How to build an ESG course: a complete guide for lecturers

Central question: What does ESG add to conventional business analysis, and where can the label mislead?

Begin by separating the acronym from the managerial questions beneath it. ESG is most useful when it helps students identify environmental, social and governance issues that can affect enterprise prospects, stakeholders, legitimacy and long-term resilience. It becomes less useful when it is taught as a single score or as a synonym for virtue. Lecturers should make the contested nature of the label explicit so students learn to ask what is being measured, for whom and for what decision.

What this concept covers

• Origins and evolution of ESG, corporate sustainability, CSR, responsible business and sustainable finance.
• The environmental, social and governance pillars and the interdependencies between them.
• Financial relevance, stakeholder impacts and the difference between disclosure, performance and reputation.
• Why ESG can be decision-useful without implying one universal definition of a good company.
• Common critiques: aggregation, politicisation, box-ticking, greenwashing and weak causal claims.

Learning outcomes

• Distinguish ESG from sustainability, CSR and impact.
• Explain why the same ESG issue can matter differently to investors, managers, workers, regulators and communities.
• Critique claims that reduce ESG performance to a single headline score.
• Frame an ESG question as a decision problem rather than a checklist.

Supports course learning outcomes through observable analysis and judgement.

How to teach it

• Open with three short corporate claims and ask students what evidence would make each claim decision-useful.
• Build a class taxonomy that separates impact, risk, opportunity, disclosure and governance.
• Ask students to compare an investor-facing ESG question with a community-impact question.
• Use a short debate on the proposition: ESG is a useful label only if the underlying decision is specified.

Case-style example

GreenArc Retail has revenue of $1.2 billion, an 8.5% operating margin and three proposed priorities: a $14 million energy retrofit expected to save $4 million a year, a $9 million wage programme expected to cut turnover from 28% to 20%, and a board renewal plan that adds no immediate cash flow. Students rank the priorities for an investor memo and for a stakeholder-impact memo, then explain why the rankings differ. Students discover that ESG is not one objective function.

Where students struggle

Students often search for the correct ESG position rather than identifying the decision, evidence and stakeholder perspective. They may also treat the three pillars as independent silos.

Reading and a quick check

Use Edmans, “The End of ESG” (2023) as a provocation. Ask students to write one sentence defining the decision that must be made before any ESG metric is selected.

Applied teaching activity

Use the case, workshop or critique above as the applied activity at this point in the sequence. Do not add a simulation merely to fill the session.

Where it leads

The next concept gives students a disciplined way to decide which sustainability issues merit attention: stakeholder analysis and materiality.

Central question: Which sustainability issues are material, and material to whom?

Materiality is the bridge between a long list of possible ESG topics and a defensible course of action. Students should learn at least three lenses: investor-oriented sustainability-related financial materiality, impact materiality, and the double-materiality approach used in European sustainability reporting. The teaching goal is not to memorise frameworks. It is to make students specify thresholds, evidence, affected stakeholders, time horizons and the route by which an issue becomes strategically important.

What this concept covers

• Stakeholder identification, salience, affected stakeholders and users of reporting.
• Financial materiality in investor-oriented sustainability disclosure.
• Impact materiality focused on significant effects on economy, environment and people.
• Double materiality as the interaction of impact and financial dimensions.
• Time horizons, severity, likelihood, value-chain boundaries and dynamic materiality.

Learning outcomes

• Map stakeholders and distinguish power from affectedness.
• Apply financial, impact and double-materiality lenses to the same issue.
• Prioritise issues using explicit evidence and thresholds.
• Defend why an issue is or is not material for a particular decision.

Supports course learning outcomes through observable analysis and judgement.

How to teach it

• Give every group the same issue inventory but a different organisation and stakeholder profile.
• Require groups to show evidence and thresholds rather than merely colour a matrix.
• Ask students to identify an issue that is impact-material before it becomes financially material.
• Use a paired challenge in which another group must attack the materiality rationale.

Case-style example

Meridian Components employs 4,000 people and earns $95 million EBITDA. Its largest plant emits 180,000 tonnes of CO2e, a supplier audit finds 6% of sampled workers below the company wage standard, and a new carbon price could add $11 million of annual cost by 2030. Students build separate financial-materiality and impact-materiality maps, then decide which issues enter a double-materiality assessment. Students discover that one issue can be material through either route and that time horizon changes the answer.

