Industrial management meets environmental reporting – how a learning factory for engineering education is used to teach accounting of greenhouse gas emissions

Abstract

Purpose

This paper aims to examine the piloting of an experience-based training module on greenhouse gas (GHG) reporting. The training is designed to promote knowledge and skills of both, students and professionals, in the context of the European Sustainability Reporting Standards. The paper’s purpose is to evaluate the suitability of the chosen environment of a learning factory (LF).

Design/methodology/approach

The proposed content and approach were initially created as basic training for cooperation partners from industry and auditing by applying Bloom’s taxonomy up to the level of analyzing, evaluating and creating in a close-to-reality industrial environment. Subsequently, the training was adapted for higher engineering education. Three consecutive exercises are explained concerning the crucial stages of carbon footprinting. To provide support for the authors’ suggestion that LFs are effective for the training in the field of GHG accounting, pre- and post-test and questionnaires were applied.

Findings

This case study reveals that LFs facilitate training participants to reliably identify, classify and quantify emission sources because of their authentic characteristics. Findings in this paper indicate that engineering students prefer this education practice over other formats.

Practical implications

This case study on active learning may prompt other universities to introduce similar concepts and content. Also, industrial professionals can benefit from this application-oriented teaching method.

Originality/value

Despite the urgent and far-reaching need for better awareness and expertise, there is an absence of initiatives that practically teach them. To the best of the authors‘ knowledge, this paper describes the first training of its kind used in an LF.

Citation

Rüdele, K. and Wolf, M. (2024), "Industrial management meets environmental reporting – how a learning factory for engineering education is used to teach accounting of greenhouse gas emissions", International Journal of Sustainability in Higher Education, Vol. 25 No. 9, pp. 397-418. https://doi.org/10.1108/IJSHE-04-2024-0301

1. Introduction

Global warming poses serious threats to the livelihood of humankind, with the consequences disproportionately affecting vulnerable populations (Lenton et al., 2023; Rawat et al., 2024). Thus, urgent and coordinated action is required to reduce the anthropogenic emissions of greenhouse gases (GHGs) and mitigate related effects (e.g. Busch et al., 2023; Radunsky and Cadman, 2021; Stavi, 2023). The European Union (EU) has pledged to comply with the Paris Agreement and to achieve climate neutrality by 2050, as established in the European Climate Law (European Parliament and Council, 2021). As further consequence, climate-related sustainability reporting has become increasingly prominent on the EU’s agenda (European Commission, 2024).

Although not intended to add an extra layer of bureaucracy, the Corporate Sustainability Reporting Directive (CSRD) that entered into force in 2023 represents an additional burden for companies, also because the mandatory organizational GHG accounting requires knowledge and skills (Birkmann et al., 2024). The European Commission expects that approximately 50,000 entities in the EU will be required to report under the CSRD, compared to the 11,000 under the previously applicable Non-Financial Reporting Directive (NFRD) (European Parliament, 2023). Especially companies that are asked to gather and disclose information on sustainability matters in annual reports for the first time now have a demand for carbon literacy and related competencies. Comparatively small companies (i.e. they are just large enough to fall under the obligation to issue a CSRD-compliant report) are expected to face challenges in devoting the resources necessary for detailed reporting or emissions reduction initiatives (Earley et al., 2024). In the medium term, there will be a high demand for employees and external specialists who are able to compile information on an organization’s climate-related performance. To address this market demand and prevent a talent shortage, it is necessary to redesign curricula toward interdisciplinarity by conveying knowledge on methods and regulatory aspects in a techno-scientific context (Chopra et al., 2024).

This shift in the requirements for future graduates has led to the creation of a new training module on GHG reporting applied in an existing university learning factory (LF). Students are taught how to collect and assess inventory data and accurately calculate the related GHG emissions. The objective of the training module is to impart practically relevant reporting frameworks, especially the European Sustainability Reporting Standards (ESRS), through an iterative and collaborative hands-on experience.

Our case study concerns academic training for engineering students in environmental reporting, placing special emphasis on carbon accounting. We start with an overview of upcoming EU regulations and existing standards and continue with a review of university courses already addressing the topic. We then introduce the concept of LFs and showcase their benefits for knowledge transfer and skill development in the context of environmentalism. In Section 4, we present a detailed description of our course on carbon accounting in a specific LF and its evaluation. We conclude the article by discussing the results and further research.

