Sustainable Finance and Networks
Sustainable Finance and Networks
Master-level course, Fall semester.
Sustainable finance is today a strategic area of investment for both private and public institutions. Our society faces sustainability challenges that are unprecedented and interconnected, ranging from environmental issues (e.g. climate change, biodiversity loss, pollution), to social issues (e.g. mounting inequality) and health issues (e.g. new pandemic risks).
Addressing these challenges requires to look into how and where investments flow: How much of the funds managed by financial institutions are invested in activities that worsen climate change or biodiversity loss? How much of them is actually aligned with sustainability objectives?
Financial technologies (equities, bonds, derivatives, crypto, etc.) play a crucial role not only for the well-functioning of the modern economy but also for the management of these challenges. Depending on how financial technologies are used, they can either support the good management of these challenges, or, instead they can exacerbate their mismanagement.
The discipline of financial networks is key to make this difference: three main effects propagate through networks of financial contracts: 1) portfolios' risk (e.g. systemic risk, climate risk); 2) impact of portfolios on social and climate objectives 3) creation and redistribution of wealth. Many important (un)intended effects and externalities (positive or negative) can only be captured by a financial network analysis.
Throughout this course, students will learn to master key notions in sustainable finance and financial network models. During the practical exercises the students will also acquire an operational know-how to analyze empirical financial networks from the perspectives of sustainability-related risks and impact (e.g. climate, biodiversity).
Additional information: The final grade will be the weighted average of the following
- 10% class active participation
- 50% individually submitted assignments
- 40% final project essay and presentation
More information and material on OLAT
- Bressan, G., Monasterolo, I. and Battiston, S., 2022. Sustainable investing and climate transition risk: a portfolio rebalancing approach. The Journal of Portfolio Management, forthcoming, earlier version ssrn
- Battiston, S., Monasterolo, I., Riahi, K. and van Ruijven, B.J., 2021. Accounting for finance is key for climate mitigation pathways. Science, 372(6545), pp.918-920.
- Alessi, L., Battiston, S. and Melo, A.S., 2021. Travelling down the green brick road: a status quo assessment of the EU taxonomy. Macroprudential Bulletin, 15.
- Battiston, S., Mandel, A., Monasterolo, I., Schütze, F. and Visentin, G., 2017. A climate stress-test of the financial system. Nature Climate Change, 7(4), pp.283-288.
- S. Battiston, G. Caldarelli, M. D'errico, and S. Gurciullo, “Leveraging the network : a stress-test framework based on DebtRank", Statistics and Risk Modeling, forthcoming, ssrn 2571218, pp. 1-33, 2016.
- Battiston, S., Caldarelli, G., May, R.M., Roukny, T. and Stiglitz, J.E., 2016. The price of complexity in financial networks. Proceedings of the National Academy of Sciences, 113(36), pp.10031-10036.
- Schuldenzucker, S., Seuken, S. and Battiston, S., 2020. Default ambiguity: Credit default swaps create new systemic risks in financial networks. Management Science, 66(5), pp.1981-1998.
- Battiston, S., Puliga, M., Kaushik, R., Tasca, P. and Caldarelli, G., 2012. DebtRank: Too Central to Fail? Financial Networks, the FED and Systemic Risk. Scientific Reports, 2, pp.541-541.
- Vitali, S., Glattfelder, J.B. and Battiston, S., 2011. The network of global corporate control. PloS one, 6(10), p.e25995.