A new climate data centre has been established at the University of Oxford, which seeks to place ‘spatial finance’ as a priority.
The move has been welcomed by the pensions industry ahead of new climate scenario analysis requirements for pension funds.
The UK Centre for Greening Finance and Investment (CGFI), which will be headed by Dr Ben Caldecott, seeks to assemble global climate and environmental data for major sectors of the economy and climate factors.
The data will cover past and present conditions, and also provide projections for the future.
Highlighted as a key priority for the centre is ‘spatial finance’ – understanding the risks posed by the geographic location of an investment, such as the risk posed to power stations by flooding or storms.
The combination of increasingly sophisticated satellite imagery and the use of AI has the potential to provide investors with detailed data on geospatial risks, reducing their reliance on corporate disclosures.
Mike Clark, founder of UK-based ESG consultant Ario Advisory, particularly welcomed this emphasis: “This is a welcome initiative. The world is crying out for climate data to improve investor decision-making and the CGFI will accelerate its production. Spatial finance is the new climate frontier.”
The centre, funded by a £10m initial investment from the UK Government, will involve Leeds, Bristol and Reading Universities, as well as Imperial College London.
The centre’s physical hubs in Leeds and London will also work to commercialise new products for greening global finance, such as tools that measure storm and flood risk facing properties or company pollution and its impacts.
The centre will begin work in April 2021 ahead of the COP26 summit.
The data will be of particular use to UK Pension Schemes, who will be required to carry out detailed climate scenario analysis from 2021 under new regulations set out in the Pension Schemes Act, which was passed into law last week.
Joe Dabrowski, Deputy Director for Policy at the Pensions and Lifetime Savings Association, said: “It is a very positive step that the Government is funding research to help investors with climate data. Having the right data will also be crucial to helping schemes conduct robust scenario analysis to understand the impact of their investments heading into a carbon-constrained future, a consideration that will be even higher on schemes agendas given the new obligations set out in the Pensions Schemes Act.”