2. Environmental reporting and carbon accounting

2.1 Corporate Sustainability Reporting Directive and European Sustainability Reporting Standards

Besides other legal provisions, such as the Carbon Border Adjustment Mechanism or the taxonomy for sustainable activities, the EU also adopted the CSRD as part of its commitment to a set of policy initiatives on the path to climate neutrality by 2050, named the European Green Deal (European Commission, 2019). The CSRD is a significant change regarding sustainability reporting in the EU, extending the former NFRD requirements by the disclosure of detailed information about 85 disclosure requirements and more than 1,100 data points, depending on which sustainability matters are material to a particular business (KPMG, 2024; Ramboll, 2024). This includes diverse information about policies, incentive schemes, timeframes, indicators, sustainability risk management and science-based improvement strategies to counteract greenwashing (European Parliament and Council, 2022). CSRD’s implementation is expected to enhance the availability and comparability of sustainability reporting including information on both a company’s own operations and upstream and downstream value chain activities (i.e. suppliers and subcontractors), highlighting the connection between financial and sustainability information (European Parliament and Council, 2022). From 2024 onwards, certain large companies and public-interest entities must report according to the CSRD. This will be gradually extended to all large corporations, listed small- and medium-sized enterprises (SMEs) and third-country EU-based subsidiaries (see Figure 1). However, micro-enterprises and not-listed SMEs are exempt from these requirements but will be affected based on their role in European value chains. Finally, CRSD’s transposition into EU member states’ laws necessitates an expansion of existing national regulations (e.g. Norwegian Accounting Act, German Commercial Code, Austria Business Code), also including auditors’ qualification and approval (European Parliament and Council, 2022).

To promote unified reporting based on the CSRD, ESRS were developed and published in July 2023 (European Parliament and Council, 2023) largely based on the proposal submitted by the European Financial Reporting Advisory Group (EFRAG) (EFRAG, 2022a). The ESRS outline how affected companies must report on sustainability performance. In 2025, the first reports using ESRS will be published.

The ESRS include two “cross-cutting” standards (ESRS 1 and 2) setting out general requirements as well as ten “topical” standards regarding environmental, social and governance (ESG) issues. Furthermore, the framework comprises sector-agnostic and SME-specific standards (EFRAG, 2023a and EFRAG, 2024). Figure 2 shows both the approved and upcoming content of the ESRS as of spring 2024.

While reporting requirements within topical standards are subject to a materiality analysis, the ESRS E1 (Climate Change) is the only one where companies must justify the non-disclosure of information. Thus, it can be considered as mandatory as ESRS 2.

Compared to the other topical standards, ESRS E1 comprises a large number of data points, which can be expressed in relative, absolute (e.g. monetary) and narrative data (O’Connell, 2023). They are grouped into nine disclosure requirements which, in addition to metrics, shall also include information on strategies and business models and the management of risks and opportunities. Among others, ESRS E1 includes disclosure requirements for three sustainability reporting areas: climate change mitigation in line with the Paris Agreement; actual and expected climate change adaptation; and all types of energy production and consumption (European Parliament and Council, 2023). ESRS E1 places emphasis on direct and indirect GHG emissions, as well as emissions reduction targets, by defining numerous corresponding data points.

Altogether, ESRS E1 sets requirements allowing to understand the reporting company’s actual and potential positive and negative impacts on climate change, also including past, current and future efforts to mitigate GHG emissions (European Parliament and Council, 2023).

2.2 Alignment of European Sustainability Reporting Standards with other sustainability and climate reporting standards

Several financial and non-financial accounting standards exist worldwide. The most common sustainability reporting standards are those developed and updated by the Global Reporting Initiative since 1997 (GRI, 2022). Similarly to the ESRS, the GRI Standards comprise universal, sector-specific and topic areas. The ESRS were designed to be consistent with GRI Standards and their interoperability is confirmed by a joint statement (EFRAG, 2023b).

