Center for Instructional
Innovation and Assessment


Julie A. Lockhart
Arunas P. Oslapas
Grace A. Wang
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Julie A. Lockhart
Department of Accounting



Accounting for Environmental Impact


St. Andrews
The "Quadrangle" at St. Andrews University

During a sabbatical leave in Scotland at the Center for Social and Environmental Accounting Research, I observed a very different perspective on education that continues to shape my teaching. Inspired by my time there, I designed a course, Environmental Accounting, which has become a model for others interested in this area of teaching1 and for which I won the Cayden Chase Franklin Excellence in Teaching Award. Environmental Accounting (Accounting 484) is a seminar-style, senior-level elective where I strive to accomplish three primary goals:

  1. The most obvious goal is to help students expand their awareness of the accounting profession's responsibility toward environmental challenges.
  2. I also aim to encourage independent thought through writing and speaking opportunities.
  3. Perhaps the most important and challenging goal is fostering "deep learning." Gray et al. (1994, p. 55) state that "deep learning involves some change in the student—in conceptions, perceptions, understanding and reaction."2 Although the course is an elective in our program, it has components of a capstone experience in that it integrates several sub-disciplines of accounting and asks students to critically evaluate the role of accounting in environmental issues.
Students in Accounting 484 examine a case study

Accounting 484 is organized around a four-part framework that allows students to examine environmental issues--both macro (societal) and micro (firm)--within the conventional model and an expanded model of accounting. The expanded model encourages students to go beyond the traditional boundaries of accounting through a critical evaluation of the assumptions and objectives of mainstream economics and its ramifications for accounting.

Thus, I have adopted a broad definition of environmental accounting that includes: the moral imperatives of environmental accounting issues; an examination of the role of accounting in mitigating society's environmental problems; an analysis of reporting objectives and alternative reporting formats (e.g., sustainability reporting); an expanded definition of stakeholders; and an examination of internal corporate initiatives for the environment.

Photo credit: Thomas Sztanek

The expanded model calls to question many of the assumptions in our conventional accounting system. For example, because our economic system does not recognize the social costs of environmental damage unless an actual monetary transaction exists, corporations also do not recognize and report on these social costs. Thus, the expanded model attempts to create ways in which companies can be accountable for the full cost of environmental impacts outside of the conventional model. I have carefully selected readings, which I update every year, on current research from all over the English-speaking world to expose my students to a wide variety of conventional and expanded points-of-view, including experimentation with new methods.3

Recently Developed Assignments

  • Environmental Auditing Project: The most successful project (as rated by the students) was the Environmental Auditing Project, the purpose of which was to get students to experience what it might be like to affect change in an organization regarding environmental issues and also to experience the challenges that organizations face when creating performance metrics. The project was divided into two parts. Students were first asked to analyze their households for environmental impacts and choose four goals that they could potentially accomplish to reduce their environmental impact. They were then required to create metrics that would allow them to keep track of their progress. Then, after a month, they were to report on how they did in accomplishing their goals and reflect on the process.


    Because I required metrics, students were able to grasp through the dialogic nature of the assignment that "what gets measured gets done" and "you get what you measure," two of my mantras from management accounting. For example, one student tracked the amount of time she cooked on her stove and oven. Yet, she and her housemate also went out to eat several times in order to "meet" their goal. Thus, they gained insight on the motivational impacts of metrics through first-hand experience. Students also gained an awareness of their impacts on the environment, as well as the challenges of trying to change the behavior of housemates. I asked students to rate the value of this project on a scale of 1 to 5, where 5 is "Very Valuable." The average score for the 28 students surveyed was 4.64.

  • Smoke
    Source: City of Bellingham

    Olympic Pipeline Company Activity: This activity involves a role-playing discussion regarding the accounting issues associated with the Olympic Pipeline Explosion in Bellingham, Washington, on June 10, 1999. During the first class period, the students read through the brief synopsis of the explosion and related events, including information about corporate ownership at the time of the explosion. In small groups, they then discussed the accounting and business issues in preparation for a full class discussion. They were then asked to choose a particular stakeholder role. For the following class, they prepared an essay from the viewpoint of their stakeholder.

    Students in Accounting 484 role play stakeholders in the Olympic Pipeline case.

    During class, each student was asked to role-play, discussing the issues of transparency and accountability that would be relevant given their "stake." I then showed them what each of the four corporate owners actually disclosed (if at all). Although I have used the explosion as an example in previous quarters, it always followed a banking approach (teacher-centered) in which I told the class about the explosion and related disclosures. This is the first time I had changed the example into a dialogic process where the students had to engage in some exploration and decisions about what should be disclosed in the financial reports.

  • Power Plant
    Photo credit: Jess Rafn

    Pacific Gas and Electric Project:
    The movie Erin Brockovich brought dubious fame to PG&E and its poor environmental practices. I have used the story and facts from the movie (and real-life case) to illustrate the accounting issues regarding contingent liabilities. Although the situation from the case provided students with an interesting "Hollywood-ized" example, upon reflection, my previous approach to illustrating the accounting issues has tended toward a banking approach, because I "solved" the issue by showing them how the company handled the reporting requirements under FAS #5. To move the example from a banking to dialogic process, the students were given the facts of the case and a two-part assignment. First, they were required to research the accounting treatment of the environmental costs and contingencies by referring to pronouncements and interpretations of the Financial Accounting Standards Board (FASB). The assignment asked them to surmise what the financial reporting and disclosure requirements should be, given their research. During the next class period, information from PG&E's actual financial statements was shared with the class. In Part II, the students reflected on contingent liability reporting in the context of the conceptual framework of accounting. Rather than telling them where the inconsistencies exist, they had to come up with these on their own, creating an opportunity for the students to actively participate in a critique of the conventional accounting model.

