme, scholarship recipients, Online Quiz winners, and top achievers in the BAFS exams.
NEWS Business US$1.5 trillion The value of global private-equity investment in the first three quarters of 2025, putting it on pace for a four-year high. According to KPMG’s Pulse of Private Equity report, Q3 alone saw US$537.1 billion in deal value across 4,062 transactions. The U.S. accounted for roughly US$300.2 billion of that quarter’s total, across 1,971 deals. Hong Kong businesses reported HK$92 billion in digital-fraud losses in the past year, according to a report by TransUnion. The survey of managers worldwide, including 200 in Hong Kong, found identity-theft-linked third-party fraud accounted for 26 percent of reported incidents in the city. While Hong Kong’s overall digitalfraud rate remains below global averages, the sheer scale of losses underscores rising vulnerability amid rapid digitalization and cyber-threats. 2025 Issue 4 7 US$5 billion The combined annual revenue of the newly approved transatlantic partnership between RSM US LLP and RSM UK Holdings Ltd., uniting more than 23,000 professionals across six countries. Set to take effect on 1 January 2026, the partnership aims to align governance, partner pay, and cross-border service delivery while preserving each firm’s independence. How much Deloitte Australia charged for a government report later found to contain AI-generated errors, including fake citations and a fabricated court quote. The 237-page review for the Department of Employment and Workplace Relations prompted Deloitte to issue a partial refund after revealing it had used a generative-AI tool without initial disclosure, sparking scrutiny over transparency and reliability in government-commissioned research. The value of Hong Kong’s exports in September 2025, exceeding expectations and fuelled by strong demand from Mainland China and Asia. Data from the Census and Statistics Department showed that exports rose by 16.1 percent year on year, faster than the 14.5 percent increase seen a month earlier. Imports also surpassed forecasts, reaching HK$512.5 billion, up from 11.5 percent in the previous month. HK$462.3 billion APLUS A$440,000 – Hong Kong Exchanges and Clearing Chief Executive Officer Bonnie Chan at the Bund Summit financial forum in Shanghai in October. Chan cautioned that fundraising activity, though strong with a pipeline of over 300 companies, could be tempered by rising geopolitical tensions and economic uncertainty. “I would say that we need to be very conscious that the world is still under a lot of stress geopolitically and macro-economically.” US$300 billion The debt of China Evergrande Group. The company was delisted from the Hong Kong Stock Exchange on 25 August, following an 18-month trading suspension after a court-ordered liquidation in January 2024 when it failed to implement a viable debt restructuring plan. The delisting marked a significant chapter in Hong Kong’s market history, highlighting ongoing risks in the city’s real estate and financial sectors. US$46.2 billion The amount corporate issuers have raised so far this year through dim sum bonds, according to Bloomberg data. Deutsche Bank estimated that annual issuance of dim sum bonds, yuan-denominated debt issued outside Mainland China, tripled between 2022 and 2024 to hit 1.4 trillion yuan in 2024. That figure is expected to be higher this year as issuers take advantage of cheaper funding costs. The amount earmarked to help Hong Kong SMEs upgrade and transform, as roughly one in two local businesses eye expansion into Asian markets, according to the latest Standard Chartered Hong Kong SME Leading Business Index, executed by Hong Kong Productivity Council. Of those planning growth abroad, around 60 percent favour the Chinese Mainland and nearly 50 percent are targeting other Asian destinations. HK$420 billion
PROFILE Jean Bouquot A PRO O 8 2025 Issue 4
APLUS For IFAC President Jean Bouquot, listening is leadership, as the international accounting body leads the profession towards a more sustainable, tech-savvy future When Jean Bouquot became President of the International Federation of Accountants (IFAC) in late 2024, he knew he was stepping into one of the most globally visible positions in the profession. What he did not anticipate was just how much time he would spend in transit. In his first 10 months, Bouquot visited more than 20 countries, a dizzying schedule that has taken him from the skyscrapers of Hong Kong to the corridors of the Ministry of Finance in Lebanon, from emerging accounting organizations in Africa to stakeholder summits in Latin America. But there is no trace of fatigue in his voice when he describes why the travel matters. “These visits mean a lot to our members,” he explains. “We help to raise their profile. We contribute to the dialogue with regulators and stakeholders, and reinforce our own key messages. But most importantly, we hear directly from our members about the value they are getting from IFAC.” For Bouquot, listening is the very heart of IFAC’s mission. “I would characterize my role as being active and listening, also curious and engaging,” he says. “Listening is key.” The emphasis is deliberate. In a world of accelerating change, he sees IFAC’s job as less about issuing pronouncements and more about connecting, interpreting, and amplifying the voices of its 187 member organizations. Photography by Jocelyn Tam Interview with Jean Bouquot, President of the International Federation of Accountants OFESSION ON THE MOVE 2025 Issue 4 9