Where students struggle

Students often confuse materiality with importance in everyday language. A second difficulty is treating stakeholder consultation as a vote instead of evidence that must be assessed.

Reading and a quick check

Pair IFRS S1 materiality guidance with GRI 3: Material Topics and a short ESRS double-materiality extract. Quick check: ask students to state whose decision each materiality judgement is designed to inform.

Where a simulation fits

The ESG Simulation fits later in the course, after students can identify material environmental, workforce, financial and governance trade-offs from several stakeholder perspectives.

Where it leads

With a materiality lens in place, the course can examine environmental and social issues without turning into a catalogue of topics.

Central question: How should a business translate environmental pressure into operational, strategic and financial decisions?

Environmental teaching should move beyond definitions of carbon, pollution and biodiversity. Students need to connect physical and transition risks to assets, operations, demand, costs, supply chains and capital allocation. Climate is the most mature teaching example because it combines measurement, scenario uncertainty, policy, technology and financing. Nature, water, waste and pollution broaden the lens and stop the environmental pillar becoming a carbon-only topic.

What this concept covers

• Scope 1, 2 and 3 greenhouse-gas emissions and the limits of inventories.
• Physical and transition risk, scenario analysis and time horizons.
• Energy, pollution, water, waste, circularity, biodiversity and nature-related dependencies.
• Decarbonisation levers, abatement cost, carbon pricing and capital expenditure.
• Targets, transition plans, offsets and the distinction between operational change and claims.

Learning outcomes

• Trace an environmental issue into operating and financial consequences.
• Compare abatement options using cost, feasibility and emissions impact.
• Explain why Scope 3 information is decision-useful but often uncertain.
• Challenge an environmental target that lacks a credible implementation path.

Supports course learning outcomes through observable analysis and judgement.

How to teach it

• Use a marginal-abatement style exercise with three investment options.
• Have students map one environmental risk from physical event to income statement and balance-sheet effects.
• Run a scenario comparison rather than asking for a single forecast.
• Use PESTLE to connect policy, technology and social acceptance to environmental strategy.

Case-style example

AeroForge emits 90,000 tonnes of Scope 1 and 2 CO2e and estimates 420,000 tonnes in Scope 3. A $35 million furnace conversion cuts direct emissions by 28% and saves $3.5 million a year; a $12 million efficiency package cuts 9% and saves $2.2 million. Students calculate simple payback, compare results under carbon prices of $40 and $100 per tonne, then recommend a sequence. Students discover that the financially fastest option may not deliver the transition pathway stakeholders expect.

Where students struggle

Students often convert uncertain environmental scenarios into precise financial forecasts. They may also assume that more disclosure means better environmental performance.

Reading and a quick check

Use IFRS S2 for the disclosure architecture and ask students to identify the difference between a climate metric, a climate risk and a management response.

Where a simulation fits

The PESTLE Analysis Simulation can fit after this concept because policy, economic, social, technological, legal and environmental factors must be weighed together in a live market-entry decision.

Where it leads

Environmental risks lead naturally into the social pillar, where measurement is often less standardised and stakeholder consequences are more direct.

Central question: How should managers evaluate social performance when costs, rights, productivity and stakeholder outcomes collide?

The social pillar is frequently the least disciplined part of an ESG course. A strong treatment distinguishes workforce outcomes, human rights, customer and community effects, and supply-chain due diligence. Students should use both quantitative indicators and rights-based reasoning, then explain when a financially attractive option is nevertheless unacceptable and when a social initiative also improves operational performance.

What this concept covers

• Workforce pay, safety, turnover, diversity, skills, voice and employee relations.
• Human-rights due diligence and value-chain risk.
• Supplier standards, purchasing practices and remediation.
• Customers, product responsibility, privacy and community impacts.
• Measurement challenges: lagging indicators, under-reporting, context and distributional effects.

Learning outcomes

• Evaluate social metrics without reducing rights to financial value alone.
• Trace purchasing or workforce decisions into social and operational outcomes.
• Distinguish prevention, mitigation and remediation.
• Recommend a response to a social controversy using evidence and clear governance.

Supports course learning outcomes through observable analysis and judgement.

How to teach it

• Compare two supplier scorecards and ask what each hides.
• Give students a wage, turnover and productivity dataset and ask them to model operational effects.
• Use a human-rights scenario where legal compliance is below the organisation’s own standard.
• Ask students to write a board recommendation that states both business and rights-based reasons.

