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Syllabus CEE 686


									                          ChE/CEE 686 – Sustainability Finance:

       How Economics, Finance, and Markets drive Sustainability Strategies

                                             WINTER 2012

Instructor: Prof. Peter Adriaens 174 EWRE Building. phone: 763-8032
Lectures: T,Th 10:30-12:00; 1200 EECS
Office Hours: T,Th 9:00-10:30 (and/or by appointment)

Catalog Description: Case studies focusing on how design, financing vehicles, and market drivers
interact to accelerate the adoption of sustainable technologies, processes and business models.
Development of environmental finance literacy through the study of public, private, and corporate
environmental initiatives and projects.

Course Objectives:
1. To give students a working knowledge of sustainability stakeholder issues.
2. To show students how to use life cycle, economic, and finance metrics to assess the viability of
   solutions for sustainability.
3. To familiarize students with current trends in engineering for sustainability.
4. To help students appreciate the interconnectedness between the adoption of solutions for
   sustainability and economic development.

Text: There is no single book that contains all of the material covered in this course. Throughout the
semester, I plan to draw material from several different books, from journal articles, and from my own
experience. We will also have some guest lectures throughout the semester. Many articles will be placed
on the course CTools site. I suggest students purchase the two books below (both available from for reasonable prices). Several of the course readings will come from these books.

Daniel C. Esty and Andrew S. Winston, Green to Gold: How Smart Companies Use Environmental
   Strategy to Innovate, Create Value, and Build Competitive Advantage, John Wiley, 2009.
Sonia Labatt and Rodney S. White. 2002. Environmental Finance*, Wiley Finance.

*Additional updated information is available at the Environmental Finance website

Grading: The final grade for this course will be based largely on a semester-long project. The completed
projects will consist of a report presented during class. There will also be a few homeworks that will
influence your final grade. Your participation and preparation for class will also be important.

Course Web Site: The CTools site will contain class notes, assignments, and articles to read.

Honor Code: This course will operate under the College of Engineering Honor Code. See for an explanation of the honor code. Suspected violations of the
Honor Code will be submitted to the Honor Council for resolution.

Project: You will work in teams to complete a sustainability project this term. The topic of the project
can be one of your own choosing. You will report on your project in class near the end of the term and
you will submit a written project report as well. This written report should be of similar quality and
scholarship to a manuscript that would be submitted for publication in an archival research journal.

                                         Course Description
“In a very fundamental way, sustainability depends on long-term economic success. It is the only way to
fund whatever degree of environmental commitment a company chooses to make” (Green to Gold, p. 251)

Modern capitalist World economies are characterized by business cycles over long time frames as the
result of social shifts and changes in the public mood (e.g. Figure describing Kondratieff waves), that
consist of alternating periods between high sectoral growth and periods of relatively slow growth. You
will note the coinciding engineering revolutions associated with the steam engine, railway steel, electrical
engineering, automotive, information technology, and….technology/processes for sustainability.

Starting in the 1800s, concerns about the environmental and social impacts of industry were reincarnated
many times before they were defined as ‘environmental sustainability’ by the Brundtland Commission in
1989. They were largely aspirations, despite the metrics of the UN Millenium Goals. Since then, we
have codified life cycle assessment (LCA) of product design, to identify the bottlenecks associated with
all the stages of a process from cradle-to-grave, moved sustainability practice in business to address the
triple bottom line, and even started a movement focusing on the needs of the ‘bottom of the pyramid’.
Both engineering and business schools are increasingly including social ventures as part of the
curriculum. In addition, from global warming to water constraints and the availability of raw materials, a
growing impetus exists for businesses to develop green strategies, governments to compete for and
develop green jobs, and the public to start holding businesses to account.

In the first decade of this century, sustainability has firmly positined itself into the next wave: CleanTech.
Indeed, since 2003, private and public investment in clean technologies (or green technologies) have sky-
rocketed globally, and the financial crisis of 2008-2009 has prompted a global move to greening the
economy. The US and China are competing for green economy leadership and CleanTech innovations.

“Throughout most of the 20th century, it ws assumed there ws an implicit tradeoff between economic
growth and an attractive environment. [Environmental Finance] demonstrates how to manage
environmental risk by utlizig a variety of environmental products and services.”