PROFILE Jean Bouquot “We are a federation,” he says. “Our strength comes from our members. My role is to make sure they are heard.” Bouquot, on a visit to Hong Kong, speaks with enthusiasm about the Hong Kong Institute of CPAs. He sees it not just as a strong local professional accounting organization that is part of IFAC, but as a global partner in furthering the profession. “HKICPA is a very powerful institute. It has always maintained strong international engagement,” Bouquot says. He emphasizes that its early adoption of IFAC membership and its strategic connectivity in international finance make it a key part of IFAC, long contributing volunteers to IFAC governance. Building value through trust So what do members say they value most about IFAC? Bouquot offers three areas: quality, connectivity, foresight. “Quality in everything we do,” he begins. “Connectivity, the links we bring our members. And looking to the future, trying to be ready for what is coming.” That future-facing stance reflects IFAC’s unusual role. It is neither a regulator nor a standard-setter (functions it deliberately spun off to ensure independence) but a federation that works across borders to advocate for the profession. It promotes the adoption of international standards, convenes dialogue between regulators and firms, and champions the profession’s role in serving the public interest. It is that last phrase, public interest, that Bouquot returns to again and again. “Providing trust and working for the public interest is what makes us different,” he insists. “If we leave this, then our profession is no longer relevant.” In an era when corporate scandals can tarnish the reputation of auditors overnight, Bouquot knows the fragility of trust all too well. His own career was shaped by the collapse of Arthur Andersen, where he spent two decades. He felt the shockwaves from afar in France when Enron’s implosion began in America. “It was a shock,” he recalls. “It taught me the importance of being reliable, not just yourself, but all together. Weakness in one part of the world can damage trust everywhere.” Sustainability disclosure as a defining challenge If trust is the foundation of the accountancy profession, then sustainability-related information is one of the frontiers. And the conversation is an ongoing one. “The first thing is to understand the fundamental change in the scope of information that many investors, lenders, companies and stakeholders want and need for decision making. Then, there has to be trust in sustainability information, which will only exist if it is assured.” In 2021, the IFRS Foundation created the International Sustainability Standards Board (ISSB), chaired by Emmanuel Faber, and by mid-2023 it had issued its first two standards, IFRS S1 and S2. For Bouquot, this was a milestone, but also the start of hard work. “We still have colleagues who are wondering what our role is in sustainability,” he admits. Without assurance, he warns, sustainability reporting risks degenerating into public relations gloss. “Producing information is one thing. Making sure it has the appropriate level of quality, that it is suitable for decision-making, and subjecting it to assurance is something else. And this is where we have to step in.” It requires upskilling and training, he says. “You cannot just say, ‘I’m a green accountant,’” Bouquot insists. “It requires real expertise. This is in the hands of the professional accounting organizations. Significant progress has been made, but we are still at the early phase of a very important engagement.” He points to his own country, France, where regulators have taken a significative step: introducing a 90-hour certification programme for sustainability auditors. Bouquot himself undertook the training, sitting through lessons and assessments like a student again. “Today in France, we have 2,000 of these trained auditors,” he notes with pride. “It shows the impact we can have if we engage seriously.” For him, sustainability education is not just about technical skills. It is also about inspiration. “For young generations, it can be a new source of purpose. They see they can be both financial experts and experts in non-financial information that investors and stakeholders want. It makes Jean Bouquot, President of IFAC, spoke to A Plus during his visit to Hong Kong in September. During his visit, the Institute facilitated dialogue between IFAC and key Hong Kong stakeholders. “ Providing trust and working for the public interest is what makes us different. If we leave this, then our profession is no longer relevant.” 10 2025 Issue 4