Case-style example

BrightThread Apparel buys $260 million of product from 42 suppliers. Audits find that 8% of sampled workers are below the company’s living-wage benchmark and overtime breaches occur at six factories. A remediation programme costs $7.5 million; switching suppliers could add $11 million in sourcing cost and delay launches. Students compare remediate, exit and phased-escalation options, then specify evidence needed before acting. Students discover that supplier exit can protect reputation while worsening outcomes for affected workers.

Where students struggle

Students may treat social metrics as softer versions of environmental metrics or assume stakeholder interests are always aligned. They need practice separating rights, outcomes, operational constraints and voice.

Reading and a quick check

Assign a recent chapter on business and human rights from the core textbook and use a quick check: what information would change your recommendation to remain with or exit a supplier?

Where a simulation fits

The ESG Simulation later gives the Union role explicit workforce objectives, allowing students to experience how wages and employment interact with production, investment and environmental commitments.

Where it leads

Social conflicts often become governance questions. The next concept asks who has authority, accountability and oversight.

Central question: Who is accountable for ESG decisions, and what makes governance credible rather than symbolic?

Governance is both a pillar of ESG and the system through which environmental and social priorities are overseen. Students should examine board responsibilities, incentives, conflicts of interest, disclosure, controls and stakeholder accountability. The central teaching move is to show that governance quality is not the number of committees a company has. It is whether decision rights, challenge, evidence and consequences are clear when interests conflict.

What this concept covers

• Board and management responsibilities for sustainability-related risks and opportunities.
• Conflicts of interest, fiduciary duties, executive accountability and disclosure.
• Incentives, remuneration, ownership and governance controls.
• Risk oversight, internal control, escalation and whistleblowing.
• Ethical reasoning and the difference between formal compliance and credible governance.

Learning outcomes

• Diagnose a governance failure and identify the decision rights involved.
• Evaluate whether proposed safeguards are proportionate and workable.
• Connect governance credibility to investor confidence and organisational resilience.
• Defend a board-level resolution under competing stakeholder incentives.

Supports course learning outcomes through observable analysis and judgement.

How to teach it

• Use an escalation map: what belongs with management, a committee or the full board?
• Compare an incentive metric that is measurable but gameable with one that is harder to measure but closer to the desired outcome.
• Run a conflict-of-interest role-play before formalising governance principles.
• Require students to write both the immediate resolution and the system change that prevents recurrence.

Case-style example

NovaCloud’s CTO owns 6% of a private competitor through a family vehicle. The CTO delivered 35% revenue growth, but a new product roadmap overlaps with the competitor and two institutional investors have asked for disclosure. Students choose among disclosure only, recusal, divestment, role restrictions or removal, then design future safeguards. Students discover that retaining a high-performing executive and protecting governance credibility can both be defensible if the controls are proportionate and enforceable.

Where students struggle

Students can identify that a conflict exists but struggle to design a proportionate remedy. They may also assume stricter governance always produces better outcomes.

Reading and a quick check

Use a recent governance chapter from the core textbook. Quick check: ask students to distinguish the immediate conflict response from the future control framework.

Where a simulation fits

The Corporate Governance Simulation fits directly here. CEO, CTO, CCO and Shareholder teams use common evidence to negotiate the immediate response and future safeguards to a senior executive conflict of interest.

Where it leads

Once governance is established, students need to know whether ESG performance can actually be measured well enough to support decisions.

Central question: Which ESG measures are decision-useful, and what should students do when ratings disagree?

ESG data can create an illusion of comparability. Ratings aggregate different scopes, measurements and weights, and corporate KPIs vary in boundary and definition. This concept teaches measurement discipline: define the construct, boundary, denominator, source, frequency and decision. Students should learn to treat a rating as a model output, not a fact, and to interrogate whether improvements reflect real performance, disclosure quality or methodology.

What this concept covers

• Metric design: inputs, outputs, outcomes and impacts.
• Boundaries, denominators, baselines and normalisation.
• ESG rating methodologies, weighting, scope and aggregation.
• Data gaps, estimates, provider disagreement and audit trails.
• Dashboards, targets and the risk of metric gaming.

Learning outcomes

• Design KPIs that connect to a stated decision and material issue.
• Explain why ESG ratings can diverge for the same company.
• Identify measurement error, boundary changes and denominator effects.
• Reconcile conflicting evidence without averaging it away.

