The global skills and competency framework for the digital world

#1600 Embed carbon accounting and Scope 1/2/3 emissions modelling dimensions into Financial Management (FMIT) and Investment Appraisal (INVA) change request pending

Update FMIT and INVA skill descriptions to explicitly reference carbon accounting, environmental cost pools, and Scope 1/2/3 emissions modelling as dimensions of financial competency.

Problem Statement: SFIA 9 financial skills — particularly Financial Management (FMIT, Levels 4–6) and Investment Appraisal (INVA, Levels 4–6) — are financially rigorous but contain no reference to environmental accounting, carbon cost attribution, or integration of non-financial ESG metrics into financial models. The TBM for Sustainability & ESG Framework explicitly requires practitioners to model carbon, energy, and water costs alongside financial costs using structured taxonomies (TBM Taxonomy 5.0). Without this, a practitioner demonstrating SFIA financial competency may be unequipped to perform ESG-integrated financial analysis.

Proposed Change:

Amend FMIT descriptors at Levels 4–6 to include:

·        Understanding and application of carbon accounting principles alongside financial cost management.

·        Ability to model environmental cost pools (energy, carbon, water) in parallel with financial cost pools.

·        Integration of non-financial ESG metrics into financial performance reporting.

 

Amend INVA descriptors at Levels 4–6 to include:

·        Appraisal of ESG-related investments incorporating carbon cost/benefit analysis.

·        Assessment of Scope 1, 2, and 3 emissions reduction as a financial and strategic return metric.

·        Reference to green finance standards and ESG investment criteria.

 

Rationale:

  • Directly addresses Gap identified in Section 2.1 of the gap analysis.
  • Aligns with GHG Protocol, IFRS/ISSB S2, and CSRD financial disclosure requirements.
  • Reflects the growing expectation that technology financial managers operate with dual financial and environmental accountability.

Applies to: FMIT — Financial Management; INVA — Investment Appraisal

Change Note: Proposed additions to existing skill descriptions at Levels 4–6. No structural changes to level numbering or skill category.

Note: More than 36 jurisdictions globally are actively adopting or aligning their corporate disclosure regulations with the IFRS Sustainability Disclosure Standards (ISSB) to create a global baseline for climate and sustainability reporting. Beyond the UK, the EU, and Australia, numerous other countries have formally finalised their approach to adopt or closely align with these rules, including Brazil, Canada, Chile, China, Hong Kong, Japan, Malaysia, Mexico, Nigeria, Qatar, and Turkey. Additionally, nations such as Singapore, South Korea, India, and Indonesia are in advanced stages of implementing ISSB-aligned frameworks. View official implementation maps and country-by-country data on the IFRS Foundation Jurisdictional Profiles page.

Proposed change applies to Financial management

Current status of this request: pending

Tim Prosser
Oct 03, 2026 12:55 am

Update following industry review;

1. Incorporate Embodied Carbon and Whole-Life Costing into Investment Appraisal (INVA)
• Context from Review: The current draft of CR #1600 focuses primarily on Scope 1, 2, and 3 emissions modelling and carbon cost/benefit analysis. However, the role profile review highlights that financial business cases frequently ignore embodied carbon because it does not appear in ongoing operational expenses. Furthermore, procurement and finance must evaluate hardware refresh cycles, refurbished equipment, and lifecycle extension against purchase price and operational impact.
• Recommended Addition to INVA (Levels 4–6):
o Explicitly mandate whole-life carbon costing—combining operational energy use with embodied carbon across the full asset lifecycle.
o Include financial evaluation of lifecycle extension, hardware refurbishment, and deferred asset replacement as part of investment appraisal trade-offs.

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2. Require Environmental Showback in Financial Management (FMIT)
• Context from Review: While CR #1600 proposes adding carbon accounting to FMIT, it lacks explicit reference to environmental showback. Putting consumption and carbon metrics directly in front of the business service owners who generate the demand is one of the primary mechanisms that drives behavioural change.
• Recommended Addition to FMIT (Levels 4–6):
o Add the responsibility to allocate and show back environmental impact (carbon, energy, water) alongside financial costs to the specific business units, services, and consumers creating the demand.
o Align FMIT guidance with Cost Management (COMG) so financial management frameworks account for consumption-based environmental metrics.

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3. Distinguish Measured vs. Modelled Data & Eliminate Spend-Based Proxies
• Context from Review: A major failure mode identified in financial partner roles is deriving carbon figures directly from financial spend. Under spend-based estimation, supplier price cuts or discounts appear falsely as emissions reductions, masking real impact. Financial roles must actively challenge spend-derived figures and distinguish measured telemetry from modelled estimates.
• Recommended Addition to FMIT / Financial Analysis (FIAN) Skills:
o Require financial managers and analysts to audit data sources and calculation methods, explicitly distinguishing between measured activity data and modelled/spend-based estimates.
o Include a specific requirement to challenge and replace spend-derived carbon proxies with granular operational data.

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4. Interface Financial Management with Sourcing, Asset, and Contract Management (Procurement Alignment)
• Context from Review: Investment appraisal (INVA) and financial management (FMIT) depend directly on contractual data rights and supplier disclosures established during procurement (SORC, SUPP, ITCM). Without contractual rights to granular emissions data and audited end-of-life terms, financial models are forced to rely on unverified marketing figures.
• Recommended Cross-Skill Alignment Note for CR #1600:
o Cross-reference CR #1600 with procurement-related change requests (#1602 for SUPP/SORC, as well as proposed updates for Asset Management ASMG and Contract Management ITCM).
o Ensure FMIT and INVA descriptors explicitly reference incorporating contractually secured supplier emissions data, activity-based vendor evidence, and chain-of-custody disposal terms into financial appraisals.

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Proposed Ready-to-Paste Text for CR #1600 "Change Comments / Proposed Additions"
Proposed Amendments to CR #1600 Descriptors:
• FMIT (Financial Management, Levels 4–6):
o "Applies carbon accounting and environmental cost allocation principles to show back energy, carbon, and water usage alongside financial costs to consuming business units and service owners."
o "Evaluates financial data quality by distinguishing between measured operational data and spend-derived or modelled estimates, eliminating spend-proxy distortions."
• INVA (Investment Appraisal, Levels 4–6):
o "Incorporate whole-life carbon impact—including embodied carbon, operational footprint, and hardware lifecycle extension/refurbishment options—into formal business cases and capital investment appraisals."
o "Evaluates supplier and partner investment options using contractually verified Scope 1, 2, and 3 activity data rather than spend-based averages."