Ten students compared the differences between environmental, social and governance landscapes in the U.S. and E.U.

Accountancy class in front of a Romanian castle Like many of the 10 students who visited Bucharest, Romania, as part of a summer accounting class, Henry Traylor didn’t know what to expect from the Eastern European country. He signed up for the Daniels College of Business course to get to know a completely new place and to dive deeper into one of accounting’s hottest topics: environmental, social and governance (ESG) reporting.

“I’m passionate about the environmental aspect of it,” Traylor said. “I’ve always been interested in work with an environmental focus or conservation focus. I think this is a great way to tie that in with accounting.”

The course, which took place over a week in June, was led by Daniels professors Doina Chichernea, who focuses on finance, and Tony Holder, who specializes in accounting. Their goal for the course was to help students better understand the differences between the ESG landscapes in the United States and the European Union. The pair felt that Romania was the sweet spot for examining how ESG requirements trickle down to less prominent EU countries. Plus, Chichernea knows Bucharest well—she grew up there.

The rising importance of ESG in business

ESG is an important topic right now, Chichernea said, as countries and companies wrestle with how to appropriately document their work in the space.

“ESG reporting is a mess right now. It’s in its infancy,” she explained. “Right now is when the battle back and forth is happening. Right now is when everybody has an opinion. Right now is when the decision needs to happen.”

Accounting firms are charged with advising their clients on how to report, while those in the financial industry are seeking standardized methods for measuring initiatives and determining their value and implications.

In the U.S., pressure from socially conscious investors, consumers and activists has pushed companies to begin quantifying their contributions to causes such as climate change. As a result, the Securities and Exchange Commission (SEC) is passing a new rule that requires this type of reporting.

In contrast to the American, bottom-up approach, the EU has worked from the top down, imposing reporting requirements and offering grant funding.

Another aspect of this landscape is debate. While some feel that ESG reporting is a step in the right direction, others argue that it isn’t worthwhile, and the hype will likely die down. Given these varying opinions and approaches, Holder and Chichernea felt now was the perfect time to dive deeper with students.

Accounting class in yellow safety vests posed inside an office.

Seeing ‘ESG in action’

Holder said he’s noticed his students taking a growing interest in sustainability in the classroom too.

“[Before the trip], they were talking about the logistics of how they were going to go from Colorado to Europe in the most sustainable way possible,” he said. “Every day they had a sustainable word for the day. This didn’t come from [the faculty]; this came from the students.”

Before traveling to Romania, students took time in Denver to familiarize themselves with the conversation around ESG reporting and implementation. Students met with representatives from the big four accounting firms to explore case studies and learn how they are advising clients on ESG reporting. They also participated in an ESG town hall, which drew a crowd of more than 100 people.

The conversations continued overseas. Students spent a full day at Klynveld Peat Marwick Goerdeler (KPMG), where they spoke with members of the sustainability team and heard a message different from what even Holder and Chichernea expected.

“We thought one of the reasons the SEC rule would definitely happen was that, in Europe, they had already passed something more concrete,” Holder said. “But when we got over there, we found out the rules there are still in a developmental stage, and they are still adjusting.”

Students also had the opportunity to see ESG work in action while in Romania. They spent hours behind the scenes at Ikea, exploring the company’s solar panels and watching returned packaging churn through a massive machine to be repurposed and reused.

“It was so interesting hearing from experts and at the Ikea tour,” Traylor said. “They showed us how they were specifically making their stores more environmentally friendly, which isn’t really happening in America. So, it was cool to see how they were incorporating all of that into their business.”

In between explorations of ESG reporting, students had the opportunity to learn about Bucharest from a local. They explored castles, visited the People’s House and got to know the culture. They also got a peek into how to build a career in the ESG space, something Traylor is particularly interested in.

“I think it really convinced me that ESG is what I want to do in the future,” Traylor said. “I was on the fence, but seeing just how new the field is, I just think it’d be really cool to be part of that.”

This is the true value of holding class outside the classroom and across the world, Chichernea said. “You want to open their eyes a little bit. You could tell that getting to do this meant a lot to them.”