The recent years have seen companies being put to a higher level of scrutiny for their environmental and social footprints. Environmental concerns are more vocally expressed by the public in general, and there is increasing demand by stakeholders toward organizations to deliver on the sustainable development goals in their respective realms. In this backdrop, the companies are not only expected to integrate sustainability in their business models but also to communicate the impact of their business activities. Thus, against these stakeholders’ expectations, companies are increasingly becoming more active in disclosing their sustainability footprints vis-à-vis non-financial disclosures (i.e. sustainability or CSR reports). Likewise, companies are expected to behave ethically in their financial disclosures. There is increased scrutiny of firms’ tax practices and there have been some noteworthy instances of accounting fraud. These topics are also part of the company's sustainability performance, and highly relevant for business students that in the future may find themselves in positions to affect this type of firm behavior.
Regulators and industry professionals are also making efforts to develop a common language (reporting standards) for such non-financial disclosures, so that companies could transparently and efficiently communicate their sustainability practices and behavior to their respective stakeholders. Given the above highlighted importance of sustainability reporting, the aim of this course would be to familiarize the students with the key concepts surrounding the sustainability reporting. The course will introduce concept of sustainability reporting, guidelines around sustainability or ESG reporting, implications of such ESG parameters for firms (e.g. ESG rating, sustainable finance) and relevant regulatory standards and frameworks.
The course consists of two key parts: 1) Sustainability reporting 2) Ethical issue in financial accounting. From the ESG standpoint, the first part of the course primarily covers 'Environmental’ & ‘Social’ whereas the second part relates to ‘Governance’ issues for companies in their disclosures. These are further divided into 5 course modules.
Module 1 will give a general introduction to the concept of sustainability in business, sustainability Reporting & Integrated Reporting. The students will be given a background of why companies provide sustainability reporting and how it can be anchored to organizations’ value creation. The students will be also introduced to key sustainability reporting discussions in academia. This module will be directly linked with the course book Integrated Sustainability Reporting by L. Bini and M. Bellucci
Module 2 considers the relevance of sustainability reporting independent from reporting on the firm's underlying sustainability activities. This includes how sustainability reporting and regulations can have real effects, how and why sustainability reporting is relevant to different stakeholders, and factors that affect sustainability reporting. The topics in this module are mostly covered in the report Economic Analysis of Widespread Adoption of CSR and Sustainability Reporting Standards by Christensen, Hail and Leuz.
Module 3 will focus on giving introduction to different standards within sustainability reporting. Students will be primarily introduced to two most popular standards SASB & GRI as well as they will be given brief introduction to other popular guidelines on reporting e.g. TCFD, CDP. Furthermore, the students will be introduced to the concept of double materiality and its implications for reporting standards. Furthermore, the students will be introduced to sustainability reporting strategies such as reporting linguistics, impact framing and its implications, use of persuasion and storytelling in reporting.
Module 4 will discuss the critical issues in sustainability reporting as well as the future of sustainability reporting. Here the objective of the course will be to discuss practice of sustainability reporting assurance, social rating for companies and their implications. Furthermore, the course will introduce increasing use of Big Data and AI by companies for sustainability reporting related activities, and how it overcomes key challenges in reporting (e.g. credibility gap, information asymmetries and so on). Lastly, the module will introduce implications of sustainability reporting for management control in organizations.
Module 5 covers sustainability topics specifically related to financial reporting as this sustainability topic may be of particular interest to business students. In this part we first consider the purpose of financial reporting and how this ties in with sustainability reporting. We then look at two important topics, namely the differences between earnings smoothing, earnings management and accounting fraud and the differences between tax planning, tax avoidance and tax fraud. We also consider the role of the "accountant" in the firm and the conflicts they may face.