Instructional goals
The course aims to provide students with a comprehensive understanding of the interconnections between global finance and environmental sustainability, focusing on the role of banking systems, financial markets, and corporate finance operations. Students will develop analytical skills to assess the impact of climate risks and ESG (Environmental, Social, Governance) criteria on financial strategies, international regulations, and the design of innovative financial instruments (e.g., green bonds). Through a practical approach combining lectures, thematic workshops, and group projects, the course prepares professionals to design sustainable solutions for the ecological transition, manage complex scenarios such as valuing biodiversity-linked assets or structuring circular business models, and effectively communicate the financial implications of environmental policies. The ultimate goal is to equip students to critically navigate the global financial landscape, balancing economic objectives, social responsibility, and environmental constraints, with a focus on innovation and systemic resilience.
Prerequisites
Basic knowledge of financial principles (e.g., time value of money, risk-return tradeoffs), familiarity with corporate finance fundamentals (capital structure, valuation), introductory understanding of sustainability concepts (ESG, climate change).
Intended learning outcomes
By the end of the course, students will be able to critically analyze the impact of environmental risks and ESG criteria on financial decisions, banking policies, and global market dynamics, as well as design and evaluate sustainable financial instruments (e.g., green bonds, sustainability-linked loans) in real-world contexts. They will integrate economic objectives, environmental constraints, and social responsibility to drive the ecological transition through innovative solutions and resilient strategies.
Course Contents
The course explores the interactions between global finance and environmental sustainability, starting with the theoretical foundations of international financial systems and environmental crises, with a focus on frameworks such as ESG, TCFD, and the EU Taxonomy. It delves into the implications of climate risks in the banking sector, analyzing environmental stress tests, central bank policies (e.g., ECB), and case studies on energy transitions and fossil fuel financing. Sustainable financial markets are examined, including the integration of ESG criteria into equities, bonds, and derivatives, as well as the role of institutional investors and green stock indices. In the corporate finance module, topics include sustainable capital structures, valuation of biodiversity-linked assets, ESG due diligence in private equity and M&A operations, and circular economy models. Practical activities include workshops on green bond design, simulations of climate risk assessment using tools like Bloomberg, and group projects to develop innovative financial products (e.g., biodiversity credits). The course concludes with critical analysis of real-world cases and a reflection on global policies for the ecological transition, preparing students for an oral exam that combines theory, case studies, and discussion of developed projects.
Reference Books
Handbook of Sustainable Finance (Thierry Roncalli).
Teaching Methods
The course employs a blended teaching approach, combining lectures to convey theoretical foundations with interactive workshops to apply concepts to real-world cases. Guided group work enables students to develop practical projects.
Assessment Method
The overall assessment for the course comprises three integrated components: the group project (45%), which includes an oral presentation (15%) and a final written report (30%) to develop and defend practical solutions related to sustainable finance, evaluating design skills, teamwork, and the application of theoretical concepts; active participation (5%), based on critical contributions during lectures, workshops, and case study discussions; and the final oral exam (50%), an individual interview focused on analyzing course themes, real-world cases, and the group project, with emphasis on logical coherence, depth of reflection, and the ability to integrate theory, financial practices, and environmental criteria within a global context.
Thesis assignment criteria
Group project (45%: presentation 15% + report 30%), active participation (5%), final oral exam (50%). Assessment based on logical coherence, depth of reflection, and theory-practice integration.
Week 1
The first week establishes the theoretical foundations of the course, exploring the interplay between global financial systems and environmental crises. Lectures cover: a historical analysis of sustainable finance evolution; international regulatory frameworks (ESG, TCFD, EU Taxonomy, SDGs); technical tools such as carbon accounting and green bond principles.
Week 2
The second week introduces the interplay between banking and ESG challenges. Lectures cover: the supply of sustainable credit, ESG risks and opportunities for banks, non-financial reporting, the evolution of the bank-firm relationship in a scenario of environmental transition and social and governance awareness.
Week 3
The third week deepens the banking perspective. Lectures focus on: ESG risks regulatory expectations, drivers and effects of the climate and ESG integration in the lending processes and risk management frameworks, also by analyzing some case studies concerning the ESG Risk Scoring and Risk Appetite Framework as well as the Sustainable Finance Framework of some Globally Significant banks (G-SIBs).
Week 4
The fourth week explores the financial markets’ perspective. Lectures cover: the significance of ESG factors in capital markets, the emerging risk-return-impact approach, the spread of market instruments – equity and fixed-income - linked to environmental and social sustainability issues.
Week 5
The fifth week explores the sustainable bond market. Lectures cover: the main typologies, principles and reference standards, external certifications (e.g. Second Party Opinion), bond indices, hints on pricing (e.g. Green Bond Premium)
Week 6
The sixth week explores in detail the sustainable investment market (ESG investing). Lectures cover: ESG investing strategies (exclusion, best-in-class screening etc.); shareholder activism, impact investing, Investing FOR impact vs. investing WITH impact.
Week 7
The seventh week focuses on the in-depth analysis of asset pricing and portfolio management models. Lectures cover: relationship between ESG factors and the systematic risk component, integration of CAPM and Fama–French models, ESG-efficient frontier, empirical evidence, and ongoing issues (e.g., ESG data divergence).
Week 8
Week 8 examines private equity's role in sustainable finance, focusing on ESG challenges. Lectures will cover: ESG criteria in private equity investment analysis; structuring impact investing funds; sustainability assessment methodologies for acquisitions (ESG due diligence); and sustainable exit strategies. We will analyze real-world case studies of private equity firms successfully integrating ESG criteria into their portfolios.
Week 9
Week 9 delves into ESG challenges in private equity and corporate finance operations, focusing on company valuation in sustainable contexts. Lectures cover: integrating ESG criteria into valuation models (DCF, multiples) for targets in high-environmental-impact sectors; the impact of factors such as carbon pricing, climate transition risks, and circular economy opportunities on intrinsic company value.
Week 10
In Week 10, students launch their projects by selecting topics such as sustainable market initiatives or corporate ESG strategies.
Week 11
In week 11, the groups delve into the technical aspects: for the markets side, ESG data analysis via platforms; for the corporate side, climate risks are integrated into DCF valuation models and private equity transactions are simulated.
Week 12
Week 12 involves finalizing projects: iterative revisions with instructor feedback and peer reviews, and preparation of oral presentations and written reports. For market-focused projects, emphasis is placed on quantifying environmental impact; for corporate projects, cost-benefit analysis of proposed ESG strategies is prioritized.