Postgraduate Course: Climate Risk and Investment Alignment (CMSE11488)
Course Outline
| School | Business School |
College | College of Arts, Humanities and Social Sciences |
| Credit level (Normal year taken) | SCQF Level 11 (Postgraduate) |
Availability | Not available to visiting students |
| SCQF Credits | 10 |
ECTS Credits | 5 |
| Summary | The course provides students with an understanding of emerging financial sector practices related to the climate transition. Two principal areas of focus are the management of risks associated with climate change and the alignment of assets and portfolios with climate goals agreed by governments. The course will provide an overview of the concepts, initiatives and regulations related to this topic (e.g., International Sustainability Standards Board S2), and the ideas necessary to critically evaluate and implement these practices. |
| Course description |
The course provides students with an understanding of principal concepts emerging within the financial sector to take climate change into account in decision-making and portfolio management. Across private sector financial actors, two principal areas of focus are the management of risks and opportunities associated with climate change and the alignment of assets and portfolios with climate goals agreed by governments.
There is a significant division between approaches that follow conventional capital allocation methods (where capital is allocated to projects that offer the most competitive risk-adjusted returns) and novel approaches where capital is channelled towards Net Zero opportunities via taxonomies and investor alignment strategies.
The course develops practical knowledge for implementing these practices. Students will develop the critical thinking skills to evaluate whether emerging practices are fit for purpose for use by different financial actors with a focus on pension funds and asset managers.
The course builds on knowledge developed elsewhere in the Programme. It aims to provide a practical investment context for knowledge gained in courses focused on climate policy, carbon accounting and energy and infrastructure finance.
Outline Content
1. Overview of the climate change investment and finance challenge - scale of capital required and required deployment.
2. Understanding the climate investment value chain: from asset owners to asset managers, companies, and projects.
3. Overview of two contrasting logics for climate finance and investment decision making (conventional return-based vs portfolio alignment).
4. Introduction to new investment-related climate regulations, such as the UK TCFD fund regulations (requiring portfolio climate scenarios and carbon reporting), the EU CSRD, SFDR and Taxonomy, IFRS ISSB S2 corporate accounting standards among others, and how they relate to the climate finance logics.
5. Critical evaluation of the alignment agenda and consideration of effective strategies to accelerate capital allocation.
6. Case studies of capital allocation to climate solutions at the project at portfolio levels, including a group project to build a climate solutions portfolio which meets new regulatory climate reporting requirements, with critical evaluation.
Student learning experience
The course will be taught through weekly lectures and will include a case study, group exercise or other interactive discussion components. The course will also include a small number of guest speakers. This provides useful real-world insights alongside the more theoretical aspects of the Programme.
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Course Delivery Information
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| Academic year 2025/26, Not available to visiting students (SS1)
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Quota: None |
| Course Start |
Block 2 (Sem 1) |
Timetable |
Timetable |
| Learning and Teaching activities (Further Info) |
Total Hours:
100
(
Lecture Hours 10,
Seminar/Tutorial Hours 5,
Programme Level Learning and Teaching Hours 2,
Directed Learning and Independent Learning Hours
83 )
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| Assessment (Further Info) |
Written Exam
0 %,
Coursework
100 %,
Practical Exam
0 %
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| Additional Information (Assessment) |
70% coursework (group) - Assesses all course Learning Outcomes
30% coursework (Individual) - Assesses course Learning Outcomes 1, 2 |
| Feedback |
Formative: Feedback will be provided throughout the course.
Summative: Feedback will be provided on assessments within agreed deadlines. |
| No Exam Information |
Learning Outcomes
On completion of this course, the student will be able to:
- Describe and critically evaluate the challenges and opportunities in using climate risk and alignment approaches in low-carbon, resilient investment.
- Understand and critically discuss the different types of financial institutional and individual investors: their business models, institutional framework, incentive structures and the role of low carbon/green investment opportunities on their dashboards.