Continuing Assignments

  • Cases. The environmental accounting course has always included detailed case studies on environmental issues. I have successfully used Specialty Glass and Multipaint, Inc. from the World Resources Institute, as well as 3M: Waste Minimization (PDF) from the National Pollution Prevention Center for Higher Education. Cases place students in the role of management of a corporation and thus provide an excellent opportunity for students to develop critical thinking skills and analytical skills.

  • Chemicals
    Photo credit:
    Michal Zacharzewski
  • Short Writing Assignments. Students are asked to write brief essays on assigned topics to give them a chance to reflect on readings and class discussion, and to learn new material. These assignments have been very effective in generating class discussion because the students have been obliged to prepare their essays more carefully.

  • Reporting Project. Students are given an opportunity to explore, in detail, environmental accounting for a specific chemical-using or producing company. They first review the published annual report to look for contingent liability and other environmental disclosures. Then they analyze an environmental report. (This report could be called a sustainability report, an environment, health, and safety report.) This project gives students the opportunity to evaluate an actual company's choices around environmental reporting and disclosure.

Evolving the Learning Process

Photo credit: Fred Kuipers

Recently, I was invited to write an education essay for a publication that will celebrate the career of my colleague and co-author M. R. (Reg) Mathews upon his retirement4 This invitation gave me a unique opportunity to reflect on my approach to environmental accounting education, and I was able to make some significant changes to my course that were very well-received by the students. Through the process of writing the essay, I came to believe that my current teaching methods have relied too much on a "banking approach" to education. The banking approach is one in which students passively gain knowledge from the teacher who is in control of the educational process (Thomson and Bebbington 2004).5 After further research, I saw that while I expose my students to many new ideas in how they view the role of accounting in society, as instructor, I have done too much "telling" based on my own analysis. As stated by Bebbington and Thomson (2001, 353),6 "exposing students to 'critical' or alternative academic ideas is not in itself enough to create deep learning or develop critical reasoning." Bebbington and Thomson (2001) advocate for a "dialogic educational process" which "seeks to engage students as co-investigators in a particular subject area."

In the 2006 academic year, I created several new class activities/projects to encourage a dialogic learning process. These activities reflected a "'problem-posing' pedagogy" (Bebbington and Thomson 2001, 355) allowing the students to "critically engage" in their understanding of the assumptions of conventional accounting practices. This change involved an incremental process of transforming the course into one which builds co-investigative activities into the list of classroom activities. It also required stepping away from my safe zone as an educator. Most of the changes that I made to foster a dialogic educational process were well-received by the students.

Tree huggers
Photo credit: Arleen Lewis
  • "I really didn't want to take this class. I had the impression…that the purpose was to try and turn me into some 'tree hugger.' However, I [was] more than pleasantly surprised by Lockhart's openness and character put into the class. Going in I thought 'environmental accounting' was a joke, but coming out I believe that it is important in accounting and definitely not a joke."

  • "This class was unlike any I have ever taken. The critical thinking and analytical skills used really make me feel more confident. You did a fantastic job as facilitator in classroom discussion." (read more Student Comments)

Aspirations for the Future

Photo credit: Jonathan Oglivie

I continue to look for interesting environmental case studies that have implications for accounting. These provide students with an opportunity to put themselves inside the situation when looking at issues, facts, and alternatives. I also hope to instill an interest in sustainability across the curriculum in accounting. In our department, we have engaged in discussions of its importance and several faculty have published in areas related to sustainability. Ideally, students who graduate from our program will have a good understanding of how the accounting profession can participate in a sustainable business future.


  1. See Lockhart, Julie A. and M. R. Mathews. Teaching Environment Accounting: A Four Part Framework. Advances in Accounting Education Vol. 3: 57-84.
  2. Gray, R.H., K.J. Bebbington, and K. McPhail (1994) "Teaching ethics in accounting and the ethics of accounting teaching: Educating for immorality and a possible case for social and environmental accounting education." Accounting Education, 3(1): 51-75.
  3. For example, Ontario Hydro has experimented with including environmental externalities in decision making. See Boone, C. and H. Howes (1996), "Accounting for the Environment." CMA Magazine (May): 22-24.
  4. Lockhart, Julie A. (2007) A Festive Trip-le Step across the Dance Floor of Environmental Accounting Education. Forthcoming in Social Accounting, Mega Accounting and Beyond: A Festschrift in Honour of M. R. Mathews, edited by Rob Gray and James Guthrie (St Andrews, CSEAR Publishing).
  5. Thomson, I. and J. Bebbington. 2004. It doesn't matter what you teach. Critical Perspectives on Accounting, 15: 609-628.
  6. Bebbington, J. and I. Thomson. 2001. Commentary on: Some thoughts on social and environmental accounting education. Accounting Education, 10(4): 353-355.

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