Leeds and London to host new green finance research hubs
A new government-backed body dedicated to green finance research is set to launch in April, with physical "hubs" in Leeds and London.
Backed by £10m of initial investment from UK Research & Innovation (UKRI), the new UK Centre for Greening Finance (UK CGFI) will play host to academics and economists collating and analysing data regarding green finance. Their work will be used to inform decision-making at banks, lenders, investors and insurers around the world, and to help these bodies develop new products and services.
Aside from providing intelligence to – and inspiring product innovation within - the financial sector, companies of all sizes and sectors will be able to access the Centre’s data and analyses on measuring, disclosing and minimising climate risk in line with investor expectations.
A consortium of major research and education bodies, led by the University of Oxford, is involved in the UK CGFI. Other members include the University of Leeds, University of Bristol, University of Reading, Imperial College London, the Alan Turing Institute, Satellite Applications Catapult, and the Science and Technology Facilities Council.
The UK CGFI will launch in April 2021 and physical “hubs” for staff and clients will be opened by the end of the year. Its advisory board will be chaired by long-serving Environment Agency chairperson Emma Howard-Boyd.
“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 financial system,” said Natural Environment Research Council (NERC) chair Sir Duncan Wingham. The NERC is part of UKRI.
“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 the delivery of a low carbon economy and the recovery and restoration of our natural environments.”
Green financing progress and policy gaps
The Government said in a statement that the creation of the UK CGFI “will unlock brand-new opportunities for Britain to lead internationally in greening global finance, positioning Leeds and London as global centres for green finance while also protecting the UK economy and society from climate and environmental risks such as extreme weather events, flooding, major biodiversity loss and water crises.”
London is already highly regarded as a green finance hub on a global scale. The March 2020 edition of the Global Green Finance Index (GGFI) from Z/Yen and Finance Watch named London as the top of the 59 cities analysed.
To the statement’s latter point, the UK Government recently published its climate adaptation strategy and is urging nations to follow suit ahead of COP26. It is also mandating risk reporting in line with the Task Force on Climate-related Financial Disclosures’ (TCFD) recommendations and contributing to global efforts to develop a nature-related financial disclosures framework.
But there is still more to be done in the UK’s green finance space, with a notable policy gap being the new National Investment Bank (NIB).
Chancellor Rishi Sunak used the Spending Review in November 2020 to confirm the creation of a new NIB, as post-Brexit Britain can no longer access most of the European Investment Bank’s initiative. Sunak assured listeners that the Bank would have a net-zero remit and be launched in the North of England in the first quarter of 2021.
With just six weeks to go until the end of the quarter, a location has not yet been announced. Moreover, green groups are concerned that the NIB’s climate requirements will not be strong enough to prevent support for projects that will “lock-in” emissions that will take the UK beyond its long-term climate goals.