Supports course learning outcomes through observable analysis and judgement.

How to teach it

• Give groups three invented rating methodologies and the same company data.
• Ask students to reverse-engineer which assumptions drive the score difference.
• Require a metric dictionary for a small ESG dashboard.
• Use a red-team exercise in which students propose how a manager could game each KPI.

Case-style example

Lumen Mobility receives ESG scores of 78, 55 and 42 from three providers. Provider A gives climate 45% weight, Provider B weights labour and product safety heavily, and Provider C penalises missing data. Lumen cut emissions intensity 12% but absolute emissions rose 4% as production grew. Students reproduce a simplified score under each methodology, then advise a pension fund which raw indicators to inspect. Students discover that disagreement can come from scope, measurement and weighting rather than simple data error.

Where students struggle

Students tend to average conflicting ratings or select the score that supports their preferred conclusion. They also confuse disclosure completeness with performance quality.

Reading and a quick check

Assign Berg, Kölbel and Rigobon, “Aggregate Confusion” (2022). Quick check: ask students to label a rating disagreement as scope, measurement or weighting and justify the classification.

Applied teaching activity

Use the case, workshop or critique above as the applied activity at this point in the sequence. Do not add a simulation merely to fill the session.

Where it leads

Measurement discipline prepares students to study reporting frameworks without treating them as interchangeable checklists.

Central question: How do major reporting frameworks differ in audience, materiality and purpose?

Reporting is important, but an ESG course should not become a standards-preparation course. Students need a map of the leading approaches and enough detail to see why the same organisation may report through different materiality lenses. Teach ISSB as investor-oriented sustainability-related financial disclosure, GRI as reporting on significant impacts, and ESRS as a double-materiality system in the European context. The standards themselves will evolve, so students should learn the architecture and source-checking habit.

What this concept covers

• IFRS S1 and S2: governance, strategy, risk management, metrics and targets.
• GRI Universal, Sector and Topic Standards and impact materiality.
• ESRS and double materiality, including the revised 2026 standards.
• Connectivity with financial reporting and the importance of reporting boundaries.
• Comparability, completeness, estimates, transition relief and jurisdiction-specific adoption.

Learning outcomes

• Compare reporting frameworks by audience and materiality lens.
• Select disclosures that match a stated reporting objective.
• Explain why framework alignment does not guarantee comparable performance.
• Locate current requirements in authoritative standards rather than relying on secondary summaries.

Supports course learning outcomes through observable analysis and judgement.

How to teach it

• Ask students to classify the same issue under ISSB, GRI and ESRS lenses.
• Use a disclosure gap exercise with a short sustainability report.
• Require every student to trace one claim back to an official standard source.
• Separate “what must be disclosed” from “what management should do”.

Case-style example

Harbor Foods is preparing investor reporting and a wider sustainability report. A flood-prone factory contributes 22% of group EBITDA, supplier water use is high but poorly measured, and a community dispute has no current cash-flow effect. Students allocate information to an ISSB-style investor disclosure, a GRI impact report and an ESRS double-materiality assessment, then explain overlaps and omissions. Students discover that different reporting lenses can all be legitimate while answering different questions.

Where students struggle

Students memorise acronyms and assume convergence means identical scope. They also blur current standards, jurisdictional adoption and voluntary practice.

Reading and a quick check

Use IFRS S1, IFRS S2, GRI 1/3 and the current European Commission or EFRAG ESRS source page. Quick check: one sentence each on the primary materiality lens used by the three systems.

Applied teaching activity

Use the case, workshop or critique above as the applied activity at this point in the sequence. Do not add a simulation merely to fill the session.

Where it leads

Reporting describes risks, impacts and responses. The next concept asks whether strategy and capital allocation actually change.

Central question: How does an ESG priority become a funded strategy rather than a report commitment?

Students should learn to distinguish ambition from an investable plan. Good ESG strategy specifies the material issue, baseline, target, operational lever, capital requirement, owner, milestone, risk and evidence. Transition plans are especially useful because they force the organisation to connect long-horizon objectives with near-term decisions. Capital allocation also exposes genuine trade-offs: some initiatives have positive NPV, some protect downside, and some are justified by rights, licence to operate or strategic positioning.

