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Details of Award

NERC Reference : NE/V017756/1

CERAF

Grant Award

Principal Investigator:
Dr B Caldecott, University of Oxford, Smith School of Enterprise and the Env
Co-Investigator:
Mr M M Wilkins, Imperial College London, Imperial College Business School
Co-Investigator:
Dr ALN Money, University of Oxford, Smith School of Enterprise and the Env
Co-Investigator:
Professor MJ Siegert, University of Exeter, Earth and Environmental Science
Co-Investigator:
Professor JW Hall, University of Oxford, Environmental Change Institute SoGE
Co-Investigator:
Dr J Blower, National Oceanography Centre, Science and Technology
Co-Investigator:
Dr F Pianosi, University of Bristol, Civil Engineering
Co-Investigator:
Dr BM Matthews, STFC - Laboratories, Scientific Computing Department
Co-Investigator:
Professor L Szpruch, University of Edinburgh, Sch of Mathematics
Co-Investigator:
Professor R Toumi, Imperial College London, Physics
Co-Investigator:
Professor PD Bates, University of Bristol, Geographical Sciences
Co-Investigator:
Dr C Donovan, Imperial College London, Imperial College Business School
Co-Investigator:
Professor RT Sutton, University of Reading, National Centre for Atmospheric Science
Co-Investigator:
Professor D Wallom, University of Oxford, Engineering Science
Co-Investigator:
Dr R James, University of Bristol, Geographical Sciences
Co-Investigator:
Professor J A Lowe, University of Leeds, School of Earth and Environment
Co-Investigator:
Dr FEL Otto, University of Oxford, Environmental Change Institute SoGE
Co-Investigator:
Professor LC Shaffrey, University of Reading, Meteorology
Co-Investigator:
Professor I Clacher, University of Leeds, Leeds University Business School (LUBS)
Science Area:
Atmospheric
Earth
Freshwater
Marine
Terrestrial
Overall Classification:
Unknown
ENRIs:
Biodiversity
Environmental Risks and Hazards
Global Change
Natural Resource Management
Pollution and Waste
Science Topics:
Climate modelling
Fossil fuels
Greenhouse gases
Regional climate
Remote sensing
Sea level rise
Climate & Climate Change
Regional & Extreme Weather
Flood risk
Uncertainty communication
Geohazards
Risk analysis
Sea level change
Flood risk
Hydrological Processes
Finance and Accounting
Accountancy
Asset pricing
Banking
Banking Regulation
Capital Markets and Auditing
Central Bank
Corporate Finance
Financial innovation
Financial Markets
Financial Reporting
Financial Services
Fund Management
Investment Management
Public Finance
Risk Management
Social and Environmental Accounting
Abstract:
Climate and environmental (CE) risks (CER) to our economy and society are accelerating. CER include climate-related physical risks such as floods, storms, or changing growing seasons; climate-related transition risks such as carbon pricing and climate litigation; and environmental risks such as biodiversity loss. It is now well accepted that CER can impact asset values across multiple sectors and pose a threat to the solvency of financial institutions (FIs). This can cause cascading effects with the potential to undermine financial stability. The adoption of CER analytics will ensure that CE risks can be properly measured, priced, and managed by individual FIs and across the financial system. This is also a necessary condition to ensure that capital is allocated by FIs towards technologies, infrastructure, and business models that lower CER, which are also those required to deliver the net zero carbon transition, climate resilience, and sustainable development. These twin tracks - greening finance and financing green - are both enabled by CER analytics being appropriately used by FIs. The UK is a world-leader in Green Finance (GF). UK FIs have played a key role in GF innovation. Yet, despite these advances and leadership in almost every aspect of GF, UK FIs cannot secure the data and analytics needed to properly measure and manage their exposures to CER. While the last decade has seen the exponential growth of CE data, as well as improved analytics and methods, often produced by world-leading UK science, the vast majority of this has not found its way into FI decision-making. Our vision for CERAF is to establish a new national centre to resolve this disconnect. CERAF aims to enable a step-change in the provision and accessibility of data, analytics, and guidance and accelerate the integration of CER into products and decisions by FIs to manage CER risks and drive efficient and sustainable investment decisions, thereby delivering the following impacts: - Enhance the solvency of individual FIs in the UK and globally and so contribute to the resilience of the global financial system as a whole for all, as well the efficient pricing and reallocation of capital away from assets at risk to those that are more resilient. - Underpin the development and the growth of UK GF-related products and services. - Enable a vibrant ecosystem of UK enterprises providing CER analytics and realise the opportunity for UK plc of being a world-leader in the creation and provision of CER services. Our vision is that CERAF will be the nucleus of a new national centre established to deliver world-leading research, information, and innovation to systematically accelerate the adoption and use of CER data and analytics by FIs and to unlock opportunities for the UK to lead internationally in delivering CER services to support advancements in greening finance and financing green globally It aims to overcome the following barriers: 1) Making existing data on hazards, vulnerabilities, and exposures more accessible and useable for FIs, with clearly communicated confidence and with analytics that does not yet exist being secured; 2) Consistency and standards to reduce fragmentation, facilitate innovative products and enable the efficient flow and use of data; 3) Assurance and suitability are needed to understand which CER analytics are best suited for particular uses and provide transparency into underlying data and methodologies, so that CER analytics can be trusted and used; 4) Unlocking innovation through supporting FIs to test new approaches in a lower-risk way; and 5) Building capability, knowledge, and skills within FIs to analyse and interpret CER data. Resolving these barriers is a necessary condition for repricing capital and avoiding its misallocation, and achieving the UK's ambitions on GF.
Period of Award:
1 Apr 2021 - 30 Sep 2025
Value:
£5,212,426
Authorised funds only
NERC Reference:
NE/V017756/1
Grant Stage:
Awaiting Event/Action
Scheme:
Directed (RP) - NR1
Grant Status:
Active
Programme:
CERAF

This grant award has a total value of £5,212,426  

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FDAB - Financial Details (Award breakdown by headings)

DI - Other CostsIndirect - Indirect CostsDA - InvestigatorsDI - StaffDA - Estate CostsDI - T&SDA - Other Directly Allocated
£494,636£1,670,101£452,910£2,037,548£404,366£65,241£87,624

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