Originally published in Carroll Capital, the print publication of the Carroll School of Management at Boston College. Read the full issue here.
“And what about McDonald’s?” Professor Mary Ellen Carter asked as she gestured toward a screen in the corner of the classroom after clicking on a new slide. Carter was asking a particular question about the world’s largest fast-food chain, because she was teaching a particular kind of accounting class—offered for the first time this past academic year and titled “ESG Reporting and Analysis: Accounting for a Changing World."
On that November morning in Fulton 110, the class was scrutinizing ratings of how companies perform on environmental, social, and governance (ESG) issues. Hands across the room went up when Carter asked about McDonald’s. A young man sporting a hooded gray sweatshirt answered, “They got an upgrade.” The student had deciphered from the data that the loftier rating for McDonald’s came about because two foreign countries abounding with golden arches ramped up their recycling requirements. The company merely complied.
Professor and Joseph L. Sweeney Chair Mary Ellen Carter
Trillions of dollars are rolling into ESG investment funds, also known as “sustainable” funds. Naturally, accountants and finance professionals are in the thick of it. They’re doing things like preparing disclosures mandated by the Securities and Exchange Commission, including reports on such ESG-related issues as risks associated with climate change. Hence the new course that exposes students to the “landscape of corporate sustainability reporting,” as Carter puts it, and to this “changing world” declared in the course title.
“There are lots of players in this space—consultants, software developers, raters, and even ratings of raters. There’s just a lot of movement taking place,” the professor said during class, herself an object in motion as she dashed from blackboard to screen with clicker in hand. Since shareholders are central players, Carter, who is the Carroll School’s Joseph L. Sweeney Chair, invited Leslie Samuelrich, MCAS ’85, to speak at another class meeting. She is president of Green Century Capital Management, a family of mutual funds using ESG criteria to invest in companies. Green Century monitors and prods corporations on matters such as reducing the use of plastics and protecting tropical forests.
“ESG isn’t about how well companies are doing to protect the environment and serve society. It’s about measuring the risks that companies face, and how well they’re responding to those risks.”
Samuelrich tossed up what seemed like a softball: “What do you think is ESG investing?” A student in the back row said something about making a positive impact on the world, to which Samuelrich replied with a gentle “no.” She said ESG is about risk assessment—for instance, whether a supply chain is exposed to climate hazards including extreme storms and coastal flooding. “ESG isn’t about how well companies are doing to protect the environment and serve society,” she continued. “It’s about measuring the risks that companies face, and how well they’re responding to those risks. Most people don’t realize this.” Her point applies to both ESG enthusiasts and detractors at a time when social investing is facing a political backlash from those who see it as “woke.”
Samuelrich offered a window on the typically adversarial process of advocating change with companies, often leading to showdowns between activist shareholders and corporate officers at annual spring meetings. She left her fellow Eagles with thoughts of a career in ESG, giving her email address and suggesting they follow her on social media. “We could be friends,” she said to chuckles and applause.
These and other students had another networking opportunity courtesy of Carter, Professor Tara Pisani Gareau, who directs Boston College’s Environmental Studies Program, and Kevin O’Connell, MBA ’96, who leads PwC’s ESG practice. They collaborated on a daylong October event in Fulton where members of O'Connell's staff helped 50 students unpack a carbon-emissions case study, before presenting an afternoon panel on ESG careers. Three years ago, O’Connell had 12 staffers; now there are over 300, and he expects that number to more than triple in the next couple of years.
A few weeks later, Carter’s class was discussing how companies get different ESG scores from different raters. One factor is methodology, like how much weight the rating firm gives to one issue as distinct from another (say, livable wages versus zero emissions). Another factor is less palatable: Some raters offer consulting services and might go easy on a company they’re currying favor with. “So, there’s corruption in the ratings,” one student surmised. The professor smiled—“We like to call it conflict of interest.”
The probes continue in fall ’24 with two sections of Carter’s ESG class. So does the collaboration: She and Gareau, a biologist, are teaming up to teach a course in Boston College’s undergraduate core curriculum titled “Climate Change and Corporate America.
