Executive Certificate in ESG & Sustainability in Finance

I arranged a coffee meeting with Duncan Hughes to discuss our upcoming course, Executive Certificate in ESG & Sustainability in Finance. Take a look at conversation excerpts to see why Duncan and I believe the course offers an unmissable opportunity to gain a thorough, practical understanding of ESG and sustainability’s crucial economic, financial, and regulatory aspects.

To start off, could you tell us a bit about your (training) experience and expertise in relation to this course?

Certainly – I’ve been on both the “sell” and “buy” sides of financial and capital markets, that is in both commercial and investment banking on one hand and investment management on the other. So, I’ve been involved in the structuring and arranging of projects, such as renewable energy – principally solar and wind power – via capital markets and loan syndications as well as being a fund manager responsible for implementing ESG overlay programmes for asset owners.

In recent years I’ve also been involved in the design of circular economy models as well as delivering ESG and capacity building training programmes to major international financial institutions.

What’s happening in the market that makes this course so relevant right now?

Aside from the evident hazards from climate change that are increasingly manifesting themselves on our doorsteps, I think that there are two key dimensions that are creating an imperative for understanding more about ESG in Finance.

Firstly, we’re at or past the turning point at which ESG issues – and particularly those relating to global warming – are being priced in global markets. This means that no constituency can ignore sustainability, irrespective of their standpoint on climate, localised pollution, social issues or governance.

Secondly, regulatory and legislative requirements are tightening by the month and will – to a very great extent – be based around ESG disclosures which in turn requires enormous amounts of supporting data which many organisations are only just starting to build the capacity to gather and analyse.

Can you share some of the major topics & themes covered in the course?

The programme is pretty comprehensive and covers all of the important dimensions of environmental, social and governance factors as they apply to finance including, of course, climate change and global warming but also other important sustainability themes surrounding social factors such as quality education, clean water and decent housing which are also critically important for sustainable socio-economic systems.

In particular, we look at the bifurcation of funding sources for climate change – which is now quite well covered by Green Bonds and instruments with a similar basis in emissions reduction – on one hand, and purely social objectives – which is more covered by a combination of national government, multi-lateral development banks and philanthropists who are not seeking a financial return on investment.

We also look at governance and its importance in finance and examine a number of case studies which exemplify the key areas that need to be scrutinised and challenged in corporate governance and more generally.

It’s important to recognise, however, that there is very often an overlap among environmental, social and governance factors and that, in many scenarios, it would be a mistake to consider only one element individually. A good example of this is the BP Deepwater Horizon disaster in 2010 which had a devastating impact on the local environment but also a social impact from the point of view of the fatalities and injuries in the explosion and the loss of income for local citizens. Many analysts also criticise the poor governance of BP before and during the crisis.

How would you describe the blend of theory vs practical applications within the programme?

An important characteristic of ESG and sustainability is that each and every scenario, company and project has its own unique characteristics and consequently we use case studies throughout the programme to exemplify the application of key technical points to real-life scenarios.

That said, it is important to cover the underlying theory in sufficient detail. For example, the principal scientific points behind climate change as well as the principal legal and regulatory frameworks such as the EU’s Corporate Social Responsibility Directive and the EU Taxonomy of sustainable activities since these will form the basis for global ESG standards going forward.

What would you say are the most important elements of the course?

There are some important areas that we cover which really transcend a basic understanding of ESG and sustainability as it applies to finance. Among these are an understanding of the nature of green and sustainability-linked investments, including those based on project finance – which is substantially different to “normal” corporate finance, and has very specific considerations from the perspectives of credit and risk analysis.

Another is the recognition of very different investor constituencies and funding sources across the ESG spectrum, ranging from fully commercial transactions through to those that don’t have an immediate economic impact but are critical to the long run sustainability of socio-economic systems; improving educational opportunities, particularly for underrepresented cohorts, would be a very good example.

Finally, there are some really problematical areas and considerations which are going to remain difficult to resolve but are nonetheless crucial in our evolution to a truly sustainable future. These include Transition Finance – such as that to support the migration from coal to the use of natural gas, even though methane is a source of greenhouse gases when burnt – and the development of Circular Economies which require fundamental changes to existing business models. There are viable solutions that can be engineered but it really does require a radical change in thinking which we seek to catalyse in the programme.

Who would benefit the most from attending this course?

Really, anyone in “finance” in its broadest definition. Bankers, investment analysts, fund managers, but also accountants and lawyers. Actually, it’s hard to think of any constituencies in banking and financial market that aren’t going to be profoundly impacted by the evolution of ESG and sustainability regulation, legislation and market practices in the coming years.

Looking ahead, what are some of the issues in the sector that you foresee, and how will this course help participants address them?

• • The ESG and sustainability agenda is evolving quickly and not on a predictable path as evidenced by situations such as the on-going litigation in some US states against sustainability objectives set by state pension schemes which contrasts with successful cases being brought to court in Europe – including the UK – which are creating important legal precedents strongly supportive of ESG objectives.

• • Mandatory compliance with more stringent regulations which are currently principally based around disclosure and reporting requirements but will inevitably tighten withnecessary positive ESG measures and policies aligned with the United Nations’ Sustainable Development Goals and the United Nations Framework Convention on Climate Change agreement to limit global warming to no more than 1.5°C greater than in pre-industrial times.

• • Increasing uninsurability of assets, for example, Californian Real Estate – as the old saying goes: “if it isn’t insurable, it isn’t bankable (or investible)”.

• • Current legislation is based around misrepresentation & fraud (greenwashing) and tortious obligations – for example, pension funds’ responsibilities towards the environment and communities – but is likely to evolve quite dramatically over the coming months and years across both criminal and civil legal jurisprudence.

Lastly, what practical skills and knowledge does the course aim to equip participants with?

Participants will develop a deep knowledge of ESG and sustainability risk factors as well as financial instruments based around environmental and social goals but also a practical understanding of the real-life challenges – of which there are many – that must be addressed if meaningful progress is to be made towards a more sustainable future.

Fast track your ESG and Sustainability in Finance knowledge

Don’t miss the chance to enrich your expertise in ESG & Sustainability in Finance! Enrol today in our September Executive Certificate in ESG & Sustainability in Finance course. Download the detailed course prospectus for more information. Get in touch with any queries and to enrol: call +44 (0)204 551 8568 / email info@thezishi.com.