FIE459 Sustainable Finance
Spring 2023Autumn 2023
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.
Upon successful completion of the course the student:
- will know how to critically review the concepts of, and externalities embedded in, sustainability challenges, particularly with relevance to financial economics.
- will have knowledge of sustainability risks and opportunities which are relevant for finance professionals.
- gain applied knowledge of the main metrics and financial instruments related to sustainability from a financial perspective.
- can apply, the techniques to measure and manage the exposures of investment and lending portfolios to relevant sustainability externalities, including climate change.
- can identify and analyze relevant and material sustainability issues related to corporate finance topics like valuation, financing, M&A and incentives.
- can apply theories of sustainable finance on concrete company and portfolio cases.
- can communicate with specialists in both academia and practice about complex issues on understanding and recognizing sustainability when analyzing and solving financial tasks
The course will be taught using a combination of regular lectures, guest lectures and with a strong focus on class involvement. Alternative learning media may also be applied. The teaching format will adapted for online teaching to make it possible to follow the course without being physically present in class.
A graded group assignment, making up 50% of the grade. The report shall be written in English.
Final exam, comprising of a 4 hour written individual home exam, representing 50% of the total grade. The final exam shall be answered in English.
The course is taught using Schoenmaker and Schramade: "Principles of Sustainable Finance", Oxford University Press (2019), together with academic and relevant practitioner-oriented articles, cases and videos made available via Canvas.
- ECTS Credits
- Teaching language
Autumn. Offered Autumn 2022.
Part of studies
Assistant professor Jose A. Albuquerque de Sousa, Department of Finance, NHH.