FIE459 Sustainable Finance

• Topics

  This course deals with the integration of environmental, social and governance (ESG) issues, as well as ethical considerations, in investment and financing decisions. It reviews the evidence on how these factors matter for long-term value creation, and examines the concepts, tools and frameworks that allow managers and investors to make informed and ethical decisions.

  The financial system’s primary aim is to allocate capital to its most productive use. Traditional finance often focuses solely on financial returns, disregarding ethical considerations and the impact of business on society and the environment (externalities). Ethical business practices and the internalization of externalities often increase the financial value of a business, but not always. This course deals with the complex trade-offs that arise in such cases.

  In the first part of the course, students learn the main concepts in Sustainable Finance and Business Ethics, and reflect on the purpose of business. The second part of the course focuses on sustainability and ethical challenges from the corporate perspective. Students learn about the internalization of externalities, corporate governance and ethical business practices, sustainable business models, and integrated reporting. Students also apply important tools like stakeholder analysis, materiality matrix, and scenario and sensitivity analysis. The third part of the course focuses on sustainable lending and investing. It covers long-term value creation, and includes an overview of how ESG issues and ethical considerations affect the practice of Asset Management, Banking and Insurance. Students learn about financial instruments and strategies that align with investor preferences and evolving policies. Impact investing - actively targeting ethical, social and/or environmental objectives - is also covered. In the fourth and final part of the course, we discuss how to transition towards a sustainable and inclusive economy, by focusing on coalitions for Sustainable Finance, Transition Management and Integrated Thinking.

  Our purpose is to acquire practical business skills: the ability to identify the ethical and ESG dimensions of typical financial problems, the ability to make reasoned decisions when faced with dilemmas, and the ability to justify those decisions in a language that is both clear and persuasive.

• Learning outcome

  Upon successful completion of the course the student:

  Knowledge

  • will know how to use general concepts in the field of Sustainable Finance and Business Ethics
  • will know how ethical decision making takes place, how to identify externalities, and how businesses can internalize them
  • will know how to identify relevant sustainability risks and opportunities in the context of financial decision making

  Skills

  • gain applied knowledge of the main metrics and financial instruments related to sustainability from a financial perspective
  • can apply the tools and 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 and ethical issues in the context of valuation, financing, M&A and incentives
  • can apply theories of sustainable finance and business ethics to concrete company and portfolio cases

  General competence

  • can communicate with specialists in both academia and practice about complex issues, and recognize and understand sustainability and ethical issues when analyzing and solving financial tasks

• Teaching

  The course will be taught using a combination of regular lectures and guest lectures.

  The teaching format will be hybrid (in-person and Zoom) to make it possible for ENGAGE students to follow the course without being physically present in class.

  Regular lectures will be recorded. Guest lectures will be recorded upon agreement of the speakers.

  Students will be encouraged to have discussions in class. ENGAGE students can participate in the discussions via Zoom, but these discussions will not be recorded. 

• Restricted access

  The course is offered to students at NHH, and students taking FIE459 as a CEMS Global Online Elective and Online Exchange Course through the ENGAGE.EU alliance (University of Mannheim, the University of Toulouse Capitole, LUISS University, Tilburg University, University of National and World Economy in Sofia, Vienna University of Economics and Busines, Ramon Llull University and Hanken School of Economics).

• Compulsory Activity

  None

• Assessment

  A graded group assignment, making up 50% of the grade. The report shall be written in English by groups of 4-5 students. The groups (with the exception of ENGAGE and CEMS GOE students) will write a Sustainability Report for a financial institution operating in Norway. 

  The group assignment of ENGAGE and CEMS GOE students will consist of a COIL activity. (for more information about COIL, please see: https://eur02.safelinks.protection.outlook.com/?url=https://www.youtube.com/watch?v=5K5JxNEEcmw&data=05|01|Maj-Brit.Iden@nhh.no|6edfc47b51414c3d52bc08db1bc2433a|33a15b2f849941998d56f20b5aa91af2|0|0|638134293392352778|Unknown|TWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0=|3000|||&sdata=yAfyeP0cKaajx9+XaU0PPJ6qzqb84s9aqQNSVtw8Qv0=&reserved=0COIL - Collaborative Online International Learning - YouTube.)

  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.

• Grading Scale

  A-F

• Literature

  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.

  Business ethics: Chapters 3 and 4 of Crane, A., Matten, D., Glozer, S., & Spence, L. J. (2019). Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press, USA.

• This is an ENGAGE-course

  FIE459 is offered as an Online Exchange Course to students from the ENGAGE.EU alliance.

• Permitted Support Material

  N/A