A new £10m initiative will see Imperial housing a hub that supports the commercialisation of products aiming to green global finance.

The UK government is investing £10 million in a new 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.

Imperial College London will house one of two new physical hubs that will help companies and start-ups to commercialise products and services to transform global finance. Examples include tools that measure storm and flood risk facing properties and data that tracks the pollution created by companies.

The UK Centre for Greening Finance and Investment (CGFI) has been awarded £10 million by UK Research and Innovation (UKRI). Led by the University of Oxford with support from Imperial College London and six other institutions, the new centre aims to ensure data and analytics on climate and environmental impacts will be at the heart of global finance.

The physical London hub will be hosted by Imperial College London’s Grantham Institute – Climate Change and the Environment and the Centre for Climate Finance & Investment at Imperial College Business School. Activities will be housed at the Royal Institution of Great Britain (Ri), as part of a new partnership to bring Imperial’s expertise closer to London’s investment community.

The CGFI will form partnerships with data providers, including the Met Office and the World Bank, to produce scientifically robust global climate and environmental data for past, present and future for all industry sectors. In doing so, it will unlock opportunities for the UK to lead internationally on green finance. The CGFI will rely on a network of experts in climate, environmental science, computing, engineering, finance, business and innovation.

Professor Ralf Toumi, Co-Director of the Grantham Institute - Climate Change and Environment, said: “The financial sector is crucial to enabling a greener future. However, it urgently needs information on global climate and environmental risks.

“We are excited to bring our science expertise on, for example, extreme weather to this new centre. Imperial will provide the London innovation hub, which will host entrepreneurs who will develop the risk data and tools for the sector.”

Imperial’s role

Imperial will contribute to the CGFI through its Masters’ in Climate Change, Management & Finance, which trains future business leaders on how climate action demands changes to finance, management and investment. The programme, which started in 2016, is run jointly by Imperial College Business School and the Grantham Institute.

“Climate finance is essential to achieving the Paris Agreement climate goals." Josue Tanaka Honorary Senior Fellow in Climate Finance, Grantham Institute

Dr Charles Donovan, Executive Director of Imperial’s Centre for Climate Finance & Investment and Professor of Practice in the Department of Finance, will be a leading figure in the new initiative, alongside Grantham Institute Co-Directors Professor Ralf Toumi and Professor Martin Siegert.

Dr Donovan said: “Our MSc Climate Change, Management & Finance provides business students with a climate understanding and climate science students with business skills. It’s this combination of knowledge and skills that will make changes happen in practice. And unless new approaches are adopted in the investment community soon, we will not be able to respond in time to the climate crisis.”

Imperial’s newly appointed Honorary Senior Fellow in Climate Finance, Josue Tanaka, a former international development banker, said that in pursuing a net-zero future “without finance, there is not action on the ground.” He added: “Climate finance is essential to achieving the Paris Agreement climate goals. I’m talking trillions of dollars per year within a short time as we have less than a decade to shift the emissions curve."

Chief Operating Officer at the Royal Institution, Michael de Crespigny, said: “We are delighted to be supporting the CGFI with an innovation hub at the Royal Institution. Focusing financial investment on activities that reduce our impact on the planet is a fundamental step, and one that has the potential to make a big difference in tackling climate change.

“The Royal Institution is an independent charity inspiring everyone to think more deeply about science and its place in our lives.”

The CGFI builds on Imperial’s growing reputation for research on green finance through the work of the Centre for Climate Finance & Investment at Imperial College Business School. The centre aims to address the challenges and opportunities that climate changes poses to businesses to help companies transition to a lower-carbon future.

Recent initiatives include the launch of a new research hub dedicated to green finance and talent development in Singapore and an EdX course aimed at helping executives working in financial markets understand the financial risks and opportunities arising from climate change.

The CGFI has been set up to ensure financial institutions can access scientifically robust data and analytics to inform risk-based decisions to enhance the resilience of future investments. It will work with lead financial decision makers such as the Chartered Bankers Institute and Chartered Financial Analysts UK, making sure all financial decisions take climate change into account. It will support companies and start-ups with products that can green global finance. These will include tools that measure storm and flood risk facing properties and the pollution created by companies and the subsequent liabilities.

The UK has been accelerating green finance though its Green Finance Taskforce and Green Finance Strategy as well as its presidency of the United Nations COP26 climate conference in November in Glasgow. The CGFI will deliver on commitments made in the UK Government’s 2019 Green Finance Strategy. 

In addition to its hub In London, the new CGFI will also have a hub at the University of Leeds. The Universities of Bristol and Reading, the Alan Turing Institute, the Satellite Applications Catapult, and the Science and Technology Facilities Council are also collaborating on the initiative. 

Funding for the CGFI was allocated through the Climate and Environmental Risk for Resilient Finance programme, which was launched by the Natural Environment Research Council (NERC) and Innovate UK in February 2020.