What this concept covers

• Materiality-to-strategy linkage and prioritisation.
• Targets, baselines, interim milestones and accountability.
• Transition plans, operating levers and scenario assumptions.
• Capital expenditure, operating expenditure, NPV, optionality and risk reduction.
• Internal incentives, governance and the credibility gap between targets and delivery.

Learning outcomes

• Translate a material ESG issue into an operational plan.
• Evaluate targets for specificity, feasibility and evidence.
• Compare ESG investments using both financial and stakeholder consequences.
• Identify when a target lacks the capital, ownership or milestones needed for credibility.

Supports course learning outcomes through observable analysis and judgement.

How to teach it

• Give students a target with no implementation plan and ask them to make it executable.
• Use a capital-allocation exercise with constrained budget.
• Ask each group to state which assumptions would make the plan fail.
• Require an implementation dashboard that includes financial and non-financial milestones.

Case-style example

OceanCore Chemicals has $40 million of discretionary capital. A $25 million electrification project cuts emissions 20% and has NPV of +$6 million if carbon prices reach $90 per tonne but -$4 million at $40. A $10 million wastewater project reduces regulatory and community risk but has no direct revenue. Students allocate the budget, state their carbon-price assumption and propose milestones. Students discover that strategy must make uncertainty and non-revenue value explicit rather than hide them in a composite ESG score.

Where students struggle

Students may label any sustainability spending “strategic” without specifying the value mechanism, or reject initiatives that lack a simple positive NPV without considering risk, rights or licence to operate.

Reading and a quick check

Use a strategy and implementation chapter from the core textbook. Quick check: ask students to identify the owner, budget, interim milestone and failure trigger for one target.

Where a simulation fits

The ESG Simulation fits after strategy teaching because teams must convert stakeholder priorities into a financially viable package of operating, investment, compensation, wage and policy decisions.

Where it leads

Once companies have ESG strategies, investors and lenders must decide how those strategies affect capital allocation and stewardship.

Central question: How should investors incorporate ESG information without pretending that preferences, risk and impact are the same thing?

Sustainable finance gives the course an explicit capital-markets lens. Students should separate three questions: whether ESG information changes expected risk or return, whether an investor has sustainability preferences, and whether capital allocation or stewardship changes real-world outcomes. This prevents a common category error in which a high ESG score is assumed to be both financially superior and socially impactful.

What this concept covers

• ESG integration in security analysis and portfolio construction.
• Investor preferences, exclusions, tilts and mandates.
• Stewardship, engagement, proxy voting and escalation.
• Green, social, sustainability and sustainability-linked financing at a conceptual level.
• Impact claims, additionality, divestment versus engagement and fiduciary considerations.

Learning outcomes

• Distinguish financial ESG integration from values-based screening and impact objectives.
• Evaluate an investment mandate for internal consistency.
• Compare engagement and divestment strategies.
• Explain the role and limits of ESG data in portfolio decisions.

Supports course learning outcomes through observable analysis and judgement.

How to teach it

• Give students three investment mandates with identical securities but different objectives.
• Use a simple portfolio frontier exercise to show that preferences and risk-return choices can be explicit.
• Debate divestment versus engagement using an actual stewardship case.
• Ask students to define what evidence would demonstrate impact rather than portfolio greenness.

Case-style example

NorthPeak Pension considers three equity mandates. Portfolio A has expected return 7.8%, tracking error 1.5 and average emissions intensity 120; B has 7.6%, tracking error 2.4 and intensity 75; C has 7.2%, tracking error 4.0 and intensity 45. Students recommend a mandate for a pension fund that wants competitive returns and a 35% emissions-intensity reduction, then propose an engagement policy. Students discover that a greener portfolio and greater real-world impact are not automatically the same outcome.

Where students struggle

Students often conflate ESG scores, values, risk management and impact. They may also assume divestment is always stronger than engagement or vice versa.

Reading and a quick check

Use Pedersen, Fitzgibbons and Pomorski (2021) alongside Gibson Brandon et al. (2022). Quick check: ask students to label each proposed investor action as integration, preference expression, stewardship or impact claim.

Where a simulation fits

The ESG Simulation includes an Investor role that must weigh additional funding, ROI and environmental ambition while negotiating with Management, Regulator and Union teams.

Where it leads

The next concept brings the course’s strands together in a live operating decision where no stakeholder can maximise every objective.

