Greening accounting and finance curricula

One of the biggest challenges faced in the world today is understanding the implications of sustainability for peoples everyday lives. This is especially true in the world of business, where the sustainability agenda plays an increasing role in the decisions made by customers, managers, shareholders, lenders, suppliers and employees. A growing range of issues have a bearing on this agenda, including global biodiversity loss, climate change, and increased expectations on companies with regard to product responsibility, human rights, and providing a decent work environment for employees. In response, business schools are increasingly turning to develop sustainable accounting and finance curricula, which incorporate issues as diverse as integrated reporting, accounting for biodiversity and climate change, carbon disclosure, green investment, crowd funding, and financial entrepreneurship. Now more than ever, these curricula are useful to business organisations to help them identify and understand the economic, social and environmental implications of their activities on people’s lives.

The interaction between accounting practices and sustainability disciplines has evolved in accounting as a nascent field of business accountability. There are two possible approaches that could be developed to describe this interaction: the first approach focuses on the development of an organisational account of sustainable business activities, whilst the second approach focuses on the use of conventional accounting tools / practices to manage social and environmental activities of business organisations. These two approaches could be used together to manage the social and environmental aspects of economic business activities. The first approach focuses on the development of an organisational account (description) of social and environmental issues that falls under the ambit of Sustainable Development (SD) such as ecological biodiversity, social equalities and climate change. The second approach focuses on the use of some conventional accounting tools or practices to manage social and environmental issues in an organisation such as integrated reporting practices, coherent data recording practices, accounting principles (e.g. verification, avoid double recording, relevance and conservativeness). Therefore, these two approaches could be used to explain how business organisations could manage the main imperatives of SD such as pollution (air, water, toxic wastes, ecological damage and climate change).

In response to the growing recognition that companies must respond to the sustainability agenda, a number of international efforts have been introduced over the last ten years to guide and manage sustainability policies at the corporate level. These attempts include the Global Reporting Initiative (GRI), the United Nations Environmental Programme Finance Initiative (UNEPFI) and the Financial Institutions Resources, Solutions and Tools (FIRST) initiative that was developed by the International Finance Corporation (IFC). Greening accounting and finance curricula such as these aim to explore the intentions and possibilities of accounting to provide new organisational responses for the main challenges of SD.

At their most basic, greening accounting and finance curricula such as those noted above are intended to facilitate disclosure of the organisation’s impact, be it positive or negative, on the environment, society and economy. Not only does this require organisational resources that might otherwise be spent more profitably, but it also introduces a different corporate strategy agenda for the organisation which may be less profitable than running “business as usual”.

A good start in understanding what this means for business is to distinguish between the terms ‘sustainability’ and ‘SD’. Sustainability refers to the degree to which a company has made progress in its aim to achieve economic, ecological and social viability. It involves radical agenda for change in both organisational life and organisational accountability. This involves maintaining the relationship the company has with the ecology and society in which it operates, subject to the need to make and grow profits. These concerns present fundamental challenges for decision-making on the part of managers of such organisations. SD, meanwhile, was defined in the Brundtland Report in 1987 as development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs. This definition embraces some responsible considerations on the limits of human activities. It contains many challenges, particularly identifying the needs of present and future generations.

SD has become one of the most important agendas in today’s world. It is concerned with how we can grow our daily activities and improve people’s wellbeing. Sustainability practices have a vital role to play in this agenda. There are, however, many unresolved debates and challenges regarding the meaning and credibility of such practices. For instance, efforts are still needed to identify what accounting practices are needed to enable sustainable transformation and what guidelines should be followed to maintain this transformation. It therefore seems an opportune moment to open dialogues with the most influential stakeholders to measure corporate sustainability and to think about the organisation’s impact on the economy, environment and society. This process involves the identification of sustainability tools and practices, and their widespread adoption across the corporate world. This will not be an easy task as doing so will mean moving away from the philosophies that support business as usual. They also require the development of collaborative organisational capabilities, knowledge, and resources to apply these insights.

As such, sustainability could be thought of as the desired state and SD as the process to reach this state. Sustainability seeks ways to address the increasingly pressing exigencies of SD in companies. However, there are some other complicated issues involved in introducing the themes of SD in corporate activities, such as the efficient and fair distribution of resources and opportunities between present and future generations. All these challenges represent great pressure to encourage us to think about the process of greening accounting and finance curricula.

Dr Mohamed Saeudy, Senior Lecturer in Accounting and Finance, University of Bedfordshire Business School