Government invests £10m in green finance initiative

Leeds and London will be home to a new UK centre for global green finance and investment, energy minister Anne-Marie Trevelyan has announced

The government has invested £10m in a UK Centre for Greening Finance and Investment which will be set up in April 2021, with physical hubs in Leeds and London opening a matter of months later led by a partnership with a number of UK institutions including University of Oxford, the University of Leeds and Imperial College London.

Banks, lenders and insurers will be encouraged to invest in clean innovations and green technologies from renewable power to sustainable agriculture.

The government said the move would ‘encourage private investment in green projects to drive growth across the economy and support new jobs as the UK builds back greener from the pandemic’.

The research hubs in the two cities will provide world-class data and analytics to financial institutions and services such as banks, lenders, investors and insurers around the world to better support their investment and business decisions by considering the impact on the environment and climate change.

For example, the new centre will equip banks with the latest environmental and scientific intelligence to help companies of all sizes, including start-ups, anticipate, adapt and gear up for the risks posed by climate change.

This pioneering research will also help create new world-leading products and services that tackle climate change, such as cutting-edge technologies that measure severe storms and flood risks for property investors and tools that can improve data on industrial pollution linked to investment portfolios.

These new green finance hubs will also attract and develop new green finance talent from around the world to the UK’s major cities.

This will unlock brand-new opportunities for Britain to lead internationally in greening global finance, positioning Leeds and London as global centres for green finance while also protecting the UK economy and society from climate and environmental risks such as extreme weather events, flooding, major biodiversity loss and water crises.

Energy and clean growth minister Anne-Marie Trevelyan said: ‘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 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 said: ‘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 TCFD-aligned (Task Force on Climate-related Financial Disclosures) disclosures across the economy and implementing a green taxonomy.’

It is estimated that successfully reducing climate change and adapting to life in a changing climate will deliver multi-trillion pounds of additional private sector investment every year.

The new Centre for Greening Finance and Investment will help divert investment away from unsustainable activities such as deforestation and fossil fuels, and towards low carbon sectors, creating green jobs, building industries of the future, and ensuring the climate and environment at the heart of UK financial decision making.

The Bank of England’s executive sponsor for work on climate change Sarah Breedan 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.

‘The Bank of England is delighted that the CGFI will support firms’ efforts in this important area, including for the forthcoming Climate Biennial Exploratory Scenario.’

The announcement delivers on commitments made in the government’s 2019 Green Finance Strategy to deliver a pioneering research and innovation programme aimed at enhancing data and analytics on climate and environmental hazards, as well as vulnerability and exposures.

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