Leeds and London will be home to a new UK centre for driving global green finance and investment, the government announced this week.
The UK Centre for Greening Finance and Investment (CGFI) is a global initiative that will “encourage financial services to turn the tide of their investments and focus on sectors and companies that have a smaller environmental footprint.”
Via the initiative, banks, other lenders, and insurers will be urged to invest in clean innovations and green technologies, including sustainable agriculture and energy from renewable resources.
The aim is to help divert investment away from unsustainable activities, such as deforestation and fossil fuels, and towards low-carbon sectors. Supporting data and analytics will reveal the environmental costs of investments.
Divestment will be important. According to a 2014 report prepared for the European Parliament, HSBC, Barclays, Santander, The Royal Bank of Scotland, and Lloyds at that time had in excess of £66 billion invested in oil, gas, and coal extraction within the UK alone.
CGFI involves a consortium of major UK institutions, including the universities of Oxford, Leeds, Bristol, and Reading, Imperial College London, the Alan Turing Institute, the Satellite Applications Catapult, and the Science and Technology Facilities Council.
It will begin operations in April, with physical hubs in Leeds and London opening later. The research hubs will provide data and analysis on the environmental and climate change impacts of investments to financial institutions worldwide.
For example, they will measure storm and flood risk for property investors and provide tools to improve data on industrial pollution linked to investment portfolios. They will also help the Financial Services industry create products and services that help tackle climate change.
Minister for Business, Energy, and Clean Growth, Anne-Marie Trevelyan, unveiled £10 million in government money for the project on 15 February. She said:
“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 Bank of England’s executive sponsor for work on climate change, Sarah Breeden said:
“Integrating climate and environmental data and analytics into decision-making will allow financial institutions to identify, measure, and manage the financial risks and opportunities from climate change, and so support the Bank’s objective to ensure the financial system is resilient to these risks and supportive of the transition to net zero.”
Chair of the Environment Agency, and Chair of the CGFI Advisory Board, Emma Howard Boyd, added:
“We don’t have time to lose, the benefits of properly pricing climate and environmental risk are estimated to be worth trillions of dollars every year.”
“Closing investment gaps, by avoiding investments in at-risk assets and improving the efficiency of capital allocation across society, will speed up net zero, nature recovery, and our preparations for climate impacts like storms and droughts.”
According to the government, encouraging private funding for green projects under the 2019 Green Finance Strategy will also drive growth and support the creation of new jobs.
Another aim is to help protect the UK economy from climate and environmental risks, such as extreme weather, flooding, biodiversity loss, and water crises.
The news came as developments in the US suggest that green technologies are being drawn into a culture war between investments old and new.
A report in the Independent reveals how frozen machinery at energy facilities in Texas has led to a public disinformation campaign that has sought to blame wind turbines and other renewable sources for power blackouts in the state, reportedly backed by oil industry money.