Class 1. Traditional finance and some of its limitations (1h30)
Assets, financial markets, market players, valuation metrics, market rationality limits, recent crises and major lessons from these crises. Definitions of sustainable, environmental, climate finance.
Class 2. Introduction to environmental risks in finance (1h30)
A) Transition risks (including legal risks) vs. Physical risks ; Shareholder vs. Stakeholder theory B) Estimation of environmental and climate priced risks, rewards and cost of capital : a) Stocks, b) Bonds. Impact of ESG metrics on the performance of the financial assets.
Class 3. Environmental financial risks 1/3 (Peter, 1h30)
Introduction to climate change modeling and attribution. Link between CO2 levels in the atmo- sphere and temperature rise. Regional climate scenarios. Difficulty of forecasting local events. GIEC scenarios and the associated uncertainty measures. The 2 degree scenario.
Class 4. Environmental financial risks 2/3 (Peter, 1h30)
From climate scenarios to integrated assessment models. Sector-based scenarios. The role of the energy sector. Asset stranding.
Class 5. Environmental financial risks 3/3 (Peter, 1h30)
The tragedy of the horizons. Evaluating the impact of physical and transition risks on the financial system. Evaluating physical risks along the production chain. Climate stress tests. Role of central banks.
Class 6. The need to build a resilient financial system for the environmental tran- sition (1h30)
Transforming the global economy to limit environmental impact of investments. Public initiatives. Re-directing private capital. Regulations. Environmental finance and development: World Bank Climate Finance initiatives and OECD Climate Finance. Corporate engagement. Etc.
Class 7. Financing green assets and measuring the climate impact of investments (1h30)
Financing green assets
Climate and Green bonds. Project bonds. Real estate labels. Fund labels. The problem of taxon- omy: how to define green assets?
Measuring the environmental and climate impact of investments
Definitions ESG/CSR/SRI. Environmental impact KPI. Metrics and tools. Case study with differ- ent scopes. Green funds and ETF. Towards environment-aware accounting.
Class 8. The practice of major players (1h30)
Different major market players (pension fund and insurances, asset managers, banks). Different practices: Exclusion, ESG integration, Corporate engagement, Impact investing. Toward a green optimal asset allocation (Practical application: Andersson, Bolton, Samama (2015)).
Class 9. Practitioner course: Integration of environmental risks into financial asset management (1h30)
Class 10. Practionner course: How do banks deal with environmental risks (1h30)
Class 11. The environment: A systemic stake for the financial system (1h30)
Public intervention to integrate the environment into finance. The frontiers of environmental finance: (i) Transparency and taxonomy (Task Force on Climate-Related Financial Disclosures, European Union High Level Group on Sustainable Finance, European Commission Action Plan), (ii) What role for prudential supervision and regulation authorities? (see debate on the Green supporting factor).
Class 12. Practionner course: Central Banks Network for Greening the financial system (1h30)