The course will offer a comprehensive overview of the links between finance and sustainability, with a special focus on the transition to a low-carbon economic system. Physical investments in ´green´ sectors need to be financed. However, a number of obstacles are currently discouraging financial institutions - banks, institutional investors, development banks, and others - from supporting them. The course will present these obstacles and discuss ways to overcome them, which include the implementation of a diverse set of socioeconomic policies, the development of innovative financial mechanisms and instruments, empirical and theoretical academic research targeting the topic. We will also discuss what could be the macroeconomic and financial implications of such transition, looking at the topic of stranded assets and climate-related financial risks. The course will use a mix of theoretical concepts, empirical analysis and real-world case-studies.
Topics we will be touching upon include:
- What is sustainable finance, classification systems, the chain of intermediation.
- The gap in sustainable physical investment: how much is needed and where.
- Obstacles currently blocking sustainable physical investment: risk-return profiles; policy uncertainty; illiquidity; cost distribution; access to finance.
- Where does finance for sustainable investments come from: governments; commercial banks; financial investors; development banks.
- International sustainable finance: North-South commitments and technology transfer; climate funds; international development banks
- Obstacles currently blocking sustainable financial investments: underlying uncertainty; risk-return profiles; lack of instruments and liquid markets.
- Carbon pricing as a policy to incentivise physical investment: carbon tax and carbon markets; subsidies to sustainable investments; removal of fossil fuel subsidies; theory and real-world examples; socioeconomic and financial implications.
- Green bonds and other financial instruments to stimulate sustainable financial investments; risk mitigation tools.
- Low-carbon financial regulation and monetary policy.
- Climate-related financial risks: climate damages and low-carbon transition.
- Transition risks: stranded assets; economic losses; loss of financial value and cascade effects; divestment.
- Climate-related risk disclosure by firms and financial investors; climate stress-testing of the financial system.
After completing a ZuWi II course the students are aware of the social and environmental context of economic activities. They have a holistic perspective, seeing both the economy and society as embedded in biophysical systems. They understand the effects business has on these dimensions. Throughout the course, students learn to take into account the impact of their later actions on society and the natural environment, their social responsibility and their contribution to a long-termsustainable development. Students develop the ability to consider ethical, social and environmental issues implied in their decisions in both private and professional spheres. They acquire skills such as self-reflection, openness and sensitivity to diversity, and understanding of complexity. They learn to conduct team projects effectively, to listen attentively and to present their ideas in convincing ways. Having completed the course, they are able to process information, to understand ideas and problems, to develop solutions and to communicate them to both expert and non-expert audiences.
Extensive feedback from both the course instructors and peers helps students to understand their shortcomings and to improve.
According to the didactic orientation performance will be evaluated multidimensionally. At least 3 criteria are to be considered in the assessment (e.g. presentation + thesis paper + written work / reflection paper). Particular emphasis is placed on teamwork skills and reflective thinking and experiential knowledge.
By the end of the 'Finance and Sustainability' course, students will have developed an in-depth understanding of the links between financial, socioeconomic and environmental systems. They will be able to understand and comment on current news and research on the topic, and connecting them to the business, policy and academic debate. The course aims at being useful to both students interested in developing theoretical/applied research on these topics and students interested in developing hands-on knowledge to look for a job in the sector.
Examination-immanent courses (PI) have compulsory attendance.
In case of absence the lecturer is to be informed in advance if possible.
More detailed regulations on absenteeism will be explained in the first unit.
The course will be divided into two main parts:
- Frontal teaching by the lecturer.
- Student-led part: students' presentations, exercises, collective discussion, Q&A
Students will be graded as follows:
- Participation and engagement (10%)
- Mid-term Essay (30%)
- Final exam (60%)
Course enrollment is on the basis of "first-come, first-served” principle. If you have registered but cannot participate in the course, please de-register via LPIS during the registration period so that your course is available to students on the waiting list.
If there is a waiting list for enrollment in the course, students at the waiting list will be notified after the end of the enrollment period, and will be allocated to available places. Students will be ranked by their study progress not by their rank on the waiting list.
This procedure, however, is not to be understood as a place guarantee!
Some knowledge and experience in both finance and environmental economics is welcome, but not compulsory.
Emanuele Campiglio will hold regular office hours (TBD) throughout the semester.