Central question: How do managers make an ESG decision when environmental, workforce, investor and operating objectives cannot all be maximised?

This is the integrative decision concept. Students have already learned materiality, environmental and social issues, governance, metrics, reporting and finance. Now they must combine them. The teaching focus should be on package design: a decision is credible only if its environmental, social, governance and financial terms work together. Negotiation reveals hidden assumptions because another stakeholder has an incentive to challenge them.

What this concept covers

• Multi-stakeholder objective setting and negotiation preparation.
• Connected operating decisions, financing, compensation, wages and environmental controls.
• Financial viability constraints and sensitivity to assumptions.
• Compromise, approval rules, governance and policy statements.
• Debriefing decision quality separately from role-specific performance.

Learning outcomes

• Construct an integrated ESG decision package under a financial constraint.
• Defend a position using evidence and respond to counterarguments.
• Negotiate trade-offs without losing sight of minimum acceptable outcomes.
• Evaluate the collective quality of an agreement as well as individual stakeholder success.

Supports course learning outcomes through observable analysis and judgement.

How to teach it

• Use the simulation after students prepare a one-page materiality and stakeholder brief.
• Require teams to identify minimum acceptable terms and negotiable terms before live discussion.
• Pause once for a professor challenge: which assumption is carrying your proposal?
• Debrief both process and outcome, then require an individual memo that can be attributed.

Case-style example

Coastline Materials earns $32 million EBITDA. Management proposes a $6 million environmental upgrade, investors will add up to $8 million only if ROI stays above 10%, employees seek a $1.25 hourly wage increase costing $3.4 million, and the regulator requires pollution to fall at least 18%. Students design a package that keeps EBITDA above $20 million and meets the regulatory floor, then negotiate which concessions are acceptable. Students discover that a coherent package matters more than maximising one ESG metric.

Where students struggle

Students may optimise their assigned stakeholder score and lose sight of whether the complete agreement works. Another common error is arguing values without using the operating and financial evidence.

Reading and a quick check

Use the ESG Simulation case materials and require a pre-simulation decision memo. Quick check after the activity: what single concession most improved the collective outcome, and what did it cost your role?

Where a simulation fits

The ESG Simulation is the primary fit for this concept. Management, Investor, Regulator and Union teams analyse evidence, model terms and negotiate a shared ESG agreement that must remain financially viable.

Where it leads

Integrated decisions create disclosure and reputation risk. The next concept asks whether claims are evidence-backed and assureable.

Central question: When does an ESG claim become misleading, and what evidence makes a claim credible?

Students need a disciplined way to assess ESG communication. Greenwashing is not simply “bad marketing”; it can arise from vague scope, selective metrics, omitted trade-offs, inconsistent baselines, unsupported future claims or weak controls. The course should also cover assurance at a conceptual level: what is being assured, against what criteria, with what evidence and level of confidence. Regulatory treatment varies by jurisdiction, so lecturers should teach source-checking rather than static legal rules.

What this concept covers

• Types of misleading sustainability claims and selective disclosure.
• Target scope, baseline changes, offsets and claim boundaries.
• Internal controls, documentation and evidence trails.
• Conceptual role of limited and reasonable assurance.
• Controversy response, corrections, board oversight and regulatory risk.

Learning outcomes

• Identify the evidential weakness in an ESG claim.
• Rewrite a claim so its scope and limitations are clear.
• Specify control and assurance evidence for a material metric.
• Recommend a proportionate response to an ESG controversy.

Supports course learning outcomes through observable analysis and judgement.

How to teach it

• Give students a promotional claim and the underlying data table.
• Ask one group to defend the claim and another to challenge it line by line.
• Require a claim register with owner, evidence and review status.
• Use a board response exercise when new information undermines a public target.

Case-style example

PurePulse Beverages advertises that it is “60% net zero on the road to carbon neutrality.” The claim covers only owned operations, which represent 18% of estimated value-chain emissions; 70% of the stated reduction comes from offsets. A $450,000 assurance engagement could test the inventory and controls. Students decide whether to retain, qualify or withdraw the claim and specify what evidence is needed. Students discover that a numerically true statement can still be misleading if scope and dependence on offsets are hidden.

Where students struggle

Students can spot extreme greenwashing but miss technically accurate claims that imply more than the evidence supports. They may also treat assurance as a guarantee of sustainability performance.

