Applied Sustainable Finance

A lot of new regulations have recently been agreed by European governments with a direct impact for portfolio managers, traders and bankers inside and outside the EU. The first such regulation comes into force early next year.

Simultaneously, new organisations, such as the European Sustainability Platform, come into being and other regulatory bodies are being given extra mandates to tackle climate change. The main such regulations are EU Taxonomy, EU Green Bond Standard, EU Climate Benchmarks and regulatory ESG disclosures.

The new regulations concern all of us and the Taxonomy has a wide scope and should be considered as having a global impact. This course will cover the different regulations, their deployment timelines and practical consequences.

• Trading
• Portfolio management
• Asset allocation
• Data science
• Financial engineering
• Quantitative analytics
• Quantitative modelling

• Climate Benchmarks: explain the difference between the two new types of benchmarks (CTB and PAB). The constraints in the construction of these benchmarks will be worked out in a practical example.
• Taxonomy: This is a classification tool developed by the Technical Expert Group of the European commission to elaborate on eligibility of certain economic activities. The EU Taxonomy can be seen as the backbone of the all climate-related regulations and directives in the EU.
• The Green bond standard will be explained.
• Financial and non-financial institutions have new ESG disclosures to fulfill. March 2021 will be the date where prospectuses will have to be updated and contain ESG disclosures.
• GHG Accounting: Greenhouse gas accounting (GHG) will be explained. This will allow the delegates to understand the difference between Scope 1, 2 and 3 CO2 emissions and their respective calculations.
• Climate Data: Using climate change data will be required in portfolio management. Several (open source and free-to-use) tools have been made available already. Practical examples will illustrate the incorporation of CO2 data in portfolio management & asset allocation.

No previous knowledge is required for this course.

Introduction to Regulations

• Climate Change: Regulatory Overview from Kyoto Protocol (1997), the Paris Agreement (2015) to EU Action Plan (2018)
• EU Action Plan and the mandates for the ESA’s (EBA, ESMA, EIOPA)

CO2 - Accounting

• Scope 1, 2 and 3
• Calculating the CO2 intensity of a financial portfolio
• Portfolio optimization with Climate targets
• CO2 Data

EU Taxonomy

• Detailed overview
• Taxonomy of Eligibility of a portfolio of shares and bonds (climate change mitigation and adaptation)
• DNSH rules

Benchmarks

• Amending the existing benchmark regulation
• Workshop on two new benchmarks: Climate transition benchmark (CTB) and Paris Agreement benchmark. (PAB)

European Green Bond Standard

ESG Disclosure Rules

Organisations

• Overview of the organisations involved in climate change