APLUS the profession more interesting, attractive, and future fit.” That attractiveness is not a minor point. Across many countries, accountancy faces declining enrolments. Bouquot believes the reporting and assurance of sustainability-related information can help reverse the trend. “Young people want to contribute to meaningful change. This is meaningful.” Even with new standards that address what sustainabilityrelated information should be reported by companies and how it should be assured, trust in the profession is imperative. “We have lived in the past with problems of greenwashing. It will not disappear with standards alone. It is about how they are applied, how seriously corporations take the information.” The lesson again, says Bouquot, is that trust must be earned. Just as in financial reporting, accountants’ role is to ensure that sustainability information that companies provide is reliable. It is a role, Bouquot says, that requires judgement, independence and a willingness to call out weaknesses. The SME perspective Bouquot is candid about the difficulties. For small- and medium-sized entities (SMEs) and small and medium practices (SMPs), sustainability often feels like a compliance burden. “If it is viewed as a cost, then we are lost,” he says. Attitudes vary widely. Some SME leaders are enthusiastic, others skeptical. In his experience, many are surprisingly engaged. “A lot of SME leaders consider this important. They see where they can have a role. In some ways, it may even be easier for SMEs to adapt than for very large corporations with factories all over the world.” Still, Bouquot says the perception of burden is real. Europe, where sustainability reporting has become mandatory for large entities, has already seen pushback. “At the moment, Europe, which had to engage very fast, is slowing down,” he notes. The challenge, then, is communication: framing sustainability disclosure not as bureaucratic overhead but as a necessity for fully informed economic decisions. “Your clients, your suppliers, they will expect it. “ We have lived in the past with problems of greenwashing. It will not disappear with standards alone. It is about how they are applied, how seriously corporations take the information.” 2025 Issue 4 11
PROFILE Jean Bouquot Bouquot became IFAC President in November 2024, having served previously as IFAC Deputy President since November 2022. He has over 44 years of experience as an auditor in various positions at EY. You cannot stay in your own world,” Bouquot says. “It is a question of economic behaviour.” AI: tool, not replacement Artificial intelligence (AI) defines another frontier. For some, AI is an existential threat to the profession. “For me, AI is a tool. It is not the profession,” he says firmly. “Our role is judgement, skepticism. If we don’t understand what is in the black box, what comfort can we give?” That does not mean AI isn’t game-changing. On the contrary, Bouquot sees it reshaping how accountants work, especially in data analysis, risk detection, and audit sampling. The risks, however, are clear: the opacity of AI models, the investment required, and the danger of leaving SMPs behind. “We have to make sure small practitioners don’t say, ‘This is not for me, I can’t climb that mountain.’” At the same time, he sees enormous potential. “AI gives us access to huge amounts of data we could never analyse before. It makes “ For me, AI is a tool. It is not the profession. Our role is judgement, skepticism. If we don’t understand what is in the black box, what comfort can we give?” 12 2025 Issue 4
APLUS On 12 September, Jean Bouquot, President of IFAC, shared insights exclusively to Institute members at a seminar on the transformations of sustainability and digitalization. Key insights from the session include: Sustainability and digitalization are not just trends – they are defining opportunities for the accounting profession; professional accountants already have the core skills and ethics to be trusted leaders in this shift; and continuous upskilling and reskilling, especially in artificial intelligence, are essential to stay ahead. us more relevant, provided we escape the fear and use it wisely.” And for young accountants, AI is not a deterrent but a magnet. “Many are already steps ahead of me,” he says. “For them, it shows the profession is engaged in the issues shaping the future.” The thread linking sustainability and AI is ethics. For Bouquot, this is non-negotiable. “We play a role which no other profession has in terms of public interest. Providing trust means we must comply with strong ethical codes. If we leave this, our profession is no longer relevant.” It is a never-ending challenge. “We are humans. Difficulties will always exist. That is why we emphasize training, education, and independent oversight. Trust is fragile. We must protect it every minute.” Ethics, for him, is not abstract. It is the reason the profession has survived scandals, technological upheaval, and shifting political winds. It is what allows accountants to be recognized not just as technicians but as guardians of credibility. Global profession, fragmented world Bouquot is also alert to geopolitics. He recalls the pre-IFRS days, when multinationals had to translate accounts across jurisdictions. Convergence, he argues, was a market-driven necessity, and the profession delivered. Today, fragmentation looms again, particularly in sustainability reporting. “We cannot tell the political environment to stop. But we can help our profession understand the differences, and provide expertise across borders. That is immense value.” In an era of rising protectionism, Bouquot sees IFAC’s global role as more vital than ever. “We want to stay global.” To that end, IFAC continues to prioritize its “IFAC Connect” regional meetings in Africa, the Middle East, Latin America and Asia to ensure members feel heard and connected. “We cannot be seen as something living in one part of the world. This is key. It differentiates us. It makes us agile, knowledgeable, innovative.” Lessons in leadership Bouquot’s personal history offers further lessons. After Arthur Andersen, he joined EY where he was audit partner until 2020 and embraced the role of “trusted advisor.” Auditing, he argues, is not simply about signing accounts but about dialogue. “Clients do not expect you to just say, ‘Your accounts are okay.’ They expect insight.” Equally important was mentoring. “Transmission, transmission, transmission,” he emphasizes. “You can contribute from the beginning. You bring the fresh eye. Maybe you are wrong, but at least you learn. And the next time, you approach things differently.” That ethos, listening, transmitting, engaging, now defines his presidency. Asked how he sees the profession a decade from now, Bouquot is optimistic noting that it will be agile, global, and anchored in values. The challenges are formidable and include sustainability, AI, attracting new talent, financing, ethics. But the assets, he points out – including multiculturalism, connectivity, inventiveness – are there too. “Agility is key,” he emphasizes. “Openness to the world is key. And always, always, public interest.” With that, he gathers his things, ready for his next journey, first back to his home country France for a conference on women in accounting and then onto another IFAC member country. For Bouquot, IFAC is a living embodiment of a profession on the move. “ We are humans. Difficulties will always exist. That is why we emphasize training, education, and independent oversight. Trust is fragile. We must protect it every minute.” 2025 Issue 4 13
SUSTAINABILITY Investor perspective Illustrations by Anna Fedoseeva The investor really driving With climate risks mounting, Hong Kong’s evolving sustainability disclosure standards aim to give investors confidence and companies a roadmap for meaningful ESG action. Crystal Chow reports Sustainability reporting is no longer just a matter of ticking boxes; For investors, it’s becoming a key lens for understanding how companies assess risk, strategy, and long-term value. As Hong Kong moves to align its new sustainability disclosure standards with the IFRS Sustainability Disclosure Standards (IFRS SDS), the city is positioning itself as a regional leader in an evolving landscape where voluntary efforts are giving way to mandatory frameworks driven by regulatory change and growing stakeholder demand. “Hong Kong is critical because it’s an advanced market and a gateway for global capital,” says Nathan Fabian, Chief Sustainable Systems Officer at the Principles for Responsible Investment (PRI). Fabian leads sustainability strategy for the world’s largest investor network, with over 5,200 signatories representing US$139.6 trillion in assets under management, and previously chaired the EU Platform on Sustainable Finance. “We see Hong Kong as being a standard bearer in the region.” This leadership is taking shape through the Hong Kong Institute of CPAs, which introduced the HKFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and HKFRS S2 Climate-related Disclosures (HKFRS SDS) in December 2024, fully aligned with IFRS SDS. Accountants play a pivotal role in this shift, translating complex sustainability data into insights investors can act on. The challenge – and the opportunity – now lies in moving beyond compliance to disclosures that genuinely drive value and market confidence. What investors look for Investors approach sustainability disclosures through a financial materiality lens, seeking clarity, comparability, and meaningful insight into how environmental and social factors may affect a company’s performance and long-term value. 14 2025 Issue 4
APLUS effect: What’s g sustainability reporting? 2025 Issue 4 15
SUSTAINABILITY Investor perspective “The first question is if the material sustainability issues identified by a company align with what we are concerned about,” says Gabriel Wilson-Otto, Head of Sustainable Investing Strategy at Fidelity International. “Then we look at how that’s integrated into their own corporate strategy – where governance, structure and accountability become important – and how they set and perform against the metric targets on those material issues.” He explains that disclosures serve two main purposes: refining fundamental analysis by assessing risk and opportunity exposure, and determining whether an issuer qualifies for specific sustainable investment products. At AIA Group, sustainability disclosures are scrutinized as much as quarterly or annual financial statements. “We developed our own in-house ESG Rating Scorecard, which our analysts use to assess investee companies,” explains Corrine Png, the group’s Regional Head of Equities Research and Stewardship. “Our analysts study these sustainability disclosures and compare them with sector peers to see how their practices are faring.” In addition to self-reported data, Png notes that her team utilizes external databases to track whether the companies are “on an improving trend” relative to global benchmarks. Companies that fail to disclose sufficient information on key risks and have low internal ESG scores may face larger valuation discounts – or be deemed as unattractive