FIN 454: Sustainable Investing

Contents
Can investing make the world a better place? Can financial markets drive real change in areas like climate action and social equality? And how is value created through investing in general – and through sustainable investing in particular? This course introduces students to the dynamic and highly relevant field of sustainable investing, where financial decision-making meets environmental and social objectives. Once considered a niche approach, sustainable investing has become mainstream in (parts of) the global investment industry. At the same time, it has also become increasingly contested. Does sustainable investing truly deliver on its promises? Can it create both financial returns and positive societal outcomes? And how could we distinguish the zoo of buzz words, such as green investing, carbon-neutral investing, socially responsible investing, and ESG investing? The course provides a rigorous foundation for critically assessing these questions. Students examine the key drivers that have brought sustainable investing to the forefront of public debate, as well as the controversies surrounding it, including recent political and regulatory pushback in parts of the United States. To build this understanding, the course introduces the investment eco­system as a whole and covers the core principles of portfolio management and investment theory. Active and passive asset management strategies are examined and compared not only from a theoretical perspective, but also through real-world financial products and professional investment approaches. In parallel, the course presents major sustainability concepts and frameworks and explores how they are today integrated into the investment process. Combining academic rigor with practical relevance, the course offers both a conceptual foundation and hands-on insights into professional investing. By the end of the course, students will be equipped to evaluate whether and how sustainable investing can generate both financial value and positive social or environmental impact. Case studies, an investment game and other interactive formats will support the learning objectives. This course is ideal for students who want to understand how modern financial markets work, how sustainability is impacting investment practice, and how to critically evaluate one of the most important debates in contemporary finance. It is particularly relevant for students interested in careers in asset management, banking, consulting, policy, or sustainability.

Learning outcomes
After participating in this course, students should be able to:

• Identify key players in the investment management industry and explain their roles and functions.
• Understand the fundamentals of portfolio theory, asset management structures, and processes. Compare and contrast active vs. passive asset management strategies, critically analyzing their advantages and disadvantages.
• Decode sustainability in finance and explore the wider sustainability eco­system – move beyond buzzwords like “green investing” and “carbon-neutral portfolios” to critically assess whether sustainable investing is making a difference – whether it drives real-world change or is simply greenwashing. Understand the contributions of various stakeholders and detailing the impact of sustainable investing also by assessing real-world examples.
• Learn to evaluate ESG data, assess different approachesto sustainable investing, applying these frameworks to real-world case studies and investment strategies. Explain and compare actual financial products with respect to their investment approach and their sustainability focus (also finally in form of an investment simulation of real life products)
• Review and evaluate the impact of regulatory and self-regulatory initiatives. Navigate the current debate around sustainable investing, considering its ethical, economic, and regulatory dimensions.

Necessary prerequisites
Semester 4 or higher

Recommended prerequisites
Introductory course in finance and econometrics is strongly recommended.

Examiner Performing lecturer

Prof. Dr. Alexandra Niessen-Ruenzi Dr. Hartmut Graf