To establish a comprehensive global baseline of sustainability disclosures, various organizations have joined forces (IFRS, 2022a, 2022b) to form the International Sustainability Standards Board (ISSB) as a part of the International Financial Reporting Standards (IFRS) Foundation. In June 2023, the ISSB issued its standards IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures) (IFRS, 2023). As IFRS’s accounting standard has been mandatory for listed companies in the EU since the year 2005 (European Parliament and Council, 2002), its efforts toward sustainability reporting are highly relevant from a European point of view. EFRAG and ISSB have harmonized their standards (Figure 1) and reconciled the IFRS and ESRS requirements, particularly on climate change (EFRAG, 2022b).

For carbon accounting, a clear and unambiguous calculation guidance is necessary, to quantify the amount of GHGs emitted by a company’s activities and resource consumption. It is decisive to determine which GHGs are considered and which values and time horizons for the global warming potential are applied. According to the ESRS, the reporting company should consider the principles of the GHG Protocol Corporate Standard (WRI, WBCSD, 2004). It may also consider the recommendations of the European Commission (European Commission, 2021) or the requirements by ISO 14064-1 (ISO, 2018), as long as they do not contradict the GHG Protocol. Regardless of whether the company chooses to use one or more of these guidance, it must disclose the methodologies, significant assumptions and emissions factors used to determine GHG emissions (European Parliament and Council, 2023).

ESRS’ disclosure requirements E1-6 (European Parliament and Council, 2023) expects that a company reports its total GHG emissions disaggregated by well-established scopes. The Scope 1 category includes the direct emissions from facilities owned or controlled by the reporting company. Scope 2 covers the emissions from the generation of purchased energy reported separately by market-based and location-based values. Scope 3 encompasses 15 different emission categories occurring upstream and downstream in the value chain, which must only be reported if significant. A company shall disclose retrospective (i.e. changes compared with the base year) and forward-looking information to indicate progress toward emission reduction targets. This quantitative information shall be presented in a tabular format. Moreover, ESRS E1 suggest presenting GHG intensity (i.e. total GHG emissions divided by net revenue) and GHG removals in a similar manner.

The standards bodies provide further guidance to accurately calculate and report GHG emissions. For instance, the GHG Protocol Corporate Standard is supplemented by documents (e.g. WRI, WBCSD, 2011; WRI, WBCSD, 2013; WRI, WBCSD, 2015) to assist in the selection and application of calculation methods. ISO 14069 (ISO, 2013) is designed to complement ISO 14064 by providing illustrative examples for calculating emissions. GRI’s Topic Standard 305 (GRI, 2016) includes recommendations for the disclosure of the three scopes, GHG emission intensity and other aspects.

2.3 Environmental reporting as teaching content at universities

Accounting and reporting have become integral parts of higher education curricula globally (Apostolou et al., 2017). The EU expects employment creation in this field, owing to the increasing demand for sustainability information (European Parliament and Council, 2022). This leads accounting lecturers to teach sustainability-related issues (Creel and Paz, 2018; Simmons et al., 2023) with GHG emissions and climate change mitigation being given the highest importance (Cho et al., 2020). Consequently, ESRS should be quickly incorporated into European curricula so that graduates have comprehensive knowledge of related disclosure requirements when entering the workforce. However, it has been shown that new reporting standards such as the recent IFRS are being implemented in university courses with some delay (e.g. Al-Bukhrani et al., 2023; Ebaid, 2021).

The upcoming relevance of sustainability in accounting education has been underscored by years of discussion (e.g. Botes et al., 2014; Coville, 2023a; Khan, 2013). Research indicates that many universities still do not offer separate or compulsory sustainability accounting courses (e.g. Sharma and Stewart, 2022) with varying readiness across countries (e.g. Ebaid, 2022; Wijaya and Putri, 2023).

Teaching methods in accounting can be distinguished between instructor-centered and learner-centered approaches (Rahman et al., 2021; Sulaiman et al., 2021; Viviers and de Villiers, 2020), but we are not aware of studies examining their respective prevalence. Even if traditional lecture methods may prevail, there are also numerous concepts to teaching accounting through experiential learning activities (Gittings et al., 2020).

As reporting is expanded by environmental aspects, technical understanding (Schröder and Pontoppidan, 2023) and the combination of practical training and theoretical instruction of auditors (European Parliament and Council, 2022) gain in importance. Additionally, Apostolou et al. (2017) advocate the identification of technologies to enhance accounting education. New pedagogical concepts encompass blended case-based approaches (Tran and Herzig, 2023), action-based co-learning conducting carbon footprints of local businesses (Earley et al., 2024), project-based approaches dealing with environmental disclosures in annual reports of fictitious companies (Hutaibat, 2019) and cases or role plays discussing ESG issues (Sheehan et al., 2024).

