Description
This course on sustainable finance integrates the three dimensions of ESG (environment, social responsibility, and governance) into corporate decisions, investments, and portfolio management. Students will learn the methods used in sustainable finance.
The course will introduce the challenges associated with the environmental concerns, social responsibility, and governance (ESG) of corporate financial decision makers, investors, and portfolio managers. Students will learn to apply the research methods in sustainable finance. The course is divided into six blocks. The first addresses sustainable corporate finance decisions. The second and third blocks discuss climate risk management and corporate governance issues. The fourth block develops the asset pricing theory in the context of sustainable investments. Topics covered include the carbon risk premium and ESG metrics. The fifth block analyzes sustainable investments, their performance, and their use in portfolio management. Student presentations on current research topics in sustainable finance conclude the course.
Themes covered
Sustainable corporate finance
Corporate investment and environmental responsibility (game theory analysis tragedy of the commons).
The role of regulators in the transition to a low carbon economy; the market for carbon emissions rights.
Green and social bond issuance; social impact investment in private equity and venture capital.
Climate risk management
Methods to evaluate climate risk (scenario analysis).
Instruments to manage climate risk (weather derivatives the market for carbon trading) and their applications.
Corporate governance
Application of the difference-in-difference estimator and natural experiments to the concept of governance.
Incentives for a long-term perspective (executive compensation).
Responsibilities of the board of directors; diversity.
ESG Measures
Cross-sectional asset valuation models (the carbon premium).
ESG methodologies interpretation and limitations.
Demand for socially responsible funds.
Performance of sustainable investments
Factor models to assess the performance of ESG portfolios.
Sustainable investments and performance evaluation.
Green and social bonds and their performance.
Important notes
Course in French : FINA 60215
M. Sc. finance: Préalable(s): MATH 60207(A) ou 60230(A), et MATH 60210(A) ou 60231(A), et FINA 60211(A) ou 60232(A) M. Sc. économie financière appliquée: Préalable(s): MATH 60837(A)(Co) ou être admis à la M. Sc. ingénierie financière
M. Sc. finance: Préalable(s): MATH 60207(A) ou 60230(A), et MATH 60210(A) ou 60231(A), et FINA 60211(A) ou 60232(A) M. Sc. économie financière appliquée: Préalable(s): MATH 60837(A)(Co) ou être admis à la M. Sc. ingénierie financière