October 11, 2017
NEWBURGH, N.Y. -
Tracey Niemotko (pictured), professor of accounting, and Moira Tolan, professor of business, discussed sustainability accounting at a recent Mount Saint Mary College iROC talk.
The development of sustainability accounting was the basis of a recent talk at Mount Saint Mary College, titled “The Relationship of Sustainability Reporting to Practice.”
As part of the Mount’s prestigious iROC series of lectures, Tracey Niemotko, professor of accounting and chair of the School of Business, and Moira Tolan, professor of business and School of Business graduate school coordinator, presented on the topic to a packed room in the college’s Dominican Center.
Using sustainability accounting, Niemotko explained, an investor looks at how a company’s environmental and societal impacts affect financial existence and company outlook. The driving force behind sustainability accounting is millennials, Niemotko emphasized, who increasingly demand that companies be more environmentally friendly.
Sustainability accounting aids in decision making about a company’s sustainability by introducing qualitative data to the former purely quantitative approach. This supplemental data can greatly influence how an investor might choose to spend his or her money, allowing a company to tell its own narrative about the gains and risks that it faces from all angles. While pure numbers used to be the key factor in decision making, this more holistic approach is rapidly becoming the norm.
Niemotko offered an example of a foreign auto company which had a great year financially; based on traditional accounting methods, they would be seen as a great investment. However, with sustainability accounting, an investor discovers that there will be new regulations in that country in the coming years demanding that all cars be electric. How will this mandate affect the currently-booming company? Providing this additional data can assist an investor in making a smart decision that doesn’t just revolve around the numbers.
While sustainability accounting is not yet mandated, debates are ongoing regarding its regulation. The Sustainability Accounting Standards Board (SASB), which was spearheaded by former Mayor of New York Michael Bloomberg, is currently working to provide sustainability data on companies’ safety, environmental factors, and more for investors to use.
Tolan explained that since sustainability accounting is such a current topic, full analysis of its implications in the business sector has not yet been possible.
“We don’t quite know how to implement it yet because it’s so new,” she explained. It’s difficult to account for every environmental issue a company can encounter, she added.
Tolan provided Mount business students with the three P’s of sustainability accounting analysis: people, planet, and profits. Under sustainability accounting, investors look at how a company treats its people (employees, consumers, suppliers, and stockholders), the planet (environmental impacts and implications), and profits (traditional investment accounting). She pointed out that so far, evidence indicates that companies that embrace sustainability accounting have seen higher profits.
Niemotko and Tolan will also be presenting on sustainability accounting at the 2017 Northeast Business & Economics Association conference at the end of the month.
The goal of the Mount’s iROC series is to “provide a forum for Mount faculty, staff, and students to showcase their research endeavors with both Mount Saint Mary College and the local community in a manner easily understood by attendees,” explained series coordinators Evan Merkhofer, assistant professor of biology, and Jennifer Park, assistant librarian for access and outreach services. Presentations include research proposals, initial data collection, and completed research projects.