Table 1 exemplarily lists sustainability reporting courses offered at Austrian universities (representing reference and peer groups of the presented training module) shortly after the adoption of the CSRD and ESRS. The information is based on course descriptions on the website of the respective educational institution and compiled without any claim for completeness or current validity.

Five of the courses explicitly referred to CSRD or ESRS in the content description. Most of the courses are elective courses for graduate students (and rarely part of an executive program) and totaling 30 h of teaching. In all cases, the lecturers are staff members of the respective university. Some of the identified courses are continuous assessment courses where attendance is typically mandatory and student performance is not exclusively assessed by final examination but based on additional assignments and/or class contribution. Predominant interactive elements are group exercises and discussions, work with case studies and journal articles, as well as the interpretation of existing sustainability reports. Some courses integrate a guest lecture or make use of flipped classroom teaching.

We conclude that environmental reporting has already become widespread at Austrian universities and is primarily addressed by economics faculties. Technical and scientific institutes seem to be less involved, although engineers and environmental scientists might be more proficient in assessing emissions. Despite efforts toward practice-oriented education, the identified courses lack a close-to-reality environment for compiling emission inventories and thereby losing causal connection to emission sources such as energy generation and use, resource consumption in production or transportation.

3. Learning factories and their role in environmental education

3.1 Learning factories and sustainability education

From an operational point of view, an LF is a simplified replica of a value chain section in a small-scale format designed for learning. From a teaching point of view, they facilitate self-contained competency development for practice-relevant skills (Abele et al., 2010; Tisch et al., 2016). The related continuous improvement philosophy is facilitated by actions and interactive participation (IALF, 2021). The advantage of LFs is that participants who learn by doing have a higher recall rate than those who learn by listening and watching (Jäger et al., 2012). In comparison to experiential learning activities already used in accounting education (Gittings et al., 2020), LFs correspond to physical simulations. Besides facilitating context-specific applications, an LF provides real workplaces, thus closing the gap identified above.

Recently, LFs have increasingly focused on research and training in sustainability (e.g. Weyand et al., 2022; Wolf et al., 2022). However, emission accounting has been limited to the product level (e.g. Hagen et al., 2020; Weyand et al., 2021; Wolf et al., 2023) and hardly addresses the environmental reporting of a facility or company.

3.2 Previous training on carbon accounting at the LEAD factory

The LEAD Factory operated by the Institute of Innovation and Industrial Management at Graz University of Technology offers a fully functional assembly line for practice-oriented academic and executive training [Figure 3(a)]. During different modules, participants can gain knowledge about best practices in lean production, energy efficiency, agile operations and digitalization. The didactic approach of this LF is based on iteratively improving production states. Theory inputs, problem-based learning and institutionalized discussion and reflection are applied to the production of a scooter depicted in Figure 3(b). Besides improving an assembly line, participants work on a manufacturing line that produces components of the scooter by 3D printing, metalworking and electroplating. Both lines can be operated separately or in combination, depending on the training scenario and content to be taught.

In 2022, the authors designed a half-day course on product carbon footprint (PCF) determination, including the identification and evaluation of emission-reducing measures (Wolf et al., 2023). Students estimate the carbon footprint of the scooter based on provided PCFs of various everyday objects as reference points (e.g. the production of a bicycle causes around 200 kg CO₂-eq; Johnson et al., 2014). Furthermore, the percentage contribution of upstream activities and assembly at the LEAD Factory is estimated. Next, a theoretical introduction and exploration phase follows, where groups of graduate students determine the resources needed to produce a scooter by measuring, calculating and estimating. Subsequently, a software tool and a database are used to create an impact assessment. To determine the GHG emissions related to a scooter, the students have to pay attention to data quality (i.e. mass balances between input and output) and correct allocation. As a real implementation of improvement measures is not possible, improvement measures are simulated (similar to Torcătoru and Săvescu, 2019).

