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Fitch Learning

Fundamentals of esg Investing

Oct 21—22, 2019
2 days
London, United Kingdom
GBP 1695 ≈USD 2078
GBP 847 per day

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Description

Responsible investing has seen a growth in interest from investors in recent years. Investors are increasingly looking for funds that offer environmental, social and governance (ESG) factors, which enhance the value of a fund’s performance. This introductory course reviews the key motivations behind the increased awareness of ESG investing and the risks and challenges this presents.

Key Learning Outcomes

  • Understand the role of ESG investing in the investment landscape
  • Understand the legal and compliance issues surrounding ESG investment
  • Understand the drivers behind the increased awareness of impact investing
  • Understand the environmental issues ESG seeks to address
  • Understand global trends and regulatory developments along with their financial analysis impacts

Content

Day One

What is ESG Investing?

The interest in responsible investing has now grown to such an extent the investment community has shifted from asking whether to adopt the ESG principles to how they should implement them. We will explore the developments in the areas of, and approaches adopted towards, responsible investing. At the end of this session participants will be able to:

  • Define responsible investing
  • Define and contrast
    • Ethical investing
    • Socially responsible investing
    • Thematic investing
    • Impact investing
    • Environmental, social and governance (ESG) investing
  • Understand the objectives of ESG
  • Explain the arguments for and against ESG in relation to affordability and effectiveness
  • Explain how ESG can create both risks and opportunities for investors
  • Understand the historical development of ethical and socially responsible and ESG investment

ESG Environmental Issues

We will examine the major environmental concerns that ESG investors seek to address, and the risks we will all face if we fail to address these concerns, by fully understanding the relationship between business activities and the environment. We will look at methods for undertaking an environmental analysis and the approaches that may be adopted when incorporating analysis findings into financial models. At the end of this session participants will be able to:

Define the environmental issues that ESG seeks to address, including:

  • Climate change
  • Limited natural resources
  • Pollution and waste
  • Nuclear energy
  • Sustainability

Along with the associates political, environmental and economic factors, participants will be able to:

  • Understand the relationship between business activities and the environment
  • Understand how environmental issues impact on investment decisions
  • Understand the risks of ignoring environmental issues in investment decisions
  • Understand approaches to environmental analysis at country, sector and company level
  • Understand how to incorporate environmental issues into financial models

ESG Social Issues

The aim of this session is to understand the social issues that exist and how these social issues impact on businesses, hence on investment decisions, so that we can incorporate the assessments into our financial models. At the end of this session participants will be able to:

  • Identify the relevant ESG social issues, including:
    • Human rights
    • Diversity and discrimination
    • Animal welfare
    • Consumer protection
  • Describe the relationship between social issues, companies and investors
  • Understand how social issues impact on investment decisions
  • Understand the risks of ignoring social issues in investment decisions
  • Understand how to incorporate social issues into financial models

ESG Corporate Governance Issues

This session will cover best practice in the area of corporate governance and how we may incorporate governance issues into financial models. At the end of this session participants will be able to:

  • Describe the potential issues and key impacts of inadequate corporate governance, including:
    • Management structure and diversity
    • Employee relations
    • Executive compensation
    • Employee compensation
    • Financial integrity and transparency
  • Describe the relationship between corporate governance, companies and investors
  • Understand how governance issues impact on investment decisions
  • Understand the risks of ignoring governance issues in investment decisions
  • Describe the Regulation and Governance surrounding ESG investing, including:
    • Stewardship Code
    • UK Corporate Governance Code
    • Walker Review
    • Turnbull Report
  • Recognize best practice in corporate governance
  • Understand how to incorporate governance issues into financial models

Benefits and Risks of ESG Investing

This section covers the potential risks of ESG investing and the opportunities that ESG investing may give rise to in respect of corporate performance. At the end of this session participants will be able to:

  • Explain the systematic nature of ESG issues in the context of:
    • Disclosure and regulation
    • Technological disruption
    • Demographic and social change
    • Globalization of value chains
    • Changes to the distribution and transfer of wealth
  • Describe the benefits to organizations of adhering to good ESG practices
  • Determine how to measure the impact of ESG investing on company performance
  • Assess the impact that ESG investing has on industry and company performance

Day Two

ESG Investment and Engagement

In this section, we look at approaches towards engagement and how engagement may create value for corporations and investors, both by enhancing returns and by controlling risk. We look at the advantages and disadvantages of individual and collective engagement, the enablers and barriers to successful engagement, and the ways in which a company can assess it engagement success. At the end of this session participants will be able to:

  • Define activism and engagement in the context of ESG investing
  • Describe how engagement may create value for companies and investors
  • Understand how to generate stakeholder engagement in ESG investing and risk management
  • Describe the features and purpose of an engagement plan and the typical steps taken for engaging with a company
  • Understand how to assess the performance of engagement activity, including benchmarking
  • Understand the Equator Principles as an ESG risk management framework for project finance

ESG Investment and Financial Analysis

In this section, we examine traditional investment analysis and ESG investment analysis, looking at how ESG may be integrated into a firm’s investment processes and into the investor’s decision-making processes. At the end of this session participants will be able to:

  • Compare traditional investment analysis to ESG investment analysis
  • Describe the aims of integrating ESG into a firm’s investment processes
  • Describe the approaches to integrating ESG into a firm’s investment processes
  • Identify the relationship between ESG analysis and investment decision making
  • Understand how to integrate ESG risks and opportunities into the traditional financial analysis of equity value

ESG Rating Agencies

It is estimated that around a third of all global professionally managed assets use ESG data within their investment decisions processes and, in this context, ESG rating agencies are becoming a major market force. In this section, we examine the workings of the ESG Credit Scoring systems of the major credit rating agencies and the impact that these ratings may have on companies and their clients. At the end of this session participants will be able to:

  • Explain how Credit Rating Agencies approach ESG Credit Scoring
  • Understand the importance of ESG rating agencies to companies and clients

ESG Investment and Portfolio Management

In this section, we examine the screening approaches that may be adopted in the management of an investment portfolio and the benefits and limitations of these approaches. We will also look at the distinction between the screening of individual companies and collective investments, along with the impact that ESG has on, and the different approaches that need to be adopted for, active and passive portfolio management. At the end of this session participants will be able to:

  • Describe approaches for integrating ESG into the portfolio management process
  • Contrast negative and positive screening and describe the roles that they have on investment selection
  • Describe the benefits and limitations of the main screening processes
  • Distinguish between ESG screening of individual companies and collective investments
  • Describe the impact of ESG on active and passive management

The ESG Market and Developing Trends

The ESG market continues to grow steadily. We will examine its estimated scale and growth, along with the key drivers behind that growth and the key challenges faced by the investment industry. In addition, we will discuss the challenges of applying ESG in different locations, along with the developing trends, themes and regulatory developments impacting this area. At the end of this session participants will be able to:

  • Describe the size and growth of the ESG market by asset class
  • Explain the key drivers behind the increased interest in ESG investing
  • Explain the key drivers and challenges for ESG among investment industry stakeholders
  • Describe the challenges of undertaking ESG analysis across different geographical regions and cultures
  • Recognize current and developing ESG issues, trends and themes
  • Identify global trends and regulatory developments along with their financial analysis impacts

Who should attend

This course examines the motivations behind ESG investing and the challenges involved in integrating this into existing investment processes and is designed for financial services practitioners across the industry looking to improve their understanding of ESG issues.

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Detailed Description

Next dates

Oct 21—22, 2019
2 days
London, United Kingdom
GBP 1695 ≈USD 2078
GBP 847 per day

How it works

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