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In the past year, sustainable finance as a theme and topic has soared in popularity across the globe.
In December 2019, the EU Parliament and Council voted on creating a framework that determines which activities can be considered sustainable, which in turn will ensure the organization hits its goal of achieving zero net emissions by 2050.
Economic institutions have been highly affected by this. On May 28 2020, economic affairs and environmental committees reached an agreement over the proposition, which set out specific instructions for private investors and financial market participants on how to be sustainable entities.
These include financing climate-friendly projects, transitioning to a circular economy and having to disclose the extent to which financial activities contribute to the EU’s environmental objectives.
But how can finance be sustainable?
According to the EU Parliament and Council, sustainable finance is a framework aimed at supporting the European Green Deal by channeling private investment for a smooth transition to a climate-neutral economy through environmental, social and governance (ESG) funds.
More specifically, private financial players in global markets are expected to consider possible environmental repercussions before making any investment or business decisions. This is a long-term ethical vision for the finance industry, which the EU hopes will lead to a more sustainable future for business.
While this vision might seem far-fetched, it’s been made apparent that the marketplace reacts positively to companies with high ESG ratings.
According to data by Morningstar, in the first few months of 2020 such companies have performed better than their less-sustainable peers despite the market plunge caused by the coronavirus pandemic.
These figures make sense in the context of the current health crisis, as the global economic system has never appeared more fragile in the eyes of the average consumer, and it is likely that this will lead to an accelerated change in the financial sphere, with an increasing number of financial players investing in sustainable practices.
This is likely going to affect business education too.
In April 2019, NYU Stern School of Business was among the first institutions to introduce the topic of sustainable finance into its curriculum with the short course Sustainable Finance and ESG Investing.
The four-day course is tailored to business executives interested in learning about the environmental and social challenges the global market is facing in the 21st century. It combines theoretical and practical teaching, and the students have the opportunity to invest real money and create an ESG portfolio through the school’s teaching fund, gaining invaluable hands-on experience and knowledge on the topic.
“There are a growing number of companies that are really embedding sustainability core to how they do business,” said Tensie Whelan, Professor at NYU Stern and director of the school’s Center for Sustainable Business.
She added: “What I was interested in is how to really help a business move beyond seeing sustainability as something they have to do but really to see it as something core to business strategy. So where better to do that than at a business school?”
Thomas Åstebro, Professor of Entrepreneurship at HEC Paris School of Management and Academic Lead of the environment-led project CDL Climate, makes the case for sustainability to become an integral part of b-school curricula rather than optional.
He says that business schools have a “duty” to be at the forefront of initiatives aimed at “making a meaningful contribution to society”, and therefore should offer a more environmentally-driven academic plan.
As research has proven that younger people have a higher concern for the environment, it is likely that the demand for sustainable finance education will increase in time as well.
Hopefully, business schools will step up to the plate and educate what is sure to a new, more sustainable generation of financial leaders.
Linda was a Content Writer at TopMBA, creating content about students, courses, universities and businesses. She recently graduated in Journalism & Creative Writing with Politics and International Relations, and now enjoys writing for a student audience.
Is Sustainability the Future of Finance Education?
By Linda Mohamed
Updated June 19, 2020 Updated June 19, 2020In the past year, sustainable finance as a theme and topic has soared in popularity across the globe.
In December 2019, the EU Parliament and Council voted on creating a framework that determines which activities can be considered sustainable, which in turn will ensure the organization hits its goal of achieving zero net emissions by 2050.
Economic institutions have been highly affected by this. On May 28 2020, economic affairs and environmental committees reached an agreement over the proposition, which set out specific instructions for private investors and financial market participants on how to be sustainable entities.
These include financing climate-friendly projects, transitioning to a circular economy and having to disclose the extent to which financial activities contribute to the EU’s environmental objectives.
But how can finance be sustainable?
According to the EU Parliament and Council, sustainable finance is a framework aimed at supporting the European Green Deal by channeling private investment for a smooth transition to a climate-neutral economy through environmental, social and governance (ESG) funds.
More specifically, private financial players in global markets are expected to consider possible environmental repercussions before making any investment or business decisions. This is a long-term ethical vision for the finance industry, which the EU hopes will lead to a more sustainable future for business.
While this vision might seem far-fetched, it’s been made apparent that the marketplace reacts positively to companies with high ESG ratings.
According to data by Morningstar, in the first few months of 2020 such companies have performed better than their less-sustainable peers despite the market plunge caused by the coronavirus pandemic.
These figures make sense in the context of the current health crisis, as the global economic system has never appeared more fragile in the eyes of the average consumer, and it is likely that this will lead to an accelerated change in the financial sphere, with an increasing number of financial players investing in sustainable practices.
This is likely going to affect business education too.
In April 2019, NYU Stern School of Business was among the first institutions to introduce the topic of sustainable finance into its curriculum with the short course Sustainable Finance and ESG Investing.
The four-day course is tailored to business executives interested in learning about the environmental and social challenges the global market is facing in the 21st century. It combines theoretical and practical teaching, and the students have the opportunity to invest real money and create an ESG portfolio through the school’s teaching fund, gaining invaluable hands-on experience and knowledge on the topic.
“There are a growing number of companies that are really embedding sustainability core to how they do business,” said Tensie Whelan, Professor at NYU Stern and director of the school’s Center for Sustainable Business.
She added: “What I was interested in is how to really help a business move beyond seeing sustainability as something they have to do but really to see it as something core to business strategy. So where better to do that than at a business school?”
Professor Whelan isn’t wrong.
While sustainable finance has been tackled by a number of business schools, such as BI Norwegian Business School, the University of Edinburgh Business School and KEDGE Business School, it is often in an elective class option, but is rarely offered as a core course.
Thomas Åstebro, Professor of Entrepreneurship at HEC Paris School of Management and Academic Lead of the environment-led project CDL Climate, makes the case for sustainability to become an integral part of b-school curricula rather than optional.
He says that business schools have a “duty” to be at the forefront of initiatives aimed at “making a meaningful contribution to society”, and therefore should offer a more environmentally-driven academic plan.
As research has proven that younger people have a higher concern for the environment, it is likely that the demand for sustainable finance education will increase in time as well.
Hopefully, business schools will step up to the plate and educate what is sure to a new, more sustainable generation of financial leaders.
This article was originally published in June 2020 .
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Linda was a Content Writer at TopMBA, creating content about students, courses, universities and businesses. She recently graduated in Journalism & Creative Writing with Politics and International Relations, and now enjoys writing for a student audience.
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