Figure 4 depicts the results of an exemplary survey with 34 Master’s students in 2023. The average estimated PCF was 82 kg CO₂-eq (median is 77.5 kg CO₂-eq). On average, the respondents assumed that 78% (mean: 80%) of the PCF is caused in the upstream chain. Accordingly, the contribution of assembly in the LEAD Factory was estimated to be 21% on average (mean: 20%).

A comparison of estimated and calculated values shows that respondents overpredict the scooters, especially the impact of assembly activities, while the contribution of the upstream chain is underestimated. This finding can be considered as further evidence for the need of corresponding educational measures.

With the adoption of ESRS and the rising demand for expertise in environmental reporting, several cooperation partners from the private sector seek support in corporate carbon accounting projects and related training. While organizations familiar with non-financial reporting may have a shorter learning curve with implementing the ESRS, companies that are required to report for the first time are particularly challenged. This led to a third-party-funded project involving an accounting firm and two industrial companies unaffected by NFRS but affected by CSRD now. The project’s objective was the creation of ESRS-compliant reports. The participating companies were particularly interested in developing a technical understanding to independently gather their GHG inventories in the following years. Therefore, the project started with a workshop at the LEAD Factory to familiarize with the new disclosure requirements. This workshop followed the established experience-based LF training concept, which reproduces an abstracted real-life environment to challenge learners with concrete problem situations and stimulate their cognition.

4. Lead factory’s training module on European Sustainability Reporting Standards E1

4.1 Design and content

Owing to its high practical relevance, the concept, content and material of the workshop were transferred to a training module for students. It is part of a compulsory elective subject for Master’s programs in mechanical engineering, industrial engineering and production science but can also be attended by students of other disciplines. The levels of Bloom’s taxonomy of educational objectives (Anderson and Krathwohl, 2001; Bloom et al., 1956) and recommendations for LF didactics (Tisch et al., 2013 and 2016) were considered.

Similarly, to courses in Earley et al. (2024), the module aims to enable students to identify, quantify and communicate GHG emissions. As participants may not be familiar with the significance of CSRD and ESRS, first awareness of the relevance of carbon accounting and environmental reporting is raised. As usual for university education, a basic understanding of the principles of climate science (i.e. GHGs and their impacts) must be created or consolidated. However, the main focus is on imparting technical knowledge and analytical skills including knowledge transfer regarding competencies in data collection, carbon accounting methodologies and familiarity with reporting frameworks (e.g. meaning of scopes for categorizing emissions).

Owing to time limitations, only the disclosure requirements of ESRS E1-1 to E1-6 (Gross scopes 1, 2, 3 and total GHG emissions) are covered through practical exercises in the LF. Relevant climate reporting requirements to ensure compliance with mandatory obligations are only mentioned to the necessary extent. Aspects such as policies related to climate change mitigation and adaptation, GHG removal or carbon pricing are only marginally addressed. Standards beyond ESRS E1 are out of scope.

4.2 Course procedure

The training module was taught for the first time in March 2024. It lasted 4.5 h (breaks excluded) and was held on the third of the four-day LF course. On the first two days, the topic of lean management was taught using the assembly line. In total, 2 bachelor’s and 16 master’s students participated, where 16 were male. The participants were affiliated with the Faculty of Mechanical Engineering and Economic Sciences (15) or with Computer Science and Biomedical Engineering (3).

The module started by providing a theoretical introduction to environmental reporting on an abstract level, including definitions of terms and superficial insight into current and upcoming requirements of CSRD and ESRS (by also using Figure 2).

Before the first practical exercise about identifying emission sources in the LF started the so far unknown manufacturing line was introduced. Subsequently, three teams (red, yellow, green) were formed, each collecting (potential) climate-impacting processes on sticky notes and presenting them at the end of the exercise (Figure 5).

The second theoretical input introduced the scope approach of the GHG Protocol. A subsequent exercise dealt with the quantification of all relevant resource consumptions in the LEAD Factory. The teams remained in place and were instructed to assign the identified emission sources to the individual reporting categories (Figure 6). Then, they were informed about the (fictional) supply chain of the LEAD Factory, including quantities of parts purchased and supplier locations. Thus, the students first had to gain an overview of the (incomplete) data provided, discuss and structure it and fill the gaps in relevant reporting categories considering suitable methods for data acquisition. In the next step, the instructors provided each team individually with further (fictitious) data only upon request (e.g. business figures, sales volume, a value-stream map including process times, scrap rates, type and quantity of waste generated during the year, electricity invoices, information on type and utilization of transport means, results of a survey on employees’ commuting). The outcome of this exercise was a completed quantification of energy and material consumption and an understanding of how such information can be obtained in practice.