Reading and a quick check

Use Christensen, Hail and Leuz (2021) for reporting incentives and a current regulatory source for the jurisdiction being taught. Quick check: what exactly would an assurance provider need evidence for?

Applied teaching activity

Use the case, workshop or critique above as the applied activity at this point in the sequence. Do not add a simulation merely to fill the session.

Where it leads

The final concept asks students to integrate the entire course into a decision they can defend, update and report.

Central question: Can students make and defend an integrated ESG recommendation when evidence is incomplete and objectives conflict?

The capstone should not ask students to repeat the three pillars. It should ask them to decide. A strong final task requires students to define the material issues, choose metrics, evaluate environmental and social consequences, specify governance, test financial viability, state reporting implications and identify missing evidence. Accountability means showing who owns each action, how progress will be measured and what happens if assumptions fail.

What this concept covers

• Integrated decision architecture from materiality to recommendation.
• Assumption registers, evidence quality and missing information.
• Action owners, milestones, escalation and board reporting.
• Scenario updating and decision reversibility.
• Individual defence, reflection and evidence for assurance of learning.

Learning outcomes

• Synthesize ESG evidence into a concise recommendation.
• Prioritise trade-offs and state rejected alternatives.
• Defend assumptions under questioning and update the recommendation when evidence changes.
• Design accountability mechanisms that make implementation observable.

Supports course learning outcomes through observable analysis and judgement.

How to teach it

• Use a capstone memo with a strict page limit and a one-page evidence appendix.
• Ask another team to act as an approval committee and challenge the recommendation.
• Require a short individual defence so the lecturer can attribute judgement.
• End with a post-decision update that forces students to revise one recommendation rather than defend sunk work.

Case-style example

TerraNova Holdings can fund only two of four initiatives: a $20 million energy programme with expected NPV +$4 million, a $12 million safety redesign expected to reduce recordable incidents 35%, a $7 million supplier due-diligence system covering 85% of spend, and a governance overhaul that costs $2 million but delays a strategic launch by six weeks. Students choose a package, state materiality and evidence assumptions, then defend it after a new customer requirement arrives. Students discover that accountable ESG judgement is iterative, not a one-off score.

Where students struggle

Students may produce polished dashboards without a clear recommendation, or recommendations without explicit assumptions and owners. AI-generated prose can make this problem harder to detect.

Reading and a quick check

Return to Edmans (2023) and the course’s reporting sources. Quick check: require each student to name the assumption that would most likely reverse the capstone recommendation.

Where a simulation fits

The ESG Simulation can be used as an earlier capstone input or as the live decision component before an individual written defence.

Where it leads

This closes the course: students can move from framing and materiality through analysis, governance, reporting, finance and negotiation to an accountable decision.

10-week course structure

Compress by combining foundations with materiality and grouping closely related analysis sessions. Keep governance, reporting, finance, the primary ESG application and the final defence. Do not make the shorter version a regulation-only survey.

14-week course structure

Use the extra time to separate environmental and social depth, add reporting/assurance practice and create more space for simulation reflection and capstone defence rather than simply adding more theory.

The ESG Simulation places students in a live, unresolved stakeholder negotiation at Innocent Corp. Management, Investor, Regulator and Union teams first analyse role-specific case material and financial/operating data, then use the modelling area to test connected choices. During Structuring they negotiate filter system, production level, ESG budget, additional investment, management compensation, wages, workforce numbers and a shared ESG Policy Statement. The agreement must remain financially viable, including the case requirement that EBITDA stays above $20 million.

Why it fits here

By Session 10, students already hold the materiality, environmental, social, governance, measurement and finance concepts needed to judge a package rather than optimise one metric. The role conflict exposes what each earlier concept leaves out when considered alone.

What students do

• Review role-specific briefs, reports, letters, financial data and Data Room evidence as Management, Investor, Regulator or Union.
• Work first within stakeholder teams to interpret the mission, identify strongest evidence and agree an opening negotiating position.
• Use the modelling area to test how production, filters, ESG spending, investment, compensation, wages and workforce choices affect financial and operating outcomes.
• Negotiate across the four roles, contribute to the ESG Policy Statement and approve or reject the complete package.
• Review final financial, environmental and workforce outcomes, compare with same-role teams and analyse why agreement succeeded or failed.

