Climate and Environmental Risk Analytics for Resilient Finance (CERAF)

Climate and environmental risks (CER) now exist at new levels of scale, likelihood and interconnectedness. Without robust information and effective management, global investment of capital is and will increasingly be exposed to these physical and transition risks, resulting in inefficient allocation and high levels of stranded assets, and economic losses with severe consequences for economic growth and the value of savings and pensions.

To address this, financial services regulators and supervisors are increasingly demanding improved disclosure of climate and related risk through measures including the G20 FSB Task Force for Climate- Related Financial Disclosures (TCFD) and the recently announced Bank of England stress test on the financial stability implications of climate change. The UK Government Green Finance Strategy published in July 2019 makes explicit reference to both the role of CER analytics in ‘greening finance’ - through ensuring that financial risks from climate and environmental factors are integrated into mainstream financial decision-making - and to supporting investment in green technologies and services.

In response, the overall vision for the CERAF programme is to drive research and innovation to support the establishment of a climate and environmental risk analytics capability and capacity in the UK aligned to the specific requirements of the financial services sector such as banks, insurers, asset managers, pension funds and ratings agencies. Programme outputs are expected to deliver information to enhance the resilience of the financial system to the increasing impact of climate and environmental variability and change and drive more sustainable investment of capital.

£10m research centre to spur a greener global financial system

16 Mar 2021

Following a successful competition, Oxford University have been selected to lead the development of The UK Centre for Greening Finance and Investment (CGFI) funded by UK Research and Innovation (UKRI).


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The programme objectives are to:

  • Deliver a step-change in the provision and analysis of CER information for a specific set of use-cases for financial services users (e.g. asset management, banking, pensions) that demonstrates impact from improved understanding and reporting of risk underpinned by robust science - for example from improved quantification and disclosure and more effective and efficient allocation of capital.
  • Develop common CER information, taxonomies, governance and reporting standards for use by financial services regulators and end users.
  • Establish an institutional and infrastructural entity to manage the provision of open-access CER data and analytics for use by commercial enterprises and public sector bodies that is capable of enduring beyond the programme funding term.
  • Stimulate and accelerate the development of an ecosystem of small, medium and large private sector enterprises to deliver value-adding analytics and reporting products and services using open-access CER information.

The programme is jointly funded by NERC and Innovate UK and will comprise two stages:

  • Stage 1 will involve a single grant award by NERC to fund translational research and the development of an open-access risk data and analytics information infrastructure, rather than novel climate or environmental science.
  • Stage 2 will involve Innovate UK funding for SMEs and larger corporates to stimulate the development of commercial CER analytics and reporting services to generate and contextualise data, translating it into decision-relevant information for the financial services sector.

Timing

2020/21 – 2024/25

Can I apply for a grant?

Stage 1 funding for this award has now been made. (NERC) and Innovate UK, both part of UK Research and Innovation (UKRI), have agreed to fund a new £10 million research and innovation centre – UK Centre for Greening Finance and Investment (CGFI) - to support the integration of the financial risks of climate and environmental change into mainstream financial decision-making. Stage 2 funding is under development.

Budget

Up to a total of £10m investment in total across NERC and Innovate UK with up to £5m for each programme stage.

Awards

Award details are shown in our online grants browser - Grants on the Web (GOTW).

View details of funded applications - external link