The Climate and Finance Research Cluster is involved in a number of externally-funded research projects. We also engage with a range of partners in business, NGOs, financial regulators and government departments. Some key projects include:
The UK Centre for Greening Finance and Investment (CGFI): The UK Centre for Greening Finance and Investment (CGFI) is a national centre established to accelerate the adoption and use of climate and environmental data and analytics by financial institutions internationally. It will unlock opportunities for the UK to lead in greening finance and financing green. CGFI activity at the University of Reading is assessing the financial impact of correlated wind and flood risk to European property, and how this might change in a warmer climate (Bloomfield et al. 2023). The Institute of Environmental Analytics has developed an interactive Correlated Wind-flood Risk Explorer to display the results.
Integrating Nature-Climate Scenarios & Analytics for Financial Decision-Making (INCAF): Over half of global gross domestic product is closely dependent on nature, yet the past decades have seen unprecedented damage to ecosystems and declines in biodiversity due to adverse human activities. Financial institutions (FIs) can play an important role in securing a nature-positive future. The focus of INCAF is the scenarios used by FIs to influence risk pricing and investment decisions, alongside the relevant and suitable data and tools needed for scenario analysis, such as asset-level data and tools to assess nature-related financial risks. Phase 1 of the project will deliver several important building blocks. Firstly, it will establish and operationalise the multi-disciplinary nature-climate-finance network. Secondly, it will co-develop the framework and guidance to generate the nature-climate scenarios and analytics, alongside syntheses of evidence and gap analyses. Finally, it will deliver a demonstrator application to a Central Bank use case in stress testing nature-related risks. Phase 2 funding will allow us to extend from Central Banks to wider FIs, understanding how they are using nature-related data, analytics and scenarios and their needs for information under developing regulatory frameworks.
Climate and Finance Research at the ICMA Centre: Henley Business School encompasses a wide array of ongoing research initiatives. Our projects range from examining the ramifications of elevated temperatures on the performance and default risk of European SMEs, to assessing whether disclosure by UK companies regarding their exposure to climate-related physical risks and their adaptation strategies can act as a safeguard against substantial negative stock price fluctuations in the aftermath of extreme weather events. Additionally, we are engaged in analysing the comparative performance of green and brown bonds and investigating the influence of market sentiment and climate change awareness on bond investors’ decisions when selecting among various fixed income products with varying levels of “green-ness”. Furthermore, we are exploring how floods impact the default risk of European residential mortgages and examining how companies may offload greenhouse gas emissions to countries with more lenient environmental standards, leveraging satellite and other remote sensing data.
Our Partners: We engage with a wide range of different financial institutions and organisations, including banks, insurance companies, asset managers, SMEs, NGOs, financial regulators and government departments. Knowledge Transfer Partnerships, sponsored PhD studentships, visiting research fellowships and more. Contact us or join our mailing list to find out more.
Recent Publications
Bloomfield, H. C., Hillier, J., Griffin, A., Kay, A. L., Shaffrey, Len C., Pianosi, F., James, R., Kumar, Dhirendra, Champion, A. and Bates, P. D. (2023) Co-occurring wintertime flooding and extreme wind over Europe, from daily to seasonal timescales. Weather and Climate Extremes, 39. 100550. ISSN 22120947 doi: https://doi.org/10.1016/j.wace.2023.100550
Cathcart, Lara; Ding, Zhenghong; Dufour, Alfonso; Rossi, Ludovico; Varotto, Simone (2023) Rain or Shine, Default Risks Align: Exploring the Climate-Default Nexus in Small and Micro Firms. Available at SSRN: https://ssrn.com/abstract=4512185
Cathcart, Lara; Ding, Zhenghong; Dufour, Alfonso; Varotto, Simone (2022) The Impact of Global Warming on Small and Micro European Firms. Available at SSRN: https://ssrn.com/abstract=4306143
Dragotto, Massimo; Dufour, Alfonso; Varotto, Simone (2023) Greenium Fluctuations and Climate Awareness in the Corporate Bond Market. Available at SSRN: https://ssrn.com/abstract=4511974
Ghanma, Dina; Oikonomou, Ioannis; Schopohl, Lisa; Varotto, Simone (2021) The Value of Being Responsible in a Crisis: An Analysis of the European Market. Available at SSRN: https://ssrn.com/abstract=3827895
Venturini, Alessio; Dufour, Alfonso; Shaffrey, Len; Varotto, Simone (2023) Climate Adaptation Disclosure: Does it Bring Home the Green? Available at SSRN: https://ssrn.com/abstract=4498261