Recommended course placement

• At the end of Session 10 after materiality, E/S/G, metrics, reporting, strategy and sustainable-finance teaching.
• In a single intensive class of roughly three hours where the timetable allows, or split across shorter sessions.
• Immediately before an individual decision memo so the live evidence becomes assessable analysis rather than a standalone event.

Knowledge students should have before the simulation

• Materiality and stakeholder analysis.
• Basic operating and financial numeracy including EBITDA, EPS and ROI.
• Environmental and workforce trade-offs.
• Governance, negotiation and evidence-based decision principles.

Delivery format

Suggested debrief questions

• Which assumption had the greatest effect on your proposed package?
• Which stakeholder concession created the largest collective benefit, and who bore the cost?
• Did a strong role-specific result produce a strong overall ESG decision?
• Which evidence was genuinely material and which was used mainly for rhetoric?
• What would you change if the EBITDA floor tightened or a new stakeholder requirement appeared?

The Corporate Governance Simulation turns a conflict-of-interest case into a live boardroom interaction. A successful CTO holds a financial interest in a competing company. CEO, CTO, CCO (Chief Compliance Officer) and Shareholder teams use an Analyst Coverage Extract, Internal Compliance Memo and Governance Agency Note to form evidence-based positions. They must agree both the immediate response and future safeguards, with the final package approved by all four stakeholder roles.

Why it fits here

The exercise follows board oversight and ethics because students need concepts such as fiduciary duty, disclosure, executive accountability and proportionality before they can judge whether a resolution is credible. It also prepares them to see governance as the decision system for later environmental and social issues.

What students do

• Review the conflict, assigned role objectives and three evidence sources during the Analysis stage.
• Decide whether disclosure, restrictions, divestment or other safeguards are needed and identify negotiation priorities.
• Enter four-role negotiation groups and present evidence-backed positions.
• Agree how the current CTO conflict should be resolved and design future governance guidelines to reduce recurrence.
• Review stakeholder approvals, final terms and same-role performance during Reflection, then evaluate whether the collective resolution is proportionate.

Recommended course placement

• At the end of Session 5 after governance, conflicts of interest and board-oversight teaching.
• As one intensive block or with Analysis and Structuring divided across separate classes.
• Before a board memo or governance reflection that produces individual evidence.

Knowledge students should have before the simulation

• Basic governance roles and accountability.
• Conflict-of-interest principles and disclosure.
• Stakeholder incentives and evidence use.
• Difference between resolving a case and designing a control system.

Delivery format

Suggested debrief questions

• Was the response proportionate to the evidence or driven by role incentives?
• Which safeguard protects the organisation without unnecessarily destroying executive value?
• What evidence most affected investor confidence or compliance judgement?
• Did the four-role approval rule improve the governance outcome or merely force compromise?
• How would you design an individual board-paper task from the final agreement?

The platform records team decisions and comparative outcomes that can support academic judgement. It does not replace a lecturer’s rubric and does not by itself establish which individual student made which argument. Add individual evidence where attribution matters.

Grading with the ESG Simulation

Students analyse and negotiate a complete operating package across Management, Investor, Regulator and Union roles, including environmental controls, investment, compensation, wages, workforce, financial outcomes and an ESG Policy Statement.

• Evidence selection and use of case data.
• Role-specific decision quality and recognition of other stakeholders.
• Financial and operational consistency of the final package.
• Quality of reflection on concessions, failure points and alternative agreements.
• Individual defence that links the team outcome to course concepts.

Grading with the Corporate Governance Simulation

Students use common evidence to resolve a senior executive conflict of interest and agree future safeguards across CEO, CTO, CCO and Shareholder roles.

• Use of evidence from the Analyst Coverage Extract, Internal Compliance Memo and Governance Agency Note.
• Proportionality and practicality of the immediate resolution.
• Credibility of future disclosure, oversight and accountability safeguards.
• Ability to distinguish role success from the quality of the collective governance decision.
• Individual board-paper or reflection where attributable marks are required.

Grading with the PESTLE Analysis Simulation

Growth Strategy and Risk Management teams score and weight the six PESTLE factors, write rationales and defend a market-entry recommendation in an Approval Committee.

• Quality of factor evidence and explanation.
• Internal consistency of scores and weights, including weights summing to 100%.
• Ability to distinguish a consequential factor from a merely interesting one.
• Quality of challenge and response in the Approval Committee.
• Reflection on how new information should update the recommendation.