FOR16 Sustainable investments

• Topics

  Corporate managers frequently make decisions on how to support and maximize the value of the firm. However, can an investment boost a firm's profitability without benefiting the environment, employees, or community? Financial decisions must increasingly consider sustainability concerns to ensure ongoing commercial and societal success. This course connects these concepts by covering key topics at the intersection of sustainability and investment through an applied and case-oriented approach.

  The course will explore the concepts of sustainability in economics and the economics of sustainability, focusing on how corporate managers can make investments that are both sustainable and economically beneficial in the long term. In this course, the term "sustainability-related investments" will refer to investments focused on human, social, and environmental (ESG) factors.

  Economics and finance professionals typically view investments in terms of costs, benefits, cash flows, and risks. Building on knowledge of capital budgeting and project analysis, we will explore the specific assumptions and factors necessary for the valuation of sustainability-related investments and the relevant impact on firms valuation. Therefore, the main goal of this course is to equip students with practical business skills for project and firm valuation, with a focus on the intersection of sustainability and investment.

• Learning outcome

  Knowledge

  Upon successful completion of the course, students will have knowledge about:

  • the concept of value and how to measure it
  • the relationship between sustainability, economic activity, and value creation
  • environmental, social, and governance (ESG) factors and their relevance for investment and valuation
  • the channels through which sustainability and ESG factors may affect revenues and costs
  • methods for integrating sustainability and ESG considerations into project and firm valuation

  Skills

  Upon successful completion of the course, students will be able to:

  • identify and assess financially relevant sustainability and ESG factors in firms and investments
  • perform project and firm valuation using appropriate valuation methods
  • integrate material sustainability and ESG factors into cash-flows, discount rates, and other relevant valuation assumptions
  • apply theories and methods of sustainable investment and valuation to practical investment problems and cases

  General competence

  Upon successful completion of the course, students will be able to:

  • critically assess the role of sustainability and ESG considerations in investment analysis and valuation
  • combine financial and sustainability-related information when evaluating investment alternatives, and firms
  • apply sustainable investment and valuation principles to decision-making
  • communicate and justify investment and valuation assessments based on relevant financial and sustainability considerations

• Teaching

  The teaching plan includes a combination of plenary lectures and case studies. The discussion and analysis of the cases are a crucial part of the course structure. The investment analysis will be conducted in Excel.

• Recommended prerequisites

  BED3

• Credit reduction due to overlap

  None.

• Compulsory Activity

  One compulsory group case assignment, with a maximum of three participants per group. The assignment is graded as approved/not approved.

  Compulsory activities from previous semesters are still valid.

• Assessment

  4-hour individual digital school exam.

• Grading Scale

  A-F.

• Literature

  Literature:

  Dejan Glavas. Valuation and Sustainability. A guide to Include Environmental, Social and Governance Data in Business Valuation. Springer, 2023.

  Bolton, Brian. Sustainable Financial Investments: Maximizing Corporate Profits and Long-term Economic Value Creation. Springer, 2016. (Some chapters)

  Jonathan Gruber. Public Finance and Public Policy. Fifth Edition. Chapters 5 and 6.

  In addition, some additional book chapters/articles may be available online (and will be made available from Leganto).

• Permitted Support Material

  Calculator

  One bilingual dictionary (Category I)

  All in accordance with Supplementary provisions to the Regulations for Full-time Study Programmes at the Norwegian School of Economics Ch.4 and Examination support material.

• Retake

  Retake in FOR16 will not be offered during the non-teaching semester (autumn).

  For further information about NHH's retake policy, please see Retake of exams.