Unit 1: Introduction to Sustainable Finance (PSF Ch 1, GP Ch 1)
•    Challenges to sustainability
•    Purpose and importance of sustainable finance
•    Limits to sustainable finance

Unit 2: Corporate Purpose (PSF Ch 2-3, GP Ch 2-3, 5)
•    Shareholder vs. stakeholder value
•    Short-term vs. long-term value creation
•    Internalization of externalities

Unit 3: Corporate Purpose: Empirical Evidence (GP Ch 4,  and articles to be provided)
•    ESG measurements and ratings
•    The effects of CSR on firm performance (Do well by doing good?)
•    Determinants of CSR practices (Do good while doing well?)

Unit 4: Investor Activism and Engagement (PSF Ch 4, GP 6, 9, and articles to be provided)
•    Role of institutional investors in sustainable finance
•    Stewardship through engagement and monitoring
•    Stewardship in practice

Unit 5: Sustainable Investing (PSF Ch 7-8)
•    Typology of sustainable investing strategies
•    ESG integration for equity investing 
•    Socially responsible investing vs. impact investing

Unit 6: Sustainable Investing Continued (PSF Ch 9, and articles to be provided)
•    Financial performance of sustainable investing: empirical evidence
•    ESG integration for bond investing 
•    Green and social impact bonds

Unit 7: Climate Finance: Empirical Studies (articles to be provided)
•    Climate risk and implications
•    Investor response to climate change
•    Corporate response to climate change

After completing the course, students will be able to:
•    Understand the context behind, and development, of sustainable finance
•    Understand the role and interplay between different stakeholders and opportunities for future development
•    Evaluate corporate sustainability risks and opportunities from both managerial and investment perspectives
•    Empirically examine the relationships between CSR practices and firm performance as well as between sustainable investing strategies and financial performance
•    Think critically with regards to applying sustainable finance in practice.

Attendance is compulsory for this class. It is also a necessary condition to receive participation marks.

The course induces learning in two ways. One takes the conventional class-room teaching approach and introduces course material through presentations by the lecturer. Such approach is used mainly in the teaching of theoretical and practical contents. The other focuses on the discussions of existing empirical research in the academic literature. To facilitate learning in this approach, students are strongly recommended to complete the assigned reading material prior to class and be ready to engage in class discussions with respect to the key findings, interpretations, and challenges to the studies, as well as how they fit into the literature and the context of sustainable finance.

The components for the grades are weighted as follows:
•    20% class participation
•    40% individual assignments (3)
•    40% group assignment and presentation

Class participation (20%): Participation is a central part of the learning process for you and your classmates. Your participation mark reflects your contribution to the classroom learning environment. This includes class attendance, arriving in class on time, staying for the class duration, and actively engaging in class debates. Please note that preparation before empirical classes is expected to effectively participate in those discussions.

Individual assignment 1 (10%): Students are required to critically respond to Friedman’s core argument that the social responsibility of a business is to increase profits. The response should be limited to no longer than one page. Detailed instructions will be given by the end of Unit 2, and it is due at the beginning of Unit 3. 

Individual assignment 2 (15%): Students are required to empirically construct CSR scores and performance measures for a sample of firms over time and examine the relationship between the two. The exercise should follow common approaches in the literature, and the interpretation of the key findings should be limited to no longer than one page (not including the result tables). Detailed instructions will be given by the end of Unit 3, and it is due at the beginning of Unit 5. 

Individual assignment 3 (15%): Students are required to empirically examine whether socially responsible investing would affect the performance of such screened stock portfolios. The exercise should follow common approaches in the literature to construct measures of ESG ratings, form firms into portfolios based on their ESG ratings, and compare return performance across different portfolios. The interpretation of the key findings should be limited to no longer than one page (not including the result tables). Detailed instructions will be given by the end of Unit 5, and it is due at the beginning of Unit 7. 

Group assignment and presentation (40%): In teams of 5 or 6, students are required to replicate the main findings of an empirical study (any relevant paper of the group’s choice). They are also to deliver a 20-miniute presentation on the paper during exam time. The presentation should clearly convey the motivations, the main objectives, the contributions, the key findings (actual and replicated), the implications, and limitations of the paper.

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Basic knowledge of R or Stata, basics in Statistics