Integrating ESG in a Managerial Accounting Class

Abstract

Among organizations and businesses, there has been a growing global attention on companies’ approach to climate change and sustainable development. Concurrently, the United States, Securities and Exchange Commission (SEC) has announced the intent to require publicly traded companies to disclose information on climate-related risks (SEC, 2022), signaling a need for carbon emission reporting integrated with financial statements. Accounting practitioners and educators are thus concerned with accounting students’ preparedness in developing skillsets that will meet the current demands for integrated reporting of climate-related and other sustainability or ESG mitigation measures (AAA, 2023). Despite this growing concern, few accounting cases address sustainability/ESG management. This case requires students to use data analysis to estimate the cost-benefit analysis across three variable costing budgets in a production cycle of a manufacturing plant while integrating the estimation of carbon emissions attributed to a number of products produced and sold. Students could synthesize relevant information on ESG issues related to production and make decisions on sustainable approaches to inventory production.