Strategies and Resources for Integrating Sustainability in the Introductory Accounting Courses

1. Strategies and Resources for Integrating Sustainability in the Introductory Accounting Courses Karen W. Braun Wendy M. Tietz

2. History of our sustainability journey… • Three years ago • Third edition • Last year • This year

3. 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.

4. 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

5. Often cited business reasons • Cost savings (“Eco-efficiency”) • Innovation/ Product development • Consumer concerns • Competitive advantage • Brand/reputation management • Risk reduction • Employee motivation • Investor relations • Increased regulatory requirements • Ethics (‘the right thing to do’)

6. Measurement & Reporting • You can‘t manage what you can’t measure • For: • Internal change management • External stakeholders

7. Global Sustainability Reporting • Global 100 companies • Nearly 100% of European • 83% of U.S. • Global 250 • 95% report

8. U.S. Sustainability Reporting (2011) • Fortune 500 • 57% report • S&P 500 • 53% report • Companies that do NOT report are now in the minority • More than double 2010

9. 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

10. 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”

11. How to report? • Leading framework • 80% of the reporting Global 250 companies • 65% of the reporting S&P 500 companies • Over 5,000 globally • Required for NASDAQ Sustainability index

12. Integrated reporting • Annual Report • Sustainability report

13. International Integrated Reporting Committee (IIRC) • Pilot program: • All Big 4, Grant Thornton, CFA Institute • Over 80 companies • 30 institutional investors

14. Consulting and Assurance Services • Big 4 dominate both - Verdantix survey

15. Calls for Sustainability Education • CEO study: • Formal educational institutions, including business schools, should be….increasing the knowledge and mindsets of future leaders and workers with respect to sustainability.

16. AACSB • One objective: “to promote a greater role for education on sustainability practices and CSR in business schools”

17. Pathways Commission (AAA and AICPA) • Learning experiences should: • “reflect globaltrends 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.”

18. Stewardship Function of Accounting • “The responsible overseeing and protection of something considered worth caring for and preserving.”

19. 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.

20. Introductory Upper level Accounting Curriculum & Sustainability • Lay ground work • Start 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

21. Introductory Financial Introductory Managerial 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 Evaluation • Connection between business activities and accounting

22. Criteria for Selection of Resources • Standard course topics • Short time requirement • Real company applications

23. Supplement to our text content • Short readings in each chapter • Numeric homework problems related to sustainability • Chapter 15 on Sustainability

24. Website houses resources • Sustainability resources website

25. General resources • Articles • List of blogs and news sites • TED talk links

26. Map of GRI Performance Indicators to Financial Accounting Topics

27. List of GRI reports and links • Recognizable companies • Ratings A+, A, B+, B • Appropriate for classroom discussion or assignments

28. Other financial acctg resources • CSR indices • What’s your footprint?

29. Company videos • Actual companies • Engaging students • Short (< 5 min.) for use inside of class • Debriefing & Discussion

30. 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?

31. Podcasts • Assigned for outside of class • Ceres • Sustainability News & Entertainment • Debrief & Discuss

32. Topical PowerPoints • Topical primers • Business case for Sustainability • E-waste • Waste audits • Life-cycle of paper bills • GRI • LEED certification • One caveat

33. Ex: Business case for sustainability • Cost savings (“Eco-efficiency”) • Innovation/ Product development • Consumer concerns • Competitive advantage • Brand/reputation management • Risk reduction • Employee motivation • Investor relations • Increased regulatory requirements • Ethics (‘the right thing to do’)

34. Current events in the news • Environmental Leader daily email (5-10 leading stories) • Post on course management platform • Assign for extra credit or quiz or exams

35. Websites • GRI • Fueleconomy.gov • Compare • Fuel Economy ($) • Environmental impact • Safety • Use as a basis for • Projecting cash flows • NPV, payback period

36. Short classroom activities • Critical thinking • Small group discussion • One per topic area

37. Example: Laptop budgeting activity • Find sustainability initiatives of any company • Were specific dollar amounts disclosed? • What budgets would be affected by these initiatives? • Translating plans into budgets…

38. Example: Job costing activity • Supply-chain assessment is on the rise. • What sustainability-related information could be collected on the Job Cost Record w/r/t: • DM • DL • MOH

39. Example: Outside of class activity • Personal waste audit • Keep track for 2-3 days • Estimate cost • Who bears cost and how? • Cost to society and environment.

40. Example: GRI report discussion • Link to Kimberly-Clark 2011 GRI report • Questions appropriate for in-class or online discussion

41. Student feedback- 15 resources used during semester • Most memorable “take-aways” from course • 25% included sustainability • Survey • 88% agreed resources helped them connect sustainability to the role accounting plays in measuring, analyzing and reporting business activities

42. Recap • CEOs view it as important • Sustainability reporting is increasing • Investors/markets are wanting ESG data • Business education is being called for • Dovetails with stewardship function of accounting • Introductory accounting classes can help develop a sustainability mindset

43. Link will be emailed to you • Website toolkit • http://tinyurl.com/cmzgvl3

44. Questions? • Contact information: • Karen.Braun@case.edu • wtietz@kent.edu