Smart sustainable Finance

The so-called "grand challenges" (e.g. climate change) and multiple disruptions (e.g. digitization) provide for a complex
and a fast changing environment of metropolitan areas as well as different industries. At the same time, due to technological progress in various fields as well as the necessity of a more sustainable way of life, especially in the so-called developed world, the implementation of smart city-concepts will require significant investments. Against this background, in order to be able to undertake these investments, it will be crucial to understand how to tap financial markets.

 

Learning Unit 7.1 Financial Markets & Institutions
Due to technological progress in various fields as well as the necessity of a more sustainable way of life, especially in the so-called developed world, the implementation of smart city-concepts will require significant investments. Against this background, in order to be able to undertake these investments, it will be crucial to understand how to tap financial markets.
Students will have the ability to:
• understand the relevance of financial markets and institution for finding adequate and innovative financing solutions for smart cities
• comprehend how different types of crisis can provide shocks to the financial system and negatively affect funding of smart cities
• choose from the adequate financing instruments from the different financial markets' segments
• know which financial institution can provide which financing solutions and services to smart cities
• understand how a changing regulatory framework for financial institutions might affect the financing possibilities for smart cities

Learning Unit 7.2 Sustainable Finance

The so-called "grand challenges" (e.g. climate change) and multiple disruptions provide for a complex and a fast changing environment of metropolitan areas as well as different industries. At the same time research shows that– if designed adequately smart cities can provide an ecosystem to foster sustainable innovation in order to tackle these various challenges. In addition, sustainable infrastructures in areas like mobility, energy supply, etc. go along with significant financing needs. Therefore, it will be of major importance to tap sustainable investments – as one of the fastest growing asset classes – in order to cover these financing needs.
Students will have the ability to:
• understand in what way smart cities provide an ecosystem to foster sustainable innovation
• comprehend why the concepts of sustainable development and sustainability management provide adequate responses for smart cities to the so-called "grand challenges" and multiple disruptions in a complex and fast changing environment
• understand in what way the concept of sustainable finance and its instruments enables smart cities to finance activities in the field of sustainable development (e.g. renewable energies)
• know that sustainable investments – as one of the fastest growing asset classes – provide a solid and growing funding source for sustainable finance-instruments
• comprehend the principles of sustainable innovation and entrepreneurship and how startups in this field can be successfully financed
• apply the acquired knowledge to different areas of application, such as smart infrastructure, smart energy, smart mobility, etc.

Learning Unit 7.3 Infrastructure & Project Finance
Smart cities will depend on sustainable and smart infrastructures. These infrastructures will only be realized if investors will provide the corresponding funding volumes. From an investors' point of view, the investments appraisal will be the basis for the investment decision. This needs to take into account the investments risk, return, liquidity and sustainability dimensions. If the respective investment appears to be favorable along these four dimensions founds are likely to be provided. A broad variety of financing instruments are available to provide the required funding.
Students will have the ability to:
• understand smart cities' needs for sustainable and smart infrastructures
• comprehend the fundamentals and specific characteristics of infrastructure investments
• apply investment appraisals and capital budgeting methods with infrastructure projects in smart cities
• differentiate between the different concepts and instruments for financing infrastructure projects in smart cities
• conduct financial (statement) analysis and calculate financial ratios for infrastructure projects and understand the relevance of ratings
• apply risk management instruments to infrastructure projects in smart cities

Learning Unit 7.4 Digitalization, Financial Innovation & Financial Tech.
Digitization and artificial intelligence lead to significant disruptions not only in the financial industry but also in other areas of society and life. With respect to smart cities this background provides for risks as well as for opportunities (e.g. new products and business models based on technological and social innovations). It is therefore crucial to be able to identify these risks and opportunities, to understand their respective implications and to find adequate means to manage them proactively.
Students will have the ability to:
• know why smart cities serve as ecosystems for innovation
• understand how technological disruptions like digitization and artificial intelligence provide for significant challenges as well as for major opportunities for smart cities
• comprehend in what why digitization and artificial intelligence and related technologies (e.g. blockchain) foster financial innovation
• understand in what way innovative FinTechs and InsurTechs are challengers for traditional financial institutions and provide new financing solutions to smart cities and their stakeholders
• comprehend why – driven by information technology – different areas of life/society/economy and industries successively converge (e.g. payments with energy and/or mobility services) and what the related implications are