UK invests £10 million in a new national green finance research centre

The UK is investing £10 million in a new national green finance research centre that will advise lenders, investors and insurers to make environmentally sustainable decisions

Working with finance professions, such as the Chartered Bankers Institute and Chartered Financial Analysts UK, the UK Centre for Greening Finance and Investment (CGFI) will help to ensure that every financial decision takes climate change into account and supports a greener global economy.

Using information and data, financial institutions will be able to make choices that contribute to a more sustainable planet. It will help them to shift money away from risky activities that harm the environment, such as coal-fired power and deforestation and move towards activities that are less harmful, such as renewable power and sustainable agriculture.

Leeds and London hubs

New hubs in Leeds and London will support companies and start-ups to commercialise products that can green global finance. They include tools that measure storm and flood risk facing properties and pollution created by companies.

Other institutions will form part of the new national centre, including:

• University of Bristol
• University of Leeds
• University of Reading
• Imperial College London
• The Alan Turing Institute
• Satellite Applications Catapult
• Science and Technology Facilities Council (STFC).

The centre will be funded by UK Research and Innovation (UKRI) while being led by the University of Oxford and work will begin in April.

Energy and Clean Growth Minister Anne-Marie Trevelyan said:

“Climate change is the biggest issue that we need to tackle to protect our planet for our children and grandchildren. While the government has invested billions of pounds so we can end the UK’s contribution to climate change, we will not reach our net-zero target without mobilising private capital and unleashing the power of the free market.

“The UK Centre for Greening Finance and Investment in London and Leeds will encourage financial services to turn the tide of their investments and focus on sectors and companies that have a smaller environmental footprint. Doing so will support industries and businesses to develop clean green innovations, creating thousands of jobs across the country – ensuring we build back greener.”

Economic Secretary to the Treasury and City Minister John Glen said:

“We’ve set the ambition for net zero – now we must ensure our financial sector has the tools and information to get behind the transition. We’re already improving the climate data available by mandating Task Force on Climate-related Financial Disclosures-aligned disclosures across the economy and implementing a green taxonomy.

“This new centre will advance the UK’s leadership in green finance and bring forward the day when firms can access environmental data and analytics for every place on Earth, past, present and future.”

Sarah Breedan, the Bank of England’s executive sponsor for work on climate change said:

“Integrating climate and environmental data and analytics into decision making will allow financial institutions to identify, measure and manage the financial risks and opportunities from climate change, and so support the Bank’s objective to ensure the financial system is resilient to these risks and supportive of the transition to net zero. The Bank of England is delighted that the CGFI will support firms’ efforts in this important area, including for the forthcoming Climate Biennial Exploratory Scenario.”

Professor Sir Duncan Wingham, Executive Chair of the Natural Environment Research Council (NERC), part of UKRI, said:

“Good data and analytics – based on the best science – is fundamental to understanding and managing climate and environmental risk exposure in support of the transition to a more sustainable global finance system.

“This investment by NERC and Innovate UK will enable improved access to, and understanding of, physical and transition climate and environmental risks as they impact both sides of the balance sheet. It will help the finance sector to support delivery of a low carbon economy and the recovery and restoration of our natural environments.”

Dr Ben Caldecott, Director and Principal Investigator of CGFI and the Lombard Odier Associate Professor of Sustainable Finance at the University of Oxford, said:

“CGFI will allow financial institutions to access scientifically robust climate and environmental data for any point on planet Earth now and projected into the future, and for every major sector of the global economy. Doing so will create public goods and unlock innovation. The UK is perfectly placed to transform the availability of climate and environmental data in finance. We have world-leading capabilities in all the various areas that need to come together to solve the problem.

“The market for Environmental, Social, and Corporate Governance data, of which climate and environmental data is a large part, is expected to reach US$1 billion in 2021 and grow annually by 20%. It is our view that this is actually a significant underestimate of future growth potential. The CGFI will support enterprises providing climate and environmental analytics and realise the opportunity for UK plc of being a world-leader in commercialising products that can green global finance.”