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Syllabus

EN IT

Learning Objectives

LEARNING OUTCOMES:
By the end of the course, students will have a solid understanding of sustainable investments and their role in financial decision-making. They will acquire analytical skills to evaluate ESG factors and apply them in portfolio management and investment strategies.

KNOWLEDGE AND UNDERSTANDING:
- Gain a comprehensive understanding of sustainable finance principles, including ESG (Environmental, Social, and Governance) criteria.
- Learn how financial markets integrate sustainability and how regulations influence responsible investing.
- Understand the role of institutional investors and financial intermediaries in promoting sustainable investments.

APPLYING KNOWLEDGE AND UNDERSTANDING:
- Analyze and evaluate investment opportunities incorporating ESG factors using financial models.
- Apply sustainability criteria in portfolio construction and risk assessment.
- Use empirical data and econometric techniques to assess the impact of ESG factors on financial performance.

MAKING JUDGEMENTS:
- Develop critical thinking skills to assess the ethical and financial implications of sustainable investments.
- Evaluate the trade-offs between financial performance and sustainability objectives
- Formulate investment strategies based on a balance of risk, return, and ESG considerations.

COMMUNICATION SKILLS:
- Present and discuss sustainable investment strategies effectively in both written and oral formats.
- Communicate financial analyses and ESG-related insights to professional and non-expert audiences.
- Work collaboratively in teams to assess and propose sustainable financial solutions.

LEARNING SKILLS:
- Develop independent learning capabilities to stay updated with evolving trends in sustainable finance.
- Enhance problem-solving abilities by integrating financial theory with real-world sustainability challenges.
- Acquire the ability to engage in continuous professional development in the field of responsible investing.

Prerequisites

There are no prerequisites to attend this course.

Program

Week 1: Corporate Finance and Corporate Social Responsibility (CSR)

The relationship between firm and market in an ESG framework has been extensively studied. Several authors emphasize how CSR can affect the market performance and firm behavior. Studies have also demonstrated that CSR is an important driver of firm valuation, particularly in terms of risk-adjusted re- turns.

Take Home Week 1. Slide presentation: slide one - Research/work idea



Week 2: Socially Responsible Investment (SRI)

Socially Responsible Investment (SRI) involves integrating ESG factors into investment strategies. Research suggests that SRI funds can perform similarly to conventional funds, and their risk-return profile is often comparable or even superior. Moreover, SRI investments are increasingly attractive to a growing class of socially conscious investors.

Take Home Week 2. Slide presentation: slide two - Literature review



Week 3: Equilibrium for the ESG Level of Commitment

The market equilibrium for ESG-related investments results from the interaction between demand and supply forces. On the supply side, firm commitment to CSR influences the pricing of stocks, while on the demand side, investors seeking ethical investments determine the overall market dynamics. Empirical evidence suggests that these factors play a crucial role in forming a market equilibrium in the SRI space.

Take Home Week 3. Slide presentation slide three - Raw data and estimation sample



Week 4: Systematic ESG Risk Factor

Incorporating ESG factors into asset pricing models is crucial for capturing the systematic risks associated with ESG. The expansion of traditional models, like the Capital Asset Pricing Model (CAPM), by adding ESG-specific risk factors, can better reflect market realities. This has led to a more nuanced understanding of how ESG factors impact asset pricing and overall market risk.

Take Home Week 4. Slide presentation: slide four one - Model and estimation strategy



Week 5: Mutual Fund and ESG factors

Mutual funds with an SRI focus have gained popularity, with investors increasingly prioritizing ethical considerations in their investment decisions. Studies have shown that SRI-focused mutual funds exhibit a different risk-return profile compared to traditional funds, and their performance is often aligned with social objectives.
Take Home Week 5. Slide presentation: slide five - Results



Week 6: Portfolios and CO2 Emission

One of the key issues within SRI is the evaluation of CO2 emissions within portfolios. It has been demon- strated that reducing carbon exposure can align both ethical and financial goals. Additionally, the inte- gration of carbon risks into investment decisions has been shown to influence firm valuation and returns, especially in high-emission industries.

Take Home Week 6. Slide presentation: slide six - Conclusions

Books

Academic papers and slides.

Bibliography

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Teaching methods

Theoretical lectures by the professor.

Practice sessions where students present their ongoing work and engage in discussions with their peers under the instructor supervision.

Exam Rules

Class Participation (30%): Evaluation of the weekly preparation of a concise presentation (6 slides) on a topic chosen from the course References.

All students are actively involved in the learning process throughout the course weeks. During the weekly exercises (and while preparing the slide presentation as a take-home assignment, TH), they are required to comment on their peers' presentations. The preparation of the presentation at home is based on the student’s chosen topic and follows a weekly schedule. By the end of the six weeks, all parts of the concise presentation will have been covered by the student, ensuring that each student is prepared to take the final exam and demonstrate their learning outcomes.

Final Oral Exam (70%): Students present their chosen topic in a public presentation, supported by 15 slides divided into five sections (research idea, literature, data and estimation dataset, results, and conclusions).Students are allowed to take the exam only twice. It is not possible to retake the exam twice in the same session. The grade from a repeated exam attempt will be recorded, including a possible "fail" grade.


The criteria to formulate the final grade expressed in 30 over 30 are the following

- Fail: significant inaccuracies in knowledge and in understanding topics; limited analysis and synthesis skills, frequent generalizations.

- 18-20: sufficient knowledge and understanding of topics with some lacks; sufficient analysis, synthesis, and independent judgment skills.

- 21-23: standard knowledge and understanding of topics; pritty correct analysis and synthesis skills with coherent logical argumentation.

- 24-26: good knowledge and understanding of topics; good analysis and synthesis skills with rigorous argumentation and approach.

- 27-29: comprehensive knowledge and understanding of topics; remarkable analysis and synthesis skills. Good and independent judgment.

- 30-30L: excellent level of knowledge and understanding of topics. Remarkable analysis, synthesis, and independent level of judgment skills. Arguments expressed in original way.