Strategies and Resources for Integrating Sustainability in the Introductory Accounting Courses

Karen W. BraunWendy M. Tietz

History of our sustainability journey…Three years agoThird editionLast yearThis year

Sustainability defined…“Meeting the needs of the present

without compromising the ability of future generations to meet their own needs”

-based on UN Brundtland Report

“The possibility that humans and other life will flourish on Earth forever.”

-John Ehrenfeld

“Do unto others, including future generations, as you would have them do unto you”

-An expansion of the Golden Rule.

Importance to business leaders

93% of CEOs believe sustainability is important to their company’s future success

96% of CEOs believe sustainability should be fully integrated into strategy and operations of a company

Often cited business reasonsCost savings (“Eco-efficiency”)Innovation/ Product developmentConsumer concernsCompetitive advantageBrand/reputation managementRisk reductionEmployee motivationInvestor relationsIncreased regulatory requirementsEthics (‘the right thing to do’)

Measurement & ReportingYou can‘t manage what you can’t

measureFor:

◦Internal change management◦External stakeholders

Global Sustainability Reporting

Global 100 companies◦ Nearly 100% of

European◦ 83% of U.S.

Global 250◦ 95% report

U.S. Sustainability Reporting (2011)Fortune 500

◦ 57% reportS&P 500

◦ 53% reportCompanies that

do NOT report are now in the minority

More than double 2010

Rising pressure from capital markets

Foreign stock Exchanges◦ London◦ Paris◦ Johannesburg

40% of U.S. shareholder proxies in 2011 were ESG issues

NASDAQ- June 2012 “urging” but still voluntary

Investors want ESG Information

1,100 institutional investors with >$30 trillion of assets under management are signatories

ESG info. taken into consideration “as part of fiduciary responsibilities”

How to report? Leading framework80% of the reporting

Global 250 companies

65% of the reporting S&P 500 companies

Over 5,000 globallyRequired for

NASDAQ Sustainability index

Integrated reportingAnnual Report Sustainability

report

International Integrated Reporting Committee (IIRC)

Pilot program:◦ All Big 4, Grant

Thornton, CFA Institute

◦ Over 80 companies

◦ 30 institutional investors

Consulting and Assurance ServicesBig 4 dominate

both - Verdantix

survey

Calls for Sustainability EducationCEO study:

◦ Formal educational institutions, including business schools, should be….increasing the knowledge and mindsets of future leaders and workers with respect to sustainability.

AACSBOne objective:

“to promote a greater role for education on sustainability practices and CSR in business schools”

Pathways Commission (AAA and AICPA)

Learning experiences should:◦ “reflect global trends

in business”◦ “develop a global

mind set in students”◦ “incorporate engaging

materials that demonstrate the role accountants play in society” including “questions and problems that need solving.”

Stewardship Function of Accounting“The responsible

overseeing and protection of something considered worth caring for and preserving.”

Stewardship and Accounting

Focus on triple bottom line impact of a company:◦ Economic◦ Environmental◦ Social

A broader and more holistic view of accounting’s role of providing relevant information to decision-makers.

Accounting Curriculum & Sustainability

Lay ground workStart creating a

sustainability mindset

Emphasis on high-level critical thinking

Broad-based for non-accounting majors, too

Topic specific coverage◦ Audit: Assurance

Services◦ Tax: tax credits◦ Corporate Financial:

Carbon credits◦ Systems: Materials

Flow Accounting systems.

◦ Cost: EMA

Introductory Upper level

Approaches:

Part of the reporting aspect of accounting

Awareness of GRI report

Link GRI indicators to course topics

Sustainability mindset with respect to:◦ Cost measurement◦ Planning◦ Decision making◦ Performance

EvaluationConnection between

business activities and accounting

Introductory Financial Introductory Managerial

Criteria for Selection of ResourcesStandard course

topicsShort time

requirementReal company

applications

Supplement to our text content

Short readings in each chapter

Numeric homework problems related to sustainability

Chapter 15 on Sustainability

Website houses resourcesSustainability resources website

General resourcesArticlesList of blogs and

news sitesTED talk links

Map of GRI Performance Indicators to Financial Accounting Topics

Course Topic GRI report componentIntroduction to financial accounting/reporting

General discussion of CSR & GRI Performance Indicators

Reporting accounting information to external users

Economic Performance Indicators in general

Cash, short-term investments, and internal control

Society Performance Indicators - S02 (Risks related to corruption), S03 (% of employees trained in anti-corruption), S04 (actions regarding incidents of corruption)

Receivables

PR8 (Customer privacy - # of breaches) and (related to sales) PR5 (practices related to customer satisfaction, including results of surveys measuring customer satisfaction)

List of GRI reports and linksRecognizable

companiesRatings A+, A,

B+, BAppropriate for

classroom discussion or assignments

Other financial acctg resources

CSR indicesWhat’s your footprint?

Company videosActual

companiesEngaging

studentsShort (< 5 min.)

for use inside of class

Debriefing & Discussion

Video example – Secret Lives of Eggs

The secret life of eggs

Shown in conjunction with ABC

What is the cost of this activity to ◦ The company?◦ The environment?◦ Society?

Cost/Benefit: What costs might increase as a result of the proposed change?

PodcastsAssigned for

outside of classCeresSustainability

News & Entertainment

Debrief & Discuss

Topical PowerPointsTopical primers

◦ Business case for Sustainability

◦ E-waste◦ Waste audits◦ Life-cycle of paper

bills◦ GRI◦ LEED certification

One caveat

Ex: Business case for sustainabilityCost savings (“Eco-efficiency”)Innovation/ Product developmentConsumer concernsCompetitive advantageBrand/reputation managementRisk reductionEmployee motivationInvestor relationsIncreased regulatory requirementsEthics (‘the right thing to do’)

Current events in the newsEnvironmental

Leader daily email (5-10 leading stories)

Post on course management platform

Assign for extra credit or quiz or exams

WebsitesGRIFueleconomy.govCompare

◦ Fuel Economy ($)◦ Environmental

impact◦ Safety

Use as a basis for ◦ Projecting cash flows◦ NPV, payback

period

Short classroom activitiesCritical thinkingSmall group

discussionOne per topic

area

Example: Laptop budgeting activityFind

sustainability initiatives of any company

Were specific dollar amounts disclosed?

What budgets would be affected by these initiatives?

Translating plans into budgets…

Example: Job costing activitySupply-chain

assessment is on the rise.

What sustainability-related information could be collected on the Job Cost Record w/r/t:◦ DM◦ DL◦ MOH

Example: Outside of class activityPersonal waste

auditKeep track for 2-

3 daysEstimate costWho bears cost

and how?Cost to society

and environment.

Example: GRI report discussionLink to Kimberly-

Clark 2011 GRI report

Questions appropriate for in-class or online discussion

Student feedback- 15 resources used during semesterMost memorable

“take-aways” from course◦ 25% included

sustainabilitySurvey

◦ 88% agreed resources helped them connect sustainability to the role accounting plays in measuring, analyzing and reporting business activities

RecapCEOs view it as

importantSustainability reporting

is increasing Investors/markets are

wanting ESG dataBusiness education is

being called forDovetails with

stewardship function of accounting

Introductory accounting classes can help develop a sustainability mindset

Link will be emailed to youWebsite toolkit

http://tinyurl.com/cmzgvl3

Questions?Contact information:Karen.Braun@case.edu

wtietz@kent.edu