The UK is investing £10m in a national green finance research centre that will advise lenders, investors and insurers, enabling them to make environmentally sustainable decisions, and support a greener global economy.
The UK Centre for Greening Finance and Investment (CGFI) will be funded by UK Research and Innovation (UKRI) and led by the University of Oxford.
The launch comes in a bid to help financial institutions shift money away from risky activities that harm the environment and move towards activities that are less harmful. It will do this by improving access to scientifically robust data and analytics, helping financial institutions make decisions that contribute to a more sustainable planet.
The CGFI will include physical hubs in Leeds and London to help companies and start-ups commercialise 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.
It 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.
Other institutions will also form part of the new national centre, 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.
Work will begin in April, ahead of this year's COP26 climate summit in Glasgow. The CGFI will deliver on commitments made in the UK Government's 2019 Green Finance Strategy, and the announcement signals the UK's commitment to using its global finance sector to support the transition to a net zero carbon and nature positive future.
CGFI director and principal investigator and the Lombard Odier associate professor of sustainable finance at the University of Oxford Ben Caldecott added: "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 $1bn (£720m) 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."
Energy and clean growth minister Anne-Marie Trevelyan commented: "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 added: "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."
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