investments from a total risk-return perspective. The HKFRS SDS frameworks aim to meet investor demand for actionable insights by requiring companies to present “connected information” alongside their financial statements. This means explicitly linking sustainability factors – such as climate risks or workforce transitions – to their financial impacts, including future revenues, asset values, and cash flow. “The sustainability information provides an early indication of how future risks and opportunities might potentially impact the entity’s financial position, performance and cash flow across the short-, medium- and long-term,” explains Eddie Ng, Chair of the Institute’s Sustainability Disclosure Standards Committee, and Partner of ESG Advisory at KPMG. Instead of treating ESG data as a separate report, companies must show investors how these factors – like carbon emissions and water scarcity – could materially affect the prospects. Ng also says that the new standards cover interactions along the value chain – aspects not fully captured by historical financial statements alone. Investors use sustainability disclosures to gauge how well companies are positioned to manage policy interventions and supply chain risks, explains Wilson-Otto. For example, if a country plans to phase out internal combustion engines, investors look 16 2025 Issue 4
APLUS at how an automaker is adapting to electric vehicles. Likewise, if a company relies on suppliers in regions with weak environmental or labour standards, investors look at whether risks are mapped and contingency plans in place. The challenges of getting it right Even with high investor appetite for sustainability data, companies are still figuring out what constitutes “meaningful” disclosure. A common misconception, investors say, is that every number has to be perfect. In reality, investors care more about whether the data is relevant, transparent and consistent than whether it’s mathematically precise. “There are always grey areas – like whether a particular spend counts as climate-related, or how far down the value chain you go,” Wilson-Otto explains. “For most companies, these are ballpark numbers around those impacts and estimates, which, from my standpoint, is perfectly fine, as long as assumptions are clear.” This transparency is what matters most, adds Fabian. “We understand it’s challenging,” he says. “What’s important is that companies are clear when they’ve got high confidence in a measurement versus when they’ve relied on assumptions. Investors can make their own judgement from there.” Forward-looking planning is often more complex. “Companies are often uncertain how far ahead they should plan, especially around capital expenditure for transitions,” Fabian notes. “Even so, signalling intentions through targets or ranges gives investors something to work with.” Still, one challenge towers above the rest. Nearly 80 percent of major Chinese companies have yet to report Scope 3 greenhouse gas emissions. These indirect supply chain emissions are largely untracked in Asia due to technology gaps, unclear methods, and low confidence in estimation models. “The biggest gap I see is around Scope 3,” says Wilson-Otto. “The data is less consistent, and many firms are still finding their footing.” In China, that gap is even more visible. Bei Zhang, ESG Manager at China Pacific Insurance Group (CPIC), says acquiring and verifying data from “upstream and downstream players in the value chain” remains difficult, as many Chinese companies began collecting and integrating sustainability-related data relatively late. “A lot of companies simply don’t trust the quality of their estimation models,” says Katherine Han, Head of ESG Research at Harvest Fund Management, one of China’s largest asset managers. “Some refrain from disclosing Scope 3 altogether.” Such inconsistency has left investors wary. “The quality and consistency of Scope 3 disclosures, particularly in this region, varies considerably,” says Cameron Bretnall, Senior Manager of the Investment ESG Centre of Excellence at AIA. “Some investors we’ve spoken to completely ignore disclosed Scope 3 emissions because they’re just not comparable across companies. Instead, they model them based on sector characteristics.” As reporting standards evolve beyond climate to include naturerelated risks, the task only grows more complex. Fabian notes that while “the standards are less developed on the nature side,” issues like water or biodiversity are “deeply relevant local issues,” which makes “comparability quite challenging across countries”. Nevertheless, this difficulty should not deter disclosure, as Fabian argues that requiring companies to apply the standards and disclose data is the only way to “drive the practice through as many jurisdictions as possible”. And as Png puts it, companies with strong management leverage disclosures to their strategic advantage, enabling them to secure more favourable valuations and financing terms as investors and lenders are able to price the risks more efficiently. Otherwise, investors and lenders may discount the “worst case scenario” given the greater uncertainty and unknown risks, which could be “extremely costly” for companies during market disruptions. In fact, since the adoption of the IFRS SDS, the push for clarity and quality is improving the data