ESG Issues in Finance (MSB312)
ESG (Environmental, Social and Governance) issues has become central in modern finance. Sustainability affects corporate operations, either as an opportunity (e.g. green investment) or as a constraint (e.g. carbon pricing). It also affect financial capital markets. For example, a corporations' cost of capital is driven by the ESG properties of the corporations. For investors, ESG enters as a separate factor beyond risk and return when making asset allocations. To accommodate all these changes, the firms' corporate governance must adjust.
Corporate governance is the system of rules, practices, and processes by which a company is directed and controlled. Corporate governance balances the interests of a company's many stakeholders, which can include shareholders, senior management, customers, suppliers, lenders, the government, and the community. Corporate governance is concerned with every sphere of management.
NB! This is an elective course and may be cancelled if fewer than 10 students are enrolled by August 20th for the autumn semester.
Course description for study year 2024-2025. Please note that changes may occur.
Course code
MSB312
Version
1
Credits (ECTS)
10
Semester tution start
Autumn
Number of semesters
1
Exam semester
Autumn
Language of instruction
English
Content
This course will consist of two parts
Corporate governance
Sustainable finance
The corporate governance part studies how firm objectives interacts with social responsibility, the need to design incentives to achieve necessary changes to firms adjusting to the new circular economy. Corporate governance considers how power is distributed among the firms stakeholders, and the need to consider behavioral finance.
The sustainable finance part look at topics like: What do we mean by sustainability? What is Environmental economics, particularly the concept of externalities? How to incorporate sustainability in valuation models to value "green" projects and companies? How does sustainability affect financing decisions and possibilities for firms?
Learning outcome
Knowledge
Upon completion of the course, students will have knowledge of
- assessing the objectives of the firm, including value and social responsibility
- designing proper incentives for managers to achieve the firm's goal
- analyzing the voting power of different stakeholders
- applying behavioral concepts associated with the governance of firms
- the concepts involved in sustainability challenges, particularly those linked to finance
- sustainability risks and opportunities
- metrics related to sustainability from a finance perspective
- the EU taxonomy and UN sustainability goals and their implications for finance and investments
Skills
Upon completion of the course, the candidate will be able to
- apply critical thinking on the pros and cons of the different governance mechanisms present in different markets (domestic and international)
- use statistical skills in support of governance mechanisms
- present in a professional manner their recommendations to enhance the governance of firms
- the ability to measure and manage the exposure of corporations and financial assets to sustainability risk, such as climate change
- the ability to identify sustainability issues related to corporate finance issues, such as valuation, corporate transactions, and investment financing
- the ability to identify sustainability issues in specific corporate cases
Required prerequisite knowledge
Exam
Handins of cases in groups and written 4 hour exam
| Form of assessment | Weight | Duration | Marks | Aid |
|---|---|---|---|---|
| Handins of cases in groups | 2/5 | Letter grades | ||
| Written 4 hour exam | 3/5 | 4 Hours | Letter grades |
Coursework requirements
Course teacher(s)
Course coordinator:
Jean Paul Rabanal SobrinoStudy Program Director:
Yuko OnozakaOverlapping courses
| Course | Reduction (SP) |
|---|---|
| Corporate Governance (MSB310A_1) | 5 |
| Sustainable Finance (MSB371_1) | 5 |