Environmental Finance
2nd Semester, Course Code: ΜΕΧΤΕ206
Credits: 7,5
Learning Outcomes
This course is a thorough introduction to the fast-evolving and expanding subject of environmental finance. In particular, it
- introduces the environmental and social risks for firms, financial institutions and investment professionals and highlights the difficulty of their measurement
- describes the risks for firms, banks and investors when they do not take sufficiently into account the ESG (Environment, Social, Governance) performance of their counterparties and the entities they finance
- analyzes the on-going effort for the development of accounting standards for ESG measurement
- discusses the fast-changing institutional environment and the additional challenges it poses to all economic agents
- analyzes the economics of ‘green’ banking, ‘green’ investments and pollution markets
- explores how banks, and the financial system in general, can contribute towards addressing environmental and social problems.
After completing the course, the students are expected to understand
- climate and, more generally, environment-related risks, as well as the resultant risks (most notably, regulatory, operational, legal, reputational, financial) and the attendant opportunities for firms, financial institutions and investors
- ‘green’ financial products and their risk-return trade-offs
- the role and the incentives of major players, such as, firms, financial institutions, institutional investors, NGOs and governments
- the risks (rewards) of financial institutions that provide financial services to firms with weak (strong) ESG credentials
- the difficulties of measuring ESG performance and the accounting standards under development
- thecarbon footprintof corporations and institutions, and ways to reduce it
- carbon credits -creation and usage- and related investment opportunities in pollution markets.
General Competences
- Search for, analysis and synthesis of data and information
- Adapting to new situations
- Decision-making
- Working independently
- Team work
- Working in an interdisciplinary environment
- Working in an international environment
- Production of new research ideas
- Respect for the natural environment
- Production of free, creative and inductive thinking
Course Content
Part A: The big picture
- Environmental and Social sustainability
- Market failures in an intractable global problem
- Government intervention in search for adequate responses
- Thinking about environmental and social risks
- Environmental and social risks – A taxonomy
- Other risks
- Major Stakeholders and their incentives
- Measuring ESG performance – Logical difficulties, AI limits
Part B: On State intervention
- Tackling market failures: The return of State intervention in the economy and the financial system
- Promises and pitfalls
- The EU Classification System
- Building the necessary infrastructure
Part C: Accounting issues
- Financial and non-financial reporting
- Corporate sustainability
- Accounting information and sustainability – Looking through the fog
Part D: ‘Green banking’
- Risks and opportunities
- Environmental and social credit-risk assessment
- What’s different
- The limits of AI
- Proposed regulatory interventions – Unintended consequences of good intentions
Part E: Financial investments
- Decision-making under extreme uncertainty
- ‘Green’ financial products
- ESG criteria and portfolio investments
- Does it pay to go ‘green’?
Part F: Carbon markets
- Economic rationale
- Tradeable permit systems
- Financial investments
Student Performance Evaluation
Written exam: 25%. Essays
Case studies: 25%
Class participation: 25%
Term project 25%
The evaluation criteria are spelled out in the syllabus
Bibliography
Suggested Bibliography
Marc Chesney, Jonathan Gheyssens, Anca Claudia Pana, Luca Taschini, Environmental Finance and Investments, Springer Texts in Business and Economics, 2015.
Related Academic Journals
Academic articles and policy papers from the ECB, the IMF, World Bank/IFC, the BIS.