Through the case, students will investigate how the financial sector can be a driving force for a sustainable economy. This case study offers a tool to integrate sustainability into investment and credit analysis, which can be applied to any organisation across sectors. It also trains analysts to develop a holistic view of organisations by integrating the ‘separate’ worlds of financials and sustainability.
Integrated thinking in finance
“The driver for sustainable development is integrated thinking. Integrated thinking in finance requires, first and foremost, a mindset that is open to integrating social foundations and planetary boundaries with finance,” says Professor Dirk Schoenmaker, co-author of the case study.
He explains that the current economic system is based on linear growth and consumption, but that planetary resources are limited and running out. The dominant economic model focuses on maximising short-term financial gains for shareholders, and does not adequately address sustainability challenges. One of the biggest challenges for the financial sector is to take a more integrated and long-term approach and to truly add value for all stakeholders.
A shift in mindset
Economic models used in the modern business world were developed in an age when the matters of depleting natural resources and the amount of carbon emissions released were not yet seen as concerning. Instead, they only focus on labour and capital. Similarly, the traditional financial theory focuses on the near-term cash flows.
However, these models are no longer tenable, as now we see that not only economic, but also environmental, as well as social, concerns must be taken into account to ensure the success of a business in the long term. When it comes to finance and economics, it is this shift in mindset – from viewing business in terms of the market and immediate financial gains to something more enduring – that is at the heart of sustainable transformation.
This business case study helps to alleviate this issue by providing an actionable tool that helps to integrate sustainability into investment analysis, which analysts usually struggle with.
Master-level case study
The case study is suitable for master and MBA students in finance, economics, business, and sustainability. It is also suitable for the following electives: investments and lending, environmental economics, development economics, business models and strategy, and sustainability.
The case study is based on Principles of Sustainable Finance (2019), written by Dr Willem Schramade and Professor Dirk Schoenmaker, who are also the co-authors of this case. Their book combines theory, empirical data and policy examples to explain how the financial sector can be mobilised to counter the popular concept that finance is an obstacle to a better world. Prof. Schoenmaker is professor of banking and finance in RSM’s department of Finance, and recently wrote an opinion piece about financial support in Europe in this time of crisis. And Dr Willem Schramade is portfolio manager listed impact equities at NN Investment Partners, and guest lecturer in the sustainable finance course at RSM.
In addition to various other case studies, RSM also offers a free online course: Driving business towards the Sustainable Development Goals.