Finance professionals are having to pay close attention to issues of sustainability, with the pressure for corporations to demonstrate their responsible credentials growing. Finance departments increasingly need to understand and assess environmental, social and governance (ESG) risks and opportunities, to improve the company’s financial position.
Business schools have an important role to play in the development of sustainable finance. It is one of the most hotly debated subjects among participants in the Finance for Executives course at INSEAD in France and Singapore. “We believe and convey the message that sustainability initiatives need to be genuine and integrated with the value-creation goal and operational plans of the companies, rather than cheap talk,” says Lily Fang, program director.
But there are very few executive courses in finance that include sustainability prominently, given they are usually very short programs. Instead, the course at INSEAD, which runs for ten days in France and 9 in Singapore, is keenly focused on helping senior corporate executives without a finance background to drive value creation in their company – typically heads of regions, business units or functions.
The program covers all the key topics in corporate finance, such as capital budgeting, cash flow management, valuation, capital structure, raising capital, mergers and acquisitions. Crucially, participants learn how to use financial language and knowledge to do their job more effectively.
“We have a really strong focus on how you use the financial concepts and tools to translate insights into actions in terms of setting KPIs and mobilizing entire organizations to move in the direction of creating value, rather than just pursuing short-term profit,” says Fang, a professor of finance.
No advanced quantitative skills required
Increasingly, it is digital transformations that are creating value for companies. While executive courses in finance are seeking to teach the fundamentals of corporate finance, the impact of digital transformation on firms’ overall operations and business models naturally influences how their finance departments are adapting as well.
To this end, the Fundamentals of Finance for the Technical Executive course at MIT Sloan School of Management in Massachusetts incorporates real-world examples from companies whose finance systems are squarely operating in the midst of digital transformations and uncertainty.
The course is for non-finance leaders who need to apply financial principles to project evaluation and resource allocation, such as chief information officers, head scientists, project managers and engineering vice presidents.
One of the most valuable takeaways is the ability to understand how corporate funding decisions are made by learning the basic principles of accounting and financial decision making. Faculty provide refreshers on how to read financial statements and balance sheets, for example. No advanced quantitative skills are required.
Hands-on exercises and group discussion enable participants to determine the potential economic value of projects, with tools such as discounted cash flow valuations.
“Participants leave the two-day course with a better understanding of the overall ﬁnancial underpinnings, and are empowered to be more involved in the ﬁnancial discussions which drive business decisions,” says Peter Hirst, senior associate dean of executive education at MIT Sloan.
They also become better advocates for their departments and are more effective at their jobs as a result.
Executive courses in private equity, investment management, and more
In the UK, London Business School has a large portfolio of executive education courses covering niche areas of finance, such as private equity and strategic investment management, which can help driven professionals to pull off a career transition or take the next step towards a promotion.
“Participants get a unique experience that propels them in their career and builds a diverse, professional network of business leaders,” says Helen Kerkentzes, associate dean for executive education at LBS.
There is a Certificate in Finance which enables participants to select any four programs from the portfolio to meet their specific goals and needs, supported with one-to-one executive coaching.
For instance, the Exploiting Disruption in a Digital World program explores how technology is transforming traditional business practices and shows participants how to harness that change to benefit their organization, no matter the sector.
“All of our programs are delivered by faculty who are experts in their field; this means that our programs are relevant, up-to-date and are backed by the latest research,” says Kerkentzes.
The participants in the short finance courses are usually senior professionals, some of whom are self-employed, while others will be looking to deepen their financial skills to progress within a corporation.
“Many of our participants are supported by their employers, who recognize that investing in the knowledge and skills of their employees benefits the broader organization as well,” says Kerkentzes.