UK FCA sets up ‘safe space’ for ESG experimentation and research

The facility is associated with the University of Oxford.

The Oxford Sustainable Finance Group (OSFG) has partnered with the UK’s Financial Conduct Authority (FCA) to establish a new sustainable finance research institution, which is set to launch in the coming months.

The Oxford Sustainable Finance Lab is described by its founder, Oxford academic and head of the OSFG Ben Caldecott, as a “safe space to conceive, test and scale urgently needed innovations in sustainable finance, where we will bring together world class research with innovative practice”.

He added: “Our researchers, including myself, benefit from working with different parts of the system to inform our analysis and having a physical environment to do so makes it easier. The Lab will become a hub for innovators and risk takers shaping the future of finance.”

The Lab is associated with the University of Oxford and will bring together researchers and financial institutions, supervisory authorities, central banks, government departments and civil society. Visitors hosted by the Lab will be invited to stay for periods ranging from a few hours per week to longer-term residencies.

Activities carried out under the Lab’s auspices will be governed by a set of rules to ensure confidentiality and academic integrity.

“I’m delighted the FCA’s ESG Division will be joining the Sustainable Finance Lab,” said department head Sacha Sadan. “We’re looking forward to collaborating with ESG practitioners and with researchers to drive forward productive partnerships.”

Other partners of the Lab will be announced in due course.

It is the latest in a series of ESG-focused moves made by the UK regulator. In recent weeks, the FCA revealed to Responsible Investor that it has pushed a number of firms to alter ESG-related fund and website disclosures over greenwashing concerns. It has also backed the regulation of the ESG data sector and has indicated that it will engage with the Treasury on introducing legislation to this effect.

Other innovation-focused initiatives backed by regulators include Singapore’s Global-Asia Insurance Partnership, which provides a forum for regulators and academia to deepen capabilities in risk management, initially focusing on climate and pandemic risk. Separately, the Japanese Ministry of Finance is supporting the Green Finance Network, an informal body which promotes public-private sector dialogue on ESG topics.