The next theoretical input dealt with the accounting of GHG. Besides information on emission factors, the market-based and location-based calculation of Scope 2 emissions and different Scope 3 approaches (i.e. spend-based, average-data) were explained, and their selection was discussed. Building on previous results and additional information, the corporate carbon footprint of the LEAD Factory for the base year was calculated. The results were entered into the ESRS template (Figure 7) practicing the conversion of consumption into CO₂ equivalents per scope.

Finally, the results of the teams were compared and the largest emissions sources were discussed. This led to the last part of the module, in which global climate targets, reduction potentials, target paths and the limitations of information from carbon footprints (i.e. midpoint vs endpoint indicators) were discussed.

4.3 Evaluation

The impact of the training module on students’ learning success was analyzed through the one-group pretest-posttest design (Campbell and Stanley, 1963; Crano et al., 2024). Differences in the results of both tests allow conclusions on the effectiveness of the training. Owing to the absence of a control group, we made use of a question pool to reduce test effects (i.e. participants’ familiarity with the content of the questions might lead to improved performance) on post-test scores. We created 7 questions in total and selected a subset of 5 questions for each participant. The number of possible combinations is 21 unique tests for the double-stage knowledge assessment of the 18 participants. As these paper-based tests were handed out to the participants, a random assignment can be assumed. In fact, only one participant was assigned exactly the same questions in both rounds. All questions were used approximately equally among the pre- and post-tests and students were not aware in advance that different tests were used.

As participants were not informed in advance about the content of the training module, and it had not been taught in any other course before, ruling out self-selection bias as seen in the pre- and post-course survey by Coville (2023b, 2023a) where students chose to participate in an elective course titled “Sustainability Accounting and Reporting”. Only one participant mentioned that he had recently attended another university course on life cycle assessments.

By using personal codes (SoSci Survey, 2021), both anonymity and traceability of related data sets were ensured. Each question was equally weighted resulting in a maximum of 5 points. As depicted in Figure 8(a), a clear learning success was measured in the post-test. The average score ( x ¯) achieved improvement from 0.5 to 3.8. With one exception, all questions referred to content that was covered in both theory and practical exercises. Only Question 7 assessing the meaning of the abbreviations CRSD and ESRS was solely mentioned in the theoretical part and can therefore be considered a control question. When broken down by individual questions [Figure 8(b)], it becomes evident that this particular question without a reference to an exercise was less often answered correctly ( x¯Q7 = 0.37 in post-test). Further details can be found in the Appendix.

In addition to the evaluation of the impact of learning achievement, a training experience questionnaire as suggested by Ramsden (1991) was used to assess the perceived teaching quality. The participants were asked for their impressions on a cognitive and emotional level. First, the focus was on learning outcomes and comprehensibility, meaningfulness, manageability and appropriateness (Figure 9). The questions were based on Borglund et al. (2016), Brent and Felder (2004) and Herrmann et al. (2017) and related to both the content and course materials, as well as the lecturing activity.

Second, participants were asked to evaluate the motivational factors (i.e. anxiety, probability of success, interest; see Figure 10) of the learning situation according to Rheinberg et al. (2001). In this context, participants assessed their attitudes before and after the module. Following the recommendations of Ramsden (1991), a five-point Likert-type scale ranging from “strongly disagree”/“false” (1 point) to “strongly agree”/“true” (5 points) was used.

The results suggest that the module was rated mostly positively and considered suitable to address the topic of corporate carbon accounting. Its collaborative nature was particularly appreciated and it was not considered excessively challenging. It can be concluded that participants have overcome their worries throughout the module and have become more convinced that they can manage to fulfill the task. However, most attitudes have changed only marginally or not at all.

