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2019　Sustainable Finance

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Academic unit or major
Graduate major in Global Engineering for Development, Environment and Society
Instructor(s)
Kim Schumacher 
Class Format
Lecture     
Media-enhanced courses
Day/Period(Room No.)
Mon5-6(S513)  Thr5-6(S513)  
Group
-
Course number
GEG.S502
Credits
2
Academic year
2019
Offered quarter
4Q
Syllabus updated
2019/12/23
Lecture notes updated
2020/2/10
Language used
English
Access Index

Course description and aims

This introductory course outlines how the financial sector is impacted by Environmental, Social, and Governance (ESG) factors, including climate change, and how banks and investors shape the world through impact investing, blended finance, as well as socially responsible investments (SRI). Moreover, sustainable finance is also thematised as a tool for prudential regulation and risk management. The course is situated at the intersection of finance, business, management, economic geography, as well as environmental studies. It describes how sustainable finance principles are implemented by integrating ESG factors throughout all decision-making processes and in the active and passive management of investment portfolios across numerous asset classes, including equity and fixed-income portfolios.

Student learning outcomes

Students will be able to:
• Understand fundamental sustainability concepts across the financial sector, especially how past decisions influence future impact
• Integrate key ESG factors into investment decision-making
• Understand the interlinkages between environmental science and finance, such as natural capital and ecosystems services
• Using sustainable finance and ESG investment as climate impact and risk management tools
• Understand the ESG data value chain including non-financial disclosure frameworks
• Discern the risks and opportunities of shifting the financial system towards a sustainable business model

Keywords

Sustainable Finance, ESG Investment, climate change, Japan, EU

Competencies that will be developed

✔ Specialist skills ✔ Intercultural skills Communication skills ✔ Critical thinking skills ✔ Practical and/or problem-solving skills

Class flow

Mainly lectures are conducted, discussions or short reports are assigned

Course schedule/Required learning

  Course schedule Required learning
Class 1 Familiarisation with the tragedy of the time horizon and prudential risk management Familiarisation with the essential concept of long-termism as the defining aspect of sustainable finance and financial risk management
Class 2 International sustainability concepts: Natural Capital and Ecosystem Services Gain a fond understanding of how sustainability is defined internationally through what channels it is embedded at the institutional and societal levels
Class 3 Contextualisation of physical climate change risks Understand the ongoing dynamics of global atmospheric and environmental transformations as learn how these affect human life and terrestrial ecosystems
Class 4 International investment and banking concepts Acquire a basic knowledge of the main actors shaping the global financial system how they generate value through investments and manage assets on behalf of fiduciaries and beneficiaries.
Class 5 International sustainable investment initiatives and disclosure frameworks Distinguish between and understand the goals of the numerous sustainable finance and ESG-related initiatives, institutions, and organisations both at the international and national levels
Class 6 Climate Finance: Carbon pricing, carbon markets, and emissions trading Understanding the fundamental rationale behind taxing negative socio-environmental externalities via the example of carbon pricing.
Class 7 Transitional climate change risks: Stranded assets Learning about transition risks via the example of stranded assets that are at risk through regulatory changes or technological innovation.
Class 8 ESG Data I: Reporting, indicators, and metrics Understand the key role of data in shaping the sustainable finance sector and understanding how performance indicators and metrics are being utilized to make investment decisions or manage risk.
Class 9 Sustainable Finance Products: The example of green bonds Understand the different types of structured green or social finance products via the example of green bonds that support green project investment.
Class 10 ESG Data II: Labels, scores, ratings, and indexes Understand the crucial role of data in shaping the sustainable finance sector and understanding how labels, scores, and ratings are being utilized to make investment decisions or manage risk.
Class 11 Development banks, infrastructure investments, and blended finance Acquire basic knowledge about the role of development banks in the advancing sustainable finance via the example of blended finance, which combines public and private capital to expand ESG-aligned investments
Class 12 Legal climate change risks: Fiduciary duties and litigation Understand in what ways investors and corporations have liabilities and duties towards their shareholders and beneficiaries and what the legal risks are in case of non-compliance.
Class 13 Impact Investing: The case of social enterprises and microfinance Gain an understanding of how certain investors, organisations, institutions, and corporations engage in socially responsible investments to advance the proliferation of ESG-aligned investments and projects
Class 14 Equity and Funds: From active engagment to divestment campaigns Get a solid understanding of how various interested stakeholder groups can influence large investors or corporations to transition to more climate or ESG-aligned business models via the example of divestment campaigns
Class 15 Group Presentations Group Presentations

Textbook(s)

Dirk Schoenmaker and Willem Schramade, Principles of Sustainable Finance, 2018, Oxford University Press, 1st Edition, Oxford, UK (ISBN: 9780198826606)

Reference books, course materials, etc.

Additional materials and readings are distributed/announced in each class.

Assessment criteria and methods

Assigned readings plus class participation 40%, Individual component of group case study report 30%, Joint presentation of group case study reports 30%

Related courses

  • TSE.C312 ： Introduction to Environmental Policy and Social System
  • GEG.S401 ： Environmental Policy
  • GEG.E401 ： Global Environmental System and Ecosystem Dynamics
  • GEG.I401 ： Sustainable Development and Integrated Management
  • GEG.E501 ： Environmental Impact Assessment

Prerequisites (i.e., required knowledge, skills, courses, etc.)

Courses and workload are adjusted to graduate student knowledge levels. The course touches on key topics from the domains of sustainability, finance, management, (financial and non-financial) accounting, corporate finance (cost of capital, valuation), and marketing. Students are expected to understand the basic concepts from these domains, however, no prior business or finance knowledge is required. Analytical skills and a solid level of English are required.

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