Jenni Rose discusses how to harness the passion of accounting students.
As the dust settles on COP26 it is clear that climate change is an increasingly important issue, especially for young people. This recently published research found that 84% of the 10,000 young people surveyed were at least moderately worried about climate change. In fact, 45% of the 16-25 year olds said that their feelings about climate change negatively affected their daily life. There seems to be no doubt that students are passionate about climate change, the Greta Thunberg effect of 10 million protesters on the street cannot be ignored. As accounting educators, we need to use this depth of feeling to get students excited about accounting and finance!
Never before has there been an issue that so many students care about which has such frequent media articles. As I teach accounting through a climate change lens, I'm easily able to bring in the day's news to class and show how it is linked to exactly what we've been talking about. It wakes students up to the fact that accountants are not the boring pessimistic stereotypical bean counters. Accountants can save the world.
With sustainability reports included in financial statements and the IFRS (International Financial Reporting Standards) developing sustainability standards, the links are easy to explain to students and they are often surprised to hear how involved the accountancy profession is in climate change. They're used to financial statements holding corporations accountable, I still love this article about states or corporations being more powerful, but to use financial statements to ensure big corporations are taking action is increasingly important to students.
Critical thinking can be taught by alerting students to greenwashing and companies using terms like 'carbon intensity' or vague promises to reduce carbon footprints in their financial statements rather than firm measurable commitments. The importance of being able to understand financial statements and their societal impact is clearly articulated in this article, which is another great one I share with students.
The old examples I used to illustrate the accounting equation were usually along the lines of "your rich uncle gives you £5,000 to start a business, what effect will this have on the financial statements" but these ideas no longer hold students' interest. However, if they are challenged with an example such as "what is the effect on the financial statements of an airline promising carbon neutrality?" they start to link the promises made by companies to their bottom line. This idea of phenomenon-based teaching is further explained in Elizabeth Marsland's excellent Ted talk.
Some fantastic resources which are easy to access include this FRS102 fact sheet which shows climate-related matters which affect financial statements and this article about the role of the ICAEW and the ICAEW page on COP26.
There are also plenty of accessible academic papers such as this one from Paolo Quattrone published in 2021 which puts forward the idea of a value-added income statement. I've used this with first-year undergraduate students, first showing them the standard income statement and explaining how focused this is on the wealth created for shareholders. Then students can be taught to think about how this could be improved – for example, as proposed in the paper, having a greater focus on wealth generation and wealth distribution, as well as including nature as a stakeholder as shown in this slide.
These students are the leaders of the future – they may well be at the top of organisations by 2030 or 2050, the target dates for many of the promises being made at COP26. Wouldn’t it be wonderful if they could use their knowledge to present financial statements which are truly relevant to all stakeholders rather than following the status quo, as well as faithfully representing what the organisation is doing?
Even the mechanics of double-entry bookkeeping are closely linked to the concept of net zero or carbon neutrality. Once students understand the dual nature of accounting they can then apply this to the idea that an entity's carbon footprint needs to balance – the carbon being used and the carbon offset. How this is measured is explored more in this letter to school strikers from the physicist behind net zero.
The topics of personal tax can be considered through an environmental lens when thinking about the carbon impact of extreme wealth. Management accounting and net present value calculations can be taught using examples such as the carbon trade-offs for paper straws. More broadly world economics can be discussed using clips from this Climate Apocalypse talk at the World Economic Forum.
I also find teaching accounting through a climate change lens enables me to set essay questions that test students' deeper thinking and application. For example, this is the formative essay that I set for first year undergraduate students:
I was delighted to see that 82% of students submitted this essay, despite this being a formative peer reviewed essay (usually if there are no marks available and no written lecturer feedback the uptake is much lower). The passion expressed by students in their answers was inspiring including "…the impact that these characteristics can have…is astounding, especially with a new and young generation of accountants who care about the environment. Firms will be held accountable for their actions…".
Seeing these responses from students for such a difficult essay question gives me hope, both in their desire for change and their increasing excitement about their own role in holding firms accountable for climate change commitments. You can also hear the strength of the passion of MBA students in this recent talk I led for the University Of Manchester Climate Science Festival on "How Do You Teach Accounting to Generation Greta?" as they discussed how this way of teaching accounting had inspired and engaged them.
Using the climate change lens to teach accounting enables teachers to use relevant and recent news and academic articles to bring accounting to life and explain the vital role accountants have in society. There is more to it than engaging students though. Those we are teaching now are the leaders and accountants of the future, through accounting teaching we can enable them to use their positions to hold organisations accountable for their actions and truly make a difference to the saving the planet.
