The University of Oxford and UK Research and Innovation (UKRI), a public body sponsored by the Department for Business, Energy and Industrial Strategy, announced today the launch of The UK Centre for Greening Finance and Investment (CGFI), a new research initiative aiming to advise lenders, investors and insurers, enabling them to make environmentally sustainable decisions, and support a greener global economy. UKRI announced that it has pledged £10 million through the National Environment Research Council (NERC) and Innovate UK towards the center, which will be led by Oxford.

Professor Sir Duncan Wingham, Executive Chair of the Natural Environment Research Council, 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.”

According to UKRI and Oxford, the initiative help financial institutions shift money away from risky activities that harm the environment, such as coal-fired power and deforestation, reallocating it towards activities such as renewable power and sustainable agriculture. CGFI will include new physical hubs in Leeds and London supporting companies and start-ups in commercialising 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.

Other institutions forming part of the new center will include the Universities of Bristol, Leeds, Reading, and Imperial College London, as well as The Alan Turing Institute and the Satellite Applications Catapult, and the Science and Technology Facilities Council, with a full range of financial institution and corporate partnerships will be announced later this year. CGFI will also work with finance associations including the Chartered Banker Institute and Chartered Financial Analysts UK, to ensure that every professional financial decision takes climate change into account.

CGFI will be led by Dr. Ben Caldecott, the founder of Oxford’s Sustainable Finance Programme. Caldecott has held numerous positions in the fields of environment, energy and sustainability, including recently being named as the Lombard Odier Associate Professor and Senior Research Fellow of Sustainable Finance at the University of Oxford, the first endowed professorship of sustainable finance at any major global research university.  He also founded and co-chairs the Global Research Alliance for Sustainable Finance and Investment (GRASFI), an alliance of global research universities promoting rigorous and impactful academic research on sustainable finance, and is a  COP26 Strategy Advisor for Finance for the UK’s Cabinet Office.

Caldecott 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 ESG data, of which climate and environmental data is a large part, is expected to reach US$1bn 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.”