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Oxford-led research centre to pioneer greener global financial system launches

Oxford-led research centre to pioneer greener global financial system launches
Aiming for a greener global financial system. Image: City of London

The Oxford-led research centre to pioneer greener global financial system launches with £10m funding from UK Research and Innovation (UKRI).

The UK is putting environmental issues at the heart of global finance with £10 million in backing to create a new Oxford-led research centre to advise lenders, investors and insurers, enabling them to make better decisions to support a greener global financial system.

With funding from the National Environment Research Council (NERC) and Innovate UK, both part of UK Research and Innovation (UKRI), the new UK Centre for Greening Finance & Investment (CGFI) will be led by Dr Ben Caldecott, the founder of Oxford’s Sustainable Finance Programme.

Dr Caldecott says, "Climate and environmental risks to our economy and society are accelerating. The ultimate vision of the CGFI is for financial institutions to be able to access and use climate and environmental data and analytics for any point on planet earth historically, in the present, and projected into the future – allowing the greening of finance and the financing of green."

Professor Dame Sarah Whatmore, head of social sciences at Oxford says, "This investment is a ringing endorsement of the breadth and depth of expertise within the University of Oxford and our partner institutions. We are delighted to be at the forefront of such an important step towards a greener financial system, which will pave the way for more sustainable investment globally and help achieve the Paris Agreement and the UN Sustainable Development Goals."

The centre will help financial institutions shift money away from risky activities which harm the environment, such as coal-fired power and deforestation, and towards less harmful activities, such as renewable power and sustainable agriculture.

The UK’s position as a world leader in sustainable finance will be underlined by the centre’s data and analytics and will draw on wide-ranging expertise from across Oxford as well as partner institutions, including the Universities of Bristol, Leeds, Reading and Imperial College, as well as The Alan Turing Institute and the Satellite Applications Catapult, and the Science and Technology Facilities Council. In the summer a full range of financial institution and corporate partnerships will be announced.

Professor Sir Duncan Wingham, Executive Chair of the NERC, explains, "This investment 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."

Sustainable finance is rapidly gaining traction as a crucial component of global efforts to address climate change and help the transition to a net zero future. The CGFI announcement follows a significant new partnership between Oxford University and Lombard Odier on sustainable finance and investment, which also established Dr Caldecott’s post as the first endowed professorship of sustainable finance at any major global research university.

The centre will provide data to all financial institutions as part of its mission to 'green' finance and investment. Dr Caldecott, says, "The CGFI will make scientifically robust climate and environmental data and analytics openly accessible to all financial institutions. The UK is uniquely placed with the range of capabilities required to do this, including in earth observation, data science and artificial intelligence, environmental science, and financial services."

New physical hubs in Leeds and London will support companies and start-ups commercialise and export products that can green global finance, including tools that measure storm and flood risk facing properties or the pollution created by companies and the liabilities that result. CGFI will also work with finance professions, such as the Chartered Bankers Institute and Chartered Financial Analysts UK, to ensure that every professional financial decision takes climate change into account.

Coming ahead of November’s key COP 26 climate summit in Glasgow, official backing for the centre signals the UK’s commitment to accelerating the adoption and use of climate data, Energy and Clean Growth Minister Anne-Marie Trevelyan MP says, "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."

The Centre was a key recommendation made by the UK Green Finance Taskforce and in the UK Green Finance Strategy and will begin work at the start of April.

The CGFI consortium brings together a world-leading, multidisciplinary team with expertise across climate, earth systems and environmental science, geography, computing, data science, mathematics, water, engineering, systems science, statistics, economics, business, innovation, decision science, and finance.

Within the University of Oxford, researchers from across the School of Geography and the Environment, including the Oxford Sustainable Finance Programme, Smith School of Enterprise and Environment, and the Environmental Change Institute, will work closely with colleagues in the Department of Engineering and others bring a broad range of scientific understanding and practical experience to the new Centre.

Oxford-led research centre to pioneer ‘greening’ of global financial system launches

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