foundation across the region. In Mainland China, asset managers are tailoring frameworks to local needs. Zhang highlights the Ministry of Finance’s new Enterprise Sustainability Disclosure Standards – Basic Standard, which provides “practical and implementable directives” to ease alignment with international requirements. “Reporting has improved over time, not just in narratives but in performance metrics. Many companies now map their “ What’s important is that companies are clear when they’ve got high confidence in a measurement versus when they’ve relied on assumptions. Investors can make their own judgement from there.” The Principles for Responsible Investment (PRI) is the world's leading investor network for sustainable finance, representing over 5,200 signatories representing US$139.6 trillion in assets under management – more than half of global professionally managed investments. Backed by the United Nations since 2006, the PRI guides institutional investors in integrating environmental, social and governance factors into investment decisions. 5,200 2025 Issue 4 17
SUSTAINABILITY Investor perspective disclosures to international standards, and some even have third-party assurance,” says Han. As Han observes, progress is evident across industries. In China’s steel sector, for instance, robust sustainability reporting supports the shift toward cleaner technologies and participation in carbon trading. Renewable energy companies, especially battery and solar manufacturers, have integrated sustainability into their operations from the outset, aligning disclosures with international benchmarks to stay globally competitive. Global standards meet local realities Data alone isn’t enough; For investors, reliable, comparable reporting has become the currency of trust. “The interests of global investors are to have standardization and comparability in disclosure as much as possible,” Fabian says, adding that disclosure standards should not be viewed as exclusive to the “peculiar or particular economic transition dynamics in any one country.” The rationale is clear: when disclosure frameworks diverge, capital becomes cautious. “If investors think a jurisdiction is developing unique standards that make it difficult to compare performance,” Fabian explains, “it becomes a higher-cost place to invest.” That’s why the global baseline set by the International Sustainability Standards Board (ISSB) – and endorsed by the International Organization of Securities Commissions – acts as an anchor for fair, efficient capital allocation. Yet achieving global alignment hasn’t always been straightforward. Companies and auditors have long navigated what the Institute’s Ng calls the “alphabet soup” of overlapping sustainability frameworks. “In Hong Kong, we currently converge with the ISSB Standards to reduce fragmentation, providing investors with a baseline framework,” she says. Asset managers, meanwhile, are finding their own balance between global comparability and local nuance. Han says while her company’s proprietary ESG assessment framework aligns with IFRS S1 and S2, the Task Force on Climate Related Financial Disclosures and the Global Reporting Initiative, localization remains vital. Her team identifies investment-relevant ESG signals by blending quantitative analysis with sector expertise to link ESG data to business outcomes. While challenges remain, regulatory momentum in Hong Kong and its regional peers is quickly closing the gap, pushing the region towards comparable, globally consistent reporting. “Hong Kong-listed companies are generally very strong in disclosures – really among the best in class,” says Png of AIA. “A Hong Kong listing gives confidence to global investors because the level of disclosure, whether financial or sustainability-related, is much richer.” Addressing greenwashing As reporting moves from voluntary to mandatory, confidence is everything. “When accountants prepare financial statements, they must consider the investor’s perspective,” says Ng, adding that the same principle now underpins the profession’s role in sustainability disclosures. As Hong Kong’s sustainability disclosure standard setter, the HKICPA is helping companies navigate the transition by offering practical guidance and capacity-building initiatives to align global standards with local practice. Ng argues that professional accountants bring unique value: they understand financial materiality, are trained to ensure connectivity between sustainability and financial statements, and possess the analytical rigour to support forward-looking estimates – expertise built for credibility. Yet smaller companies still struggle with resources, evolving taxonomies, and limited senior buy-in. “There should be more technical consulting or training for senior management to really understand these issues,” notes Han. The push for quality also reflects rising scrutiny over greenwashing. “International disclosure standards require companies to set quantifiable ESG targets and performance indicators,” says Zhang. “That drives internal governance and ensures alignment between ESG commitments and “ A Hong Kong listing gives confidence to global investors because the level of disclosure, whether financial or sustainability-related, is much richer.” 18 2025 Issue 4
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