Prof Christopher Polk

This course is available on the Double Master of Public Administration (LSE-Columbia), Double Master of Public Administration (LSE-University of Toronto), MPA Dual Degree (LSE and Columbia), MPA Dual Degree (LSE and Hertie), MPA Dual Degree (LSE and NUS), MPA Dual Degree (LSE and Sciences Po), MPA Dual Degree (LSE and Tokyo), MSc in Finance (full-time), MSc in Finance (full-time) (Work Placement Pathway), MSc in Finance (part-time), MSc in Finance and Economics, MSc in Finance and Economics (Work Placement Pathway), MSc in Finance and Private Equity, MSc in Finance and Private Equity (Work Placement Pathway), Master of Public Administration and Master of Public Policy. This course is not available as an outside option.

Students must take one of the following: FM423/FM423E Asset Markets, or FM436 Financial Economics, or FM429 Asset Markets A, or FM431M/FM431L Corporate Finance A, or FM473M/FM473L Financial Markets, or FM474M/FM474L Managerial Finance.

Students who can demonstrate comparable background may be granted an exemption from this requirement at the discretion of the course leader.

This course provides a conceptual foundation in sustainable finance and impact investing along with a clear understanding of the empirical facts associated with how sustainable finance and impact investing affect firm and fund performance in conjunction with the response of investors. Using a blend of readings, lectures, cases, and discussions, participants will learn to critically assess the actions of investors and firms with regards to sustainable finance and impact investing, including both motivation and resulting consequences.

Topics addressed will include corporate ESG (Environmental, Social, and Governance) investing, climate finance, and various impact investing topics, including micro finance. Participants will take away from the course a solid understanding of 1) the evolution of sustainable finance and impact investing from niche field to mainstream; 2) the variety of ways in which sustainable investing and impact investing manifests itself in practice, and 3) the tools, models and frameworks behind sustainable finance and impact investing.

30 hours of seminars in the LT.

Case studies and homework assignments will help communicate and develop understanding of course concepts.

• Friedman, Milton, 1970, “A Friedman doctrine: The social responsibility of business is to increase its profits,” The New York Times Magazine, September 13, 1970.
• Heinkel, Robert, Alan Kraus, and Josef Zechner, 2001, “The effect of green investment on corporate behavior,” Journal of Financial and Quantitative Analysis 36 431–449.
• Hong, Harrison and Marcin Kacperczyk, 2009, “The price of sin: The effects of social norms on markets,” Journal of Financial Economics, 93 (1), 15–36.
• Landier, Augustin and Vinay B. Nair, 2009, Investing for change: Profit from responsible investment, Oxford University Press.
• Martin, Ian and Robert Pindyck, 2015, “Averting Catastrophes: The Strange Economics of Scylla and Charybdis,” American Economic Review.
• Oehmke, Martin and Marcus Opp, 2020, “A Theory of Socially Responsible Investment,” Working Paper, LSE and Stockholm School of Economics.
• Pastor, Lubos, Robert F. Stambaugh, and Lucian Taylor, 2021, “Sustainable Investing in Equilibrium,” Journal of Financial Economics forthcoming.
• Pedersen, Lasse Heje, Shaun Fitzgibbons, and Lukasz Pomorski, 2021, “Responsible Investing: The ESG-Efficient Frontier,” Journal of Financial Economics forthcoming.

Continuous assessment (100%).

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