This course provides insight in the links between sustainability challenges and finance. The main task of the financial system is to allocate funding to its most productive use. Traditional finance focuses on financial return and regards the financial sector as separate from the society of which it is part and the environment in which it is embedded. By contrast, sustainable finance considers financial, social, and environmental externalities and returns in combination and shows how finance can accelerate the transition to a sustainable, inclusive economy. The objective is to embrace sustainability without losing a sound and sensible financial perspective.
The course reviews evidence of how environmental, social, and governance (ESG) factors matter and explains in detail how to incorporate these in company financial models and strategies, equity investing, bond investing, and bank lending. The course examines the financial instruments and techniques that can be applied in the context of evolving climate policies (and other sustainability policies). We will also cover impact investing strategies, i.e., when financial investments are used actively to reach social or other objectives.
Our purpose is to acquire some practical business skills: The ability to identify the ESG dimensions of finance problems, the ability to make practical, reasoned decisions when faced with ESG and more general ethical dilemmas, and the ability to justify those decisions in language that is both clear and persuasive.