Climate and environmental risk analytics for resilient finance

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. This results 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 demanding improved disclosure of climate and related risk. They are adopting measures including the G20 Financial Stability Board (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 references 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 supporting investment in green technologies and services.

In response, the overall vision for the Climate and Environmental Risk Analytics for Resilient Finance (CERAF) programme is to drive research and innovation to support a climate and environmental risk analytics capability and capacity in the UK. This would be 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 make the financial system more resilient to the increasing impact of climate and environmental change and drive more sustainable investment of capital.

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Closing date: 31 Oct 2022