An Accounting professor led 10 National University of Singapore (NUS) Business School undergraduate students undertaking a third-year Accounting Theory module on a field study trip to visit a Musim Mas palm oil plantation, Sorek estate, in Pekanbaru, Indonesia.
Taking a different approach to imparting Accounting knowledge, Professor Oliver Li, Musim Mas Professor in Sustainability, Department of Accounting, NUS Business School, says, “Bringing the students to visit the plantation allows them to experience first-hand real-world situations. We’re taking them out of a hypothetical situation and classroom, allowing them to evaluate for themselves the impact of haze pollution, as well as the efforts taken by companies and governments to deal with environmental and corporate social responsibilities.”
Prof Li adds, “Most students would not have visited a plantation before, let alone participate in a harvest. This experiential learning component helped the students take a break from the seminar rooms and witness how the company manages environmental accountability and corporate social responsibility; thus making learning more meaningful and relevant.”
Final year Accounting student Mr Ng Kian Siang recounted his experience, “During our visit, we had a chance to participate in the harvest, where fruits weighed over 20 kilograms per piece, from trees over 15 metres tall. I also took my first helicopter ride; a bird’s eye view of the massive plots of oil palm plantations. This behind-the-scenes tour showed us the multitude of monitoring and response systems in place to ensure fires are dealt with swiftly before they become uncontrollable. People often think of accounting as financial accounting. It goes beyond that to include managerial accounting and sustainability reporting. ”
Mr Ng further shared, “With the increased news coverage and scrutiny of the haze pollution, the learning journey helped my class consider the impact of air pollution in Indonesia on businesses including those in Singapore. Such insights helped steer our research project that we hope will spur more regional research on the effects of haze that impact Singapore.”
Upon returning, students combined their new-found insights with classroom learning for project ideas involving haze and accounting.
Investors’ behaviour raises concerns on ethical investment
One such student project arising from this module and the visit to the Indonesian palm oil plantation is to study the impact of the Indonesian haze on the behaviour of investors in Singapore, specifically on the performance of the Straits Times Index (STI) and palm oil-related stocks listed in Singapore. Past studies have demonstrated pollutants level to affect people’s mood, investing sentiment and behaviour.
Students constructed an index of six companies listed on the Singapore Stock Exchange whose revenue was derived mainly from palm oil. These are Bumitama Agri Ltd, First Resource, Global Palm Resources, Golden Agri-Resources Ltd, Indofood Agri Resources and Kencana Agri Ltd. This index and the STI were tracked from May 2009 to September 2016.
They then measured the relationship of stock returns in these companies with the Pollutants Standard Index (PSI). Included in their analyses was also a weather factor of whether it was a rainy or sunny day.
The students found that investors tend to have a psychological reaction towards weather conditions when making trade decisions. Specifically, the STI return is higher on non-rainy days than dry days. However, when these non-rainy days are accompanied by haze, STI return is adversely affected.
For the palm-oil index, they found that investors are not very sensitive to changes in PSI level within the healthy range (i.e., 0-100) when it comes to their palm-oil stock behaviour.
However, when PSI moves from the healthy to the unhealthy range (PSI>100), palm-oil return increases slightly. Additionally, when the weather is rainy, palm-oil return also increases. Possibly, investors know that heat and rainfall are imperative for the growth of palm oil. Together, this results in an increase of share prices of palm oil-related companies directly or indirectly involved in the haze pollution process of “slash and burn” practices.
In spite of increasing attention on environmentally harmful practices adopted by some organisations, the results of this student project motivated from experiential learning suggest that economic interests tend to have greater dominance over moral considerations.
Experiential learning bridging the classroom with the real world
The projects and student visit to Indonesia are part of NUS Business School’s extensive experiential learning opportunities for our students. These action learning projects, provide our students the opportunity to broaden their knowledge and sharpen their skills beyond the classroom, both in Singapore and beyond.
“Experiential learning is a key pillar of student life in NUS Business School. We create realistic opportunities for our students to apply conceptual learning and work with industry practitioners. Such experiences groom and nurture our students to be future business leaders,” said Professor Kulwant Singh, Deputy Dean, NUS Business School.
For more information of the new Bachelor of Business Administration (BBA) and Bachelor of Business Administration (Accountancy) curriculum, please visit bba.nus.edu/bba2017.