Participants also provided qualitative feedback to open questions based on Borglund et al. (2016). Positive feedback from open-text answers included the holistic overview of new regulations, the focus on an upcoming industrial need and associated job opportunities. Some participants stated that they had never heard of sustainability reporting before. The participants also appreciated the “critical thinking” and “questioning of sustainability reports”, as well as finding “all the discussions quite interesting”. Improvement suggestions included, among others, the manual calculation of emissions, which could be performed more efficiently by using spreadsheet software. Some participants criticized the group size (too large), the available time (too short) and the theoretical content (too extensive). However, others wished for additional inclusion of more practical examples, such as the integration of real environmental reports from industry or details on energy supply and its measurements. One student suggested that adding videos illustrating real-life examples would make some parts easier to understand and also demonstrate how the concepts are applied in real life. Finally, the vast majority of participants do not believe that other training formats (e.g. lecture, flipped classroom or games) are better suited to teaching the content of carbon accounting.

Furthermore, the standard course evaluation, which has been used for years to assess the entire four-day course with all its (changing) content, resulted in an overall rating of 4.6 out of a maximum of 5 points, indicating that this class was rated as good as those from previous years (Ramsauer et al., 2024).

From the lecturers’ point of view, a positive balance can be drawn. We had the impression that the participants were very interested in the topic and discussed it enthusiastically and controversially. As usual, a written assignment had to be submitted a few weeks after the course, in which questions regarding the learning content had to be answered. One of those questions referred to the effects of lean production on Scope 3 emissions and was answered very satisfactorily in general, which can be seen as an indication of lasting learning success. Finally, we received several requests from participants to engage in a master thesis project on the topic of carbon footprinting.

4.4 Discussion

Today, university graduates need to have a certain level of carbon literacy. As some of them are prospective professionals in regulatory and environmental concerns, they should be aware of far-reaching reporting standards and associated methodologies. The adoption of CSRD and ESRS will influence accounting education, as scientific and technical aspects become more relevant, especially in generating feasible footprint reduction strategies. Therefore, a holistic training concept must combine methodological and regulatory knowledge, technical expertise and communication skills.

As the LF experience involves theory and practice, it is suitable to address upcoming challenges in accounting and reporting. Our results and experiences to date suggest that the LF is methodologically better suited than other teaching formats. The direct applicability helps to understand the calculation methods and creates the ability to reliably identify emission sources in reality.

To ascertain to what extent the LF learning situation contributes to learning outcomes in this specific topic, further research is necessary. Although counterbalancing efforts have been made to ensure that different individuals receive different sets of questions, this is not a sufficient substitute for control groups, as proposed by Torgerson and Torgerson (2001). Only in this way can alternative explanations be excluded and changes in learning outcomes can be causally attributed to the intervention. Furthermore, there is a need to measure the knowledge retention.

If the shortage of accountants discussed in Reinstein and Kaszak (2024) also proves true for the European labor market, engineers with appropriate skills could mitigate the impacts. Owing to their technical understanding, they appear predestined to be involved in environmental reporting. This is also evidenced by the fact that participants in the presented training module primarily cited technical solutions for emission reduction (e.g. through energy-efficient lighting, changes to product design and avoidance of over-processing).

5. Conclusion and outlook

The CSRD forces nearly 50,000 EU companies to report on non-financial matters (i.e. sustainability) at the same level of detail as in financial reporting. This encourages transparency about the impacts of companies on people and the environment. Its operationalization in the ESRS aims at improving companies’ environmental performance, with a special focus on mandatory reporting on climate change.

The adoption of the ESRS ushers not only in a new era of sustainability-related disclosure but also challenges institutions engaged in accountant education because content, as well as teaching methods, must be updated. Thus, it is important to explore universities’ responses by incorporating the ESRS into their curricula so that students can apply these regulations after graduation. Indeed, the conversion of such content is already being given a certain priority within the (Austrian) higher education area. However, practical and innovative training methods that impart technical and scientific knowledge are still lacking.

This paper advocates the incorporation of authentic and meaningful environments for active learning in the field of environmental reporting. Here, LFs provide a promising avenue, as they provide hands-on experience in a realistic production environment. This allows students to apply theoretical knowledge directly and gain industry-relevant competencies such as real-life problem-solving and teamwork skills.

As the LEAD Factory is an important element of engineering education at Graz University of Technology, we developed a training module on ESRS E1, tested learning progress through pre- and post-test and analyzed the perceived quality using a training experience questionnaire. Both quantitative results and perceptions of students and lecturers reveal that LFs are well-suited to convey knowledge about environmental reporting and GHG accounting.