This course will discuss how the financial services industry, corporations, and policy makers are
executing on the practical implementation of sustainability, by not just considering energy and materials
use but also by constraining sustainability designs by financial and economic considerations. Public and
corporate investment, for profit and social venture funds are seeking economically viable models for
sustainable development. Thus, sustainability and solutions for climate change are not only bounded by
the life cycle of systems, but by cost-benefit analysis, financial needs, and busines models that make the
implementation of technologies and processes feasible and scalable. This course is intended for students
interested to develop solutions for sustainability as researchers, through the private sector as entrepreneurs
and in corporate R&D, by engagement with non-governmental organizations (NGOs) or as an investor.
                                   Course Schedule CEE/ChE 686


Date           Lecture topic                        Readings

                              Part I. Setting the Stage: Sustainability 2.0

Thurs          Course introduction
Tues 01/10     From idea to design to market        GTG, Ch 2: Natural Drivers of the Green Wave
               adoption of solutions for
Thurs          Stakeholders of Sustainability       GTG, Ch 3: Who’s Behind the Green Wave?
01/12          and the Green Economy: 1.            Social Cost of Carbon
Tues 01/17     Stakeholders of Sustainability:      GTG, Ch 1
               2. Corporations                      HBR, Sustainability Strategy
Thurs          Stakeholders of Sustainability:      CERES report: Climate Risk Disclosure in SEC
01/19          3. Non-Governmental                  Filings
Tues 01/24     Stakeholders of Sustainability:      Half Full or Half Empty: Water Risk and Financial
               4. The Financial Services            Institutions; The Equator Principles
               Industry                             (

                   Part 2. Financing Sustainability: What Does the Money Want?

Thurs          Tools of environmental             Center for Environmental Finance
01/26          finance: Helping to Answer         (
               the ‘How to Pay’ Question          CleanTech 2011 Report
Tues 01/31     Financing Sustainability: 1.       HBR, The Carbon Market
               Carbon Finance
Thurs          Carbon Finance Example:            John Morton, World Bank, Washington, DC
02/02          Methane Emissions
Tues 02/07     Financing Sustainability: 2.       Adriaens (2010): Investment, CleanTech. In The
             CleanTech Venture Finance           Business of Sustainability, Vol 2. Berkshire. Pub.
                                                 Ryan Waddington, President, Huron River Ventures,
                                                 Ann Arbor
Thurs 02/9   CleanTech Venture Finance           Investability analysis – how does risk capital work?
             Example: TBD                        How does it create value? Environmental Finance
Tues 02/14   Financing Sustainability: 3.        Seth Greenberg and Jamie Shea, Social Venture Fund,
             Social Ventures                     Ross School of Business;
Thurs        Financing Sustainability: 4.        Cy Jones, World Resources Institute
02/16        Nutrient Markets
Tues 02/21   Microfinance Example:               Gabrielle Harris, Planet Finance (China)
No class     Biodigesters in China
Thurs        Financing Sustainability: 5.        Tim Dekker, Vice President, LimnoTech, and Adjunct
02/23        Public Finance and EcoCities        Lecturer, Landscape Design Institute, Harvard
             Example                             University.

                                  Winter Break (02/25-03/05)

             Part 3. Design of Solutions for Sustainability: Tools and Applications

Tues 03/06   Metrics of Sustainability            GRI, WRR, WBCSD, etc…
Thurs        Corporate Sustainability             CERES: Corporate Governance and Climate Change
03/08        Reporting                            Consumer and Technology Companies
Tues 03/13   Tools of Sustainability: Life        McDonough et al (2003), Cradle-to-Cradle Design,
             Cycle Assessment                     ES&T reprint.
Thurs        Business Case Study 1.               Cradle-to-Cradle Design at Herman Miller: Moving
03/15        Herman Miller                        Toward Environmental Sustainability
Tues 03/20   Tools of Sustainability: 2. EIO-     Handouts from EIA
             LCA                                  (
Thurs        Business Case Study 2. The           The Making of a Paper Cup, ES&T feature
03/22        Paper Industry
Tues 03/27   Tools of Sustainability: 3. Cost-    Boardman et al., (2011), Introduction to Cost-
             benefit analysis                     Benefit Analysis. In Cost-Benefit Analysis: Concepts
                                                  and Practice.
Thurs        Business Case Study 3. Green         Cost-Benefit Analysis of Green Roofs (Clark et al.,
03/29        Roofs                                2008; Niu et al., 2010)
Tues 04/03   Lessons from Failures in             HBR 2009: FIJI Water and Corporate Social
             Sustainability 1. Consumer           Responsibility - Green Makeover or
             Products                             "Greenwashing"? (McMaster & Nowak)
Thurs        Lessons from Failures in             HBR 2008: Politics, Institutions and Project
04/05        Sustainability 2. Energy             Finance: The Dabhol Power Project (Loo et al.)
Tues 04/10   Presentations I (remote)
Thurs        Presentations II (remote)
Tues 04/17   Putting it all together: Design,     Course Review
             Economics, and Finance
*GTG: Green to Gold

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