Should students learn sustainability accounting?

Sustainability accounting continues to grow in prominence. The Governance and Accountability Institute Inc., which has issued a report each year since 2011 documenting the percentage of S&P 500 companies issuing sustainability reports, notes that while just 20% did so in 2011, 85% did so in 2017.

“We definitely see that the majority of publicly traded companies, and even some private companies and not-for-profit organizations, are creating sustainability reports,” said Jessica Weber, Ph.D., assistant professor of accounting & CIS at the University of Northern Colorado. “Some of the more advanced reporting organizations are even producing integrated reports.”

With so many companies now interested in sustainability reporting, faculty may wonder whether they should address the topic in their classes. Some schools do offer classes in sustainability accounting. Catherine Milburn, CPA, senior instructor and teaching professor at the Leeds School of Business, University of Colorado Boulder, created a course on the topic: Integrated Reporting for Socially Responsible Strategies. The class is offered as an elective, and Milburn regularly has a waitlist for it.

“We saw this as an emerging issue, and thought it would be a good elective for students wanting to get away from the intense, quantitative courses,” she said. “The students like it because they think it’s part of the future.”

Paul Meeks, finance instructor at Western Washington University, teaches the course Environmental Accounting/ Sustainability Reporting. Though his focus is finance and not accounting, Meeks took over the course when his predecessor retired because he saw it as an important topic.

Such courses, however, are still rare. Weber, who is currently researching the topic for her own paper, surveyed every accounting department in the United States and found that, overwhelmingly, sustainability accounting is not covered in the college classroom.

One reason may be that accounting faculty already have a great deal of material to cover and may not have space in their classes for another topic.

But faculty may want to consider introducing their students to the concept of sustainability. The faculty members interviewed for this article say that, while employers aren’t necessarily asking for students to concentrate their studies in sustainability accounting, they are beginning to look for some familiarity with the topic.

Meeks cited the development of the Sustainability Accounting Standards Board in 2011 and its work since as an indicator of what’s to come.

“I’ve met with them, and they have taken all the major industries, and essentially parsed data and figured out key sustainability metrics for those industries,” he said.

Don Pagach, CPA, Ph.D., professor in the accounting department at North Carolina State University, noted that while more companies are now preparing sustainability, triple bottom line, or 3P (people, planet, and profit) reports, many are also asking to have their reports audited and assured.

Though not all departments will have the resources or the support necessary to provide a course dedicated to sustainability, there are ways faculty can incorporate the topic into their existing lessons. Pagach, Weber, Meeks, and Milburn recommended the following:

Look for places to feature sustainability in topics you’re already covering. Milburn suggested finding places where sustainability can be woven into your curriculum. For instance, a class discussing future trends might touch on the topic of sustainability. Auditing courses can delve into nonfinancial information, which includes sustainability. Or, in accounting ethics, faculty can bring up the topic when discussing a business’s obligation to society.

Use textbook supplements. Some textbook producers are recognizing the need to incorporate sustainability into their subject matter. Weber uses the textbook Managerial Accounting (3rd edition) by Stacey Whitecotton, Robert Libby, and Fred Phillips, which includes supplemental material on sustainability for each chapter, in her managerial accounting course.

“Especially for faculty that don’t have the expertise in sustainability, adopting a textbook that has spotlights on sustainability would be the best way to introduce the material,” she said.

Bring in experts. When Meeks found the written materials on sustainability accounting didn’t meet his expectations, he looked to his local community to find experts. He found them in some unexpected places: BP’s Cherry Point Refinery in Washington had the largest sustainability staff in the country, and Alaska Airlines also had a major focus on sustainability. Of the 17 classes he taught during fall 2017, Meeks said nine classes had guest speakers.

Incorporate a simple project into your existing classes. Pagach uses two projects to introduce his students to sustainability reporting. In one, he asks his students to pick a company and answer questions regarding its sustainability report. In the textbook he uses, Starbucks is cited as an example company throughout the text, so Pagach carries that over to his sustainability discussion.

“I walk through Starbucks’ sustainability report with them [asking questions such as] why do they do this, why is it being reported, what kind of users really care about this, and then ask them to pick their own company and do the same,” he said.

In a second project, Pagach builds a case for a real-world company that is not currently providing a sustainability report. He asks students to examine such topics as what should be reported and who would want to see the report, and to discuss the types of guidelines they would adopt in providing the report. Pagach then asks students to address specific questions in a written report.

Milburn, who has taught her elective course for more than five years now, said faculty shouldn’t be afraid to learn more about sustainability.

“I was a little hesitant,” she said. “The more I got into it, the more excited I got about it. It’s exciting to be in the middle of something that’s evolving and happening right now.”

Additional resources on sustainability

The AICPA offers the following resources that faculty may find useful:

• Case studies: The AICPA developed a collection of case studies for small and medium-size companies based on a survey it conducted, which were later converted to a CGMA tool.
• Book: The publication Attestation Engagements on Sustainability Information Guide (Including Greenhouse Gas Emissions Information) offers guidance to assist CPAs with interpreting and applying the clarified attestation standards (SSAE No. 18) when performing examination or review engagements on sustainability information. Faculty could use this paper in teaching students about assurance of reported sustainability information.

Lea Hart is a freelance writer based in North Carolina. To comment on this article or to suggest an idea for another article, contact senior editor Courtney Vien at Courtney.Vien@aicpa-cima.com.