Teaching Management Control for Sustainability

By Delphine Gibassier, Audencia Business School

Next Tuesday I will have my class on management controls for sustainability. Many colleagues, who normally teach environmental and social accounting classes tell me, they do not teach management control, because they would not know how to. As of today, no excuse, here is how I teach it!

The content of the course is as follows:

1/ I teach a definition of it (that you can find in Crutzen et al. 2017)

2/ I first use a classic classification of management control tools by Schaltegger et al. 2000 (Schaltegger, S. and Burritt, R., 2000, Contemporary Environmental Accounting. Issues, Concepts and Practice, Greenleaf, Sheffield.), that exists in French (Antheaume, 2013) and has been also used in Burritt et al. 2011 with carbon as an example.

3/ I introduce Simons' controls (1995) and the example of them being used by Arjaliès and Mundy (2013) in the French CAC 40 companies.

4/ I then introduce further the "integration" of sustainability through management control systems, with the paper by Gond et al. 2012

5/ Last but not least, I finish through the "package" view of Malmi and Brown 2008, used in Crutzen et al. 2017 and the Michelin case study (Baker et al. 2018).

(do not reuse without authorization, Gibassier, 2018)

6/ I introduce the notion of management controls beyond the company (you need to for sustainability) using the figure 1 in the paper "Environmental Management Accounting: The Missing Link to Sustainability?" (2018).

7/ I explain what are "controls for sustainability using the different tables of the same paper (Gibassier and Alcouffe, 2018)

This table is used in our SEAJ special issue intro and Baker et al. 2018. If you use it, cite it!

8/ I present a few tools such as "green capex" (you can use Vesty et al. 2015, or examples using Finance for the Futures Case study of SHE)

9/ Finally I introduce the notion of "sustainability management controller". You can use both Renaud (2014)'s paper (available in French & English) and our report on sustainability CFOs.

I have them read the Michelin Case Study (2018) and then we do an exercice (same as Michelin) to look for controls and put them in the "package" way, +reflect on their sustainability orientation. I am using in French the last L'Oréal report, but any (short) report will do.

You can use our case study on Danone which talks about many of those items available in French and English at the CCMP website.
(this class is part of my "societal impact class where I teach 15 hours, 3 hours on management controls, and the rest on natural capital, social capital and multi-capitals).

More resources here:

• Stefan Schaltegger and Roger Burritt, Contemporary Environmental Accounting: Issues,
• Concepts and Practices, Routledge, 2000.
• Angèle Renaud, Management et contrôle de gestion environnemental, EMS, 2015.
• IFAC, International Guidance Document: Environmental Management Accounting, 2005.
• ICAEW, “Sustainability: the role of accountants,” 2004.
• IFAC, “Professional Accountants in Business—At the Heart of Sustainability?” 2006.
• CIMA, “Sustainability and the role of the management accountants,” 2011.
• AICPA, Accounting for the Sustainability Cycle: How the Accounting Profession Can Add
• Value to Sustainability-Oriented Activities,” 2013.
• IMA/ACCA, From Share Value to Shared Value: Exploring the Role of Accountants in Developing Integrated Reporting in Practice, 2016, .
• Accounting for Sustainability, A4S Essential guides series, 2015-2017 (and notably one on green capex).

More papers here:

• Bartolomeo, M., Bennett, M., Bouma, J.J., Heydkamp, P., James, P., and T.Wolters. 2000. “Environmental management accounting in Europe: current practice and future potential. “ European Accounting Review 9: 31–52.
• Guenther, E., Endrikat, J., and T.W. Guenther. 2016. “Environmental management control systems: a conceptualization and a review of the empirical evidence.” Journal of Cleaner Production. 
• Lisi, I.E., 2015. “Translating environmental motivations into performance: The role of environmental performance measurement systems.” Management Accounting Research 29: 27–44. 
• Milne, M.J. 1996. “On sustainability ; the environment and management accounting.” Management Accounting Research 7: 135–161.
• Norris, G., and B. O'Dwyer. 2004. “Motivating socially responsive decision making: the operation of management controls in a socially responsive organisation.” The British Accounting Review 36: 173–196.
• Rodrigue, M., Magnan, M., and E. Boulianne. 2013. “Stakeholders’ influence on environmental strategy and performance indicators: A managerial perspective.” Management Accounting Research.
• Schaltegger, S., and D.Zvezdov. 2015. “Gatekeepers of sustainability information: exploring the roles of accountants.” Journal of Accounting and Organizational Change 11: 333–361.
• Songini, L., and A. Pistoni. 2012. “Accounting, auditing and control for sustainability.” Management Accounting Research 23: 202–204.

See SEAJ 2018 special issue on this, and the 2013 MAR special issue.
Look for papers in AAAJ and SAMPJ recently (from 2012 to now), and papers by Leanne Johnstone as well.
Check out the EMAN group books, and Stefan Schaltegger's work (as well as Roger Burritt's work).

Editor's note: this blog article was originally published on Delphine Gibassier's own blog in October 2019, and is republished here with permission.

From counting money to counting CO2 emissions: the role of management accounting

By guest blogger Martin Quinn

As a management accountant and a researcher, what I am going to say here might be quite obvious. I completely appreciate the work of CSEAR members as well as efforts made by some companies to produce some form of environmental or sustainability reports.

I have a rather dull view of financial reporting of any kind to be honest – it is only done because it has to be, primarily to satisfy legal requirements and shareholders. I am in the middle of reading Capital Wars by Daniel Pinto. In the book he notes that the average period of holding a share in US public companies is now 5 months (see also here: http://www.ft.com/intl/cms/s/2/b0c45128-890c-11e3-9f48-00144feab7de.html ). This give us some idea of the relevance of financial reports. So, yes I would say this, but isn’t management accounting then more important? Perhaps what we need is companies to not only take sustainability and environmental reporting seriously – and it will probably take laws to do this – but also to instil the same issues into their internal accounting. In my experience, it does not take much for a management accountant to change their skills from counting money to counting CO2 emissions, waste or energy consumed for example.

Maybe people like myself should specifically teach such things in a standard management accounting course, but as I said, management accountants are good at counting things and controlling things – we just need to encourage them somehow. For example, over a decade ago I worked for a paper company. Every piece of waste paper was captured, baled, weighed and ultimately sold on for recycling. The primary reason for the relatively complex control system was we could generate about €300,000 per annum in revenue. Then, at some stage we had to join the Green Dot initiative and account for waste to an authority. With the system already in place, the changes needed were easily made. Basically, we had to define the type of waste in more detail – cuttings of paper, waste sheets, and even dust. These changes, along with the fact that the more waste we generated, the more we paid to Green Dot , made managers focus on waste reduction and keep an eye on the reports to see what was happening.

Taking my example above, it would be very easy to report externally on waste generated, recycled or sold. But, in my opinion there is a difference between this example and an externally imposed report. As my example comes from within, it is accepted and used by all and taken seriously. Something imposed from outside might not be as easily accepted – well at least that’s what my research on organisational routines tells me.

Martin Quinn is Lecturer of Accounting at Dublin City University, Ireland, where he teaches at the undergraduate and postgraduate level. He is also a registered Chartered Management Accountant. Martin’s blog on accounting related topics can be found at martinjquinn.com. He is also a co-author of a major new Management Accounting textbook – further details can be found at burnsetal.com.