Our findings encourage further research on the advantages of incorporating LFs into the trending topic of ESG issues. We see four specific prospects for further application and research. The iterative and evolutionary nature of LFs should be used to simulate improvements over time and to enable comparisons with the base year. ESRS offer much more content, both in terms of the depth (e.g. E1-7) and width (e.g. E2, S1) of sustainability reporting. First, the training will be extended to focus more in-depth on (technical) mitigation measures (e.g. in the module of industrial energy management), and in the development of feasible corporate carbon reduction strategies in own operations and the value chain, as suggested by the ESRS. Moreover, the severity and likelihood of these impacts, risks and opportunities, as well as set priorities, can be taught through LFs. As with other formats, insights from engagement practitioners, experts and community representatives can be incorporated and evaluated. In addition, a link can be built to related topics of industrial engineering and management, such as production strategies. Our concept should be rolled out and researched on a larger scale. Other institutions of higher education could also make use of (their existing) LFs to fulfill their pursuit of addressing major challenges. We are convinced that our concept can be implemented in any LF, at least when it is extended by fictitious elements (e.g. to illustrate the supply chain and sales of goods). If an LF is initiated specifically for this purpose, care should be taken to address as many Scope 3 emissions as possible. The medium- and long-term effects of LF-based trainings on graduates’ employability and academic labor market can also be examined, especially for specific topics such as environmental reporting.

Figures

Figure 1.

Background, interlocking and purview of CSRD and ESRS

Figure 2.

Overall structure of ESRS

Figure 3.

(a) LEAD Factory (manufacturing line on the right in the background) (b) scooter used as a showcase product

Figure 4.

Results of surveying 34 master’s students regarding the PCF of the scooter (calculated values indicated by red marks)

Figure 5.

Compilation of LEAD factory’s potential GHG emission source through brainstorming and observation (“emission walk”)

Figure 6.

Assignment of identified GHG emission sources to scopes (before discussion and correction)

Figure 7.

Intermediate results of GHG accounting (colors indicate different teams)

Figure 8.

(a) Scores in pre- and post-test by participant (b) scores in pre- and post-test per question

Figure 9.

Rating of perceived teaching quality ( x¯ indicates the average score)

Figure 10.

Evaluation of motivational factors ( x¯ indicates the average score)

Table 1.

Courses dealing with sustainability reporting at Austrian universities in the academic year 2023/2024

University	Course name	Type	Department/faculty
BOKU	Environmental management and environmental information systems for businesses*	Lecture	Economics and Social Sciences
JKU	Governance, CSR and finance	Lecture	Social Science, Economics and Business
KFU	Reportage of sustainability	Seminar	Environmental Systems Sciences
	Current issues in reporting	Continuous assessment	Business, Economics and Social Sciences
LFU	Sustainability in company law	Lecture	Company and Taxation Law
MUL	Sustainability management*	Seminar	Economic and Business Management
	Sustainable business management*
PLUS	CSR and ESG in finance	Lecture and exercise	Law, Business and Economics
TUG	Environmental management*	Lecture	Computer Science and Biomedical Engineering
	Introduction to sustainability management and -systems*	Lecture and exercise
	Advanced topics on sustainability management and systems*
	Transfer project sustainability management and systems	Project
TUW	Risk-based performance management*	Lecture and exercise	Mechanical and Industrial Engineering
	Accounting*
UVIE	ESG reporting I	Continuous assessment	Business, Economics and Statistics
	ESG reporting II
	Spreadsheet accounting*
	Green finance*		Law
WU	Economy and Sustainability II: Actors and solutions for a sustainable resource management*	Continuous assessment	Socioeconomics
	Specialization in business administration course V – Non-financial accounting		Finance, Accounting and Statistics
	Financial communication and investor relations*		Business Communication

Notes:

BOKU = University of Natural Resources and Life Sciences, JKU = Johannes Kepler University Linz, KFU = University of Graz, LFU = University of Innsbruck, MUL= University of Leoben, PLUS = University of Salzburg, TUG = Graz University of Technology, TUW = Vienna University of Technology, UVIE = University of Vienna, WU = Vienna University of Economics and Business; courses marked with an asterisk (*) also cover issues beyond sustainability reporting

Source: Authors’ own creation

Appendix

Assigned questions and scores in pre- and posttest