- Understand and apply best practice for developing an investment proposal taking into account climate change impact outcomes.
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Reading List
2DII. Tracking Real World Emissions Reductions The Missing Element in Portfolio Alignment and Net-Zero Target-Setting Approaches.; 2022. https://2degrees-investing.org/wp-content/uploads/2022/10/2DII_Real_final.pdf
Climate Finance Leadership Initiative. Unlocking Private Climate Finance in Emerging Markets: Private Sector Considerations for Policymakers.; 2021. https://assets.bbhub.io/company/sites/55/2021/03/CFLI_Private-Sector-Considerations-for-Policymakers-April-2021.pdf
Diener J. Impact case or impact washing? An analysis of investors strategies to influence corporate behavior. Sustainability accounting, management and policy journal (Print). 2023;14(5):1002-1021. doi:10.1108/SAMPJ-02-2022-0088
GFANZ. Measuring Portfolio Alignment: Driving Enhancement, Convergence, and Adoption.; 2022. https://assets.bbhub.io/company/sites/63/2022/09/Measuring-Portfolio-Alignment-Enhancement-Convergence-and-Adoption-November-2022.pdf
IIGCC. Net Zero Investment Framework Implementation Guide.; 2021. https://www.iigcc.org/resources/net-zero-investment-framework-implementation-guide
Kölbel JF, Heeb F, Paetzold F, Busch T. Can Sustainable Investing Save the World? Reviewing the Mechanisms of Investor Impact. Esty D, Cort T, eds. Organization & environment. 2020;33(4):554-574. doi:10.1177/1086026620919202
TCFD. TCFD Overview 2022.; 2022. https://assets.bbhub.io/company/sites/60/2022/12/tcfd-2022-overview-booklet.pdf
NGFS. Climate Scenarios for Central Banks and Supervisors.; 2023. https://www.ngfs.net/sites/default/files/medias/documents/ngfs_climate_scenarios_for_central_banks_and_supervisors_phase_iv.pdf |
Additional Information
| Graduate Attributes and Skills |
Practice: Applied Knowledge, Skills and Understanding
After completing this course, students should be able to:
Apply creative, innovative, entrepreneurial, sustainable and responsible business solutions to address social, economic and environmental global challenges.
Work with a variety of organisations, their stakeholders, and the communities they serve - learning from them, and aiding them to achieve responsible, sustainable and enterprising solutions to complex problems.
Communication, ICT, and Numeracy Skills
After completing this course, students should be able to:
Convey meaning and message through a wide range of communication tools, including digital technology and social media; to understand how to use these tools to communicate in ways that sustain positive and responsible relationships.
Critically evaluate and present digital and other sources, research methods, data and information; discern their limitations, accuracy, validity, reliability and suitability; and apply responsibly in a wide variety of organisational contexts.
Cognitive Skills
After completing this course, students should be able to:
Be self-motivated; curious; show initiative; set, achieve and surpass goals; as well as demonstrating adaptability, capable of handling complexity and ambiguity, with a willingness to learn; as well as being able to
demonstrate the use digital and other tools to carry out tasks effectively, productively, and with attention to quality.
Knowledge and Understanding
After completing this course, students should be able to:
Demonstrate a thorough knowledge and understanding of contemporary organisational disciplines; comprehend the role of business within the contemporary world; and critically evaluate and synthesise primary
and secondary research and sources of evidence in order to make, and present, well informed and transparent organisation-related decisions, which have a positive global impact.
Identify, define and analyse theoretical and applied business and management problems, and develop approaches, informed by an understanding of appropriate quantitative and/or qualitative techniques, to explore and solve them responsibly.
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| Keywords | Not entered |
Contacts
| Course organiser | Dr Craig MacKenzie
Tel:
Email: Craig.MacKenzie@ed.ac.uk |
Course secretary | Mr Pete Park
Tel:
Email: Pete.Park@ed.ac.uk |
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