Sustainable Finance: ESG and the Future of Finance

During this module, you will meet your fellow learners and the Facilitator who will be providing support to you throughout your studies. You will learn more about what the programme offers and how to navigate through it. You’ll also have the chance to tell us more about yourself by answering the questions and posting to the discussion board.

• Describe the key components, relationships and theories of sustainable finance;
• Unpack the ‘alphabet soup’ of various terminologies and concepts of sustainable finance;
• Analyse how technological innovation, global climate and sustainable development goals (SDGs) objectives drive opportunities in sustainable finance;
• Analyse how changes in societal norms and growing awareness of sustainability within the investment community is driving sustainable finance growth; and

Evaluate how climate and biodiversity related financial risk relate to traditional risk management approaches.

• Explain the contested definition of sustainability and evaluate the usefulness of taxonomies in standardising the definition of the concept;
• Summarise the concept of environmental, social and governance (ESG) and analyse how it matters to financial decision-making and to evaluate the strengths and weaknesses of various reporting standards in facilitating ESG integration;
• Describe the concept of ‘impact investing’ and evaluate what it means to have an impact through finance; and
• Compare the difference between climate risk management and outcome alignment, and critically evaluate which objective do prevailing ‘green’ financial products achieve.

• Recall the concept of materiality and critically evaluate the evolution of assessment methods over time;
• Identify the application of ‘materiality’ through introducing the concept of ‘stranded assets’;
• Recognise the divergence of ESG ratings and critically evaluate the implications on making effective sustainable finance decisions; and 

Define and evaluate the effectiveness of various regulations in tackling greenwashing, including financial conduct regulations, green taxonomies and voluntary normative standards.

• Identify the relevance of greening finance to central banks, and evaluate micro- and macroprudential regulations;
• Describe the emergent concept of ‘transition finance’, and analyse how the typology of transitional instruments can contribute to building a net-zero carbon economy; and

Explain the concept of investor engagement and evaluate how different engagement strategies could be effective in greening finance in different sectors, asset classes and geographies.

• Describe the various ESG equity products and the role ESG ratings play in shaping the market;
• Describe the different debt products, and critically evaluate how they are governed, along with their potentials and limitations;
• Explain the configuration of sustainable private equity, venture capital and YielddCo, and critically analyse why and how some of these asset classes have risen to greater prominence than others; and
• Identify the relevance of insurance to sustainable finance, and introduce novel products such as CAT bonds, insurance pools and risk transfer products.

• Describe how various market designs can raise capital to support sustainable projects;
• Analyse the role of different public financial institutions in channelling capital for sustainable purposes and in spurring sustainable finance market growth; and

Evaluate the role of central banks through analysing the implementation of monetary policies and quantitative easing in the context of climate change.

• Recap the concepts you have learnt throughout the previous modules;
• Identify sustainable finance issues and concepts in everyday business situations; and
• Apply your knowledge to real-world investment decisions.

Complete an essay-based assignment based on one of two options.