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From Global Uncertainty to Firm-Level Risk: Sustainability and Valuation

INSTRUCTORS
Prague University of Economics and Business

Kudej Michal

Fenerbache University

Çağatay Bilge

AIM

This course provides an integrated analysis of sustainability and uncertainty from both macroeconomic and firm-level perspectives.

The first part examines sustainable development, energy transition, and the role of economic, climate, and geopolitical uncertainty in shaping policy and investment decisions.

The second part focuses on how these macro-level dynamics translate into risks at the company level, ESG integration, cost of capital, and company valuation in conditions of uncertainty.

The course is designed to ensure conceptual continuity while maintaining a clear analytical distinction between policy-oriented and financial perspectives.

 

MAIN TOPICS

  • Sustainability and Sustainable Development Frameworks
  • Macroeconomic Drivers of Sustainability
  • Economic, Climate, and Geopolitical Uncertainty
  • Uncertainty and Policy Decision-Making
  • ESG Integration in Corporate Strategy and Finance
  • Cost of Capital under Uncertainty
  • Firm Valuation in Uncertain Environments
  • Risk Analysis and Uncertainty Quantification

 

TEACHING METHODOLOGY

This course adopts an interdisciplinary and applied teaching methodology that integrates sustainable development and energy transition concepts with microeconomic, firm-level risk analysis under uncertainty. The course combines interactive lectures and conceptual–empirical integration to link macro-level uncertainty indicators (EPU, CPU, EUI, GPR) with company-level outcomes, focusing on ESG integration, cost of capital, and corporate valuation in uncertain environments. Emphasis is placed on data-driven and simulation-based learning, culminating in a final case study and presentation that demonstrates Monte Carlo simulation using Oracle Crystal Ball to evaluate firm value under uncertainty. Through case-based discussion and policy reflection, particularly with relevance to uncertainty-prone regions such as MENA, the course emphasizes analytical rigor, economic intuition, and real-world applicability for energy, climate, and financial decision-making.

 

DAY-BY-DAY PROGRAM

N° Topics Instructor
Lesson 1

Sustainable Development and the Energy–Climate Nexus: Sustainable development framework, Role of energy systems in economic growth and climate change, SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action),Global energy transition and climate mitigation strategies.

Uncertainty and Energy Policy Decision-Making: Economic, climate, and geopolitical uncertainty, Implications of uncertainty for energy investment and policy design.		 Bilge Çağatay
Lesson 2

Uncertainty and Empirical Perspectives on Sustainability: Sources and measurement of uncertainty (EPU, CPU, EUI, GPR), Intuitive empirical insights on uncertainty and sustainability outcomes

Energy Transition under Uncertainty: Regional Evidence and Policy Implications: Energy–climate nexus in the MENA region, Case study: Managing energy transition under uncertainty, Comparative perspectives from selected MENA countries, Policy implications for sustainable development under uncertainty.		 Bilge Çağatay
Lesson 3

DCF Valuation Fundamentals: Principles, forecasting free cash flows (FCFF), and calculating terminal value.

Cost of Capital: Determining the discount rate (WACC), the CAPM model, and estimating the Beta coefficient.		 Michal Kudej
Lesson 4

ESG as a Value Driver: How Environmental, Social, and Governance factors affect cash flows, WACC, and long-term growth.

Risk Analysis and Limitations of Traditional DCF: Identifying key value drivers and the shortcomings of point estimates.

 Michal Kudej

 

SUGGESTED REFERENCES

Baker, S. R., Bloom, N., & Davis, S. J. (2016).Measuring economic policy uncertainty. The Quarterly Journal of Economics, 131(4), 1593–1636.

Pankratz, S., Bauer, R., & Derwall, J. (2021). Climate change, firm performance, and investor surprises. Journal of Finance, 76(5), 2301–2347.

Caldara, D., & Iacoviello, M. (2022). Measuring geopolitical risk. American Economic Review, 112(4), 1194–1225.

Pesaran, M. H., Shin, Y., & Smith, R. J. (2001).Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289–326.

Damodaran, A. (2012). Investment Valuation: Tools and Techniques for Determining the Value of Any Asset (3rd ed.). John Wiley & Sons.

Koller, T., Goedhart, M., & Wessels, D. (2015). Valuation: Measuring and Managing the Value of Companies (6th ed.). John Wiley & Sons.

Scheurwater, R. (2020). Reduction of valuation risk by Kalman filtering in business valuation models.

Fama, E. F., & French, K. R. (2000). The CAPM: Theory and Evidence. Journal of Economic Perspectives.

Sacco, G. M. (2012). An Empirical Evaluation of the Capital Asset Pricing Model (CAPM).


Useche, A. J. (2025). Taking ESG strategies for achieving profits: a dynamic panel analysis. Journal of Economic & Financial Analysis Studies.