Center for Advancing Accounting

ESG Momentum in Your Accounting Course

• In Event: Integration of ESG/Sustainability into Accounting Courses

Abstract

All accounting courses, financial and managerial, entail the opportunity to integrate sustainability, and there is no better time than now to accomplish this. As a Fundamentals of Sustainability Accounting (FSA) Credential holder from the IFRS Foundation, I have successfully introduced Environmental Social and Governance (ESG) into a second-year Intermediate Financial Accounting course, paving the way toward an ESG-embracing curriculum in our accounting program.

Surprisingly, most of my students had never heard of sustainability reporting before and they thought that sustainability was merely about saving our planet. With each class, students gain an appreciation for this emerging field, concluding that there is a lot more to ESG than they initially assumed. They learn to identify, analyze and interpret financially material sustainability information in corporate reports and become familiar with the concept of sustainability-informed decision-making.

Following the structure of the FSA Credential curriculum, I introduce key knowledge areas of sustainability and connect them with each accounting topic through real-life examples. Students use my Sustainability Accounting Primer as supplemental reading material.

Without compromising existing accounting content, I set aside a 20-minute segment in each two-hour lecture to cover sustainability. ESG topics are discussed in a dual context, including the core value aspect and the business perspective. In particular, we discuss the global sustainability landscape, the role of the newly created International Sustainability Standards Board (ISSB), and the importance of intangible assets in corporate value creation for a broad range of stakeholders. Students learn to identify and communicate sustainability-related risks in businesses and the importance of turning them into opportunities. Students share their perceptions about a sustainability issue through interactive and inclusive polling exercises.

I test students’ knowledge of the Sustainability Accounting Standards Board (SASB) standards, including the specifics of the five sustainability dimensions, the universe of general issue categories, disclosure topics, and sustainability accounting metrics. I use real-life examples, current news articles and short cases to analyze the connection between sustainability performance and the SASB-defined channels of financial impact. Ultimately, students learn how to integrate ESG performance into traditional financial analysis.

Finally, I add an experiential learning segment in each tutorial, where students learn first-hand from an accounting professional about sustainability in today’s workplace.

Author

• Eszter Palancz, University of Toronto