Imperial’s new climate finance centre to ‘recalibrate’ investors’ understanding of risk

By Roger Aitken —  A new centre designed to help businesses make more informed green investment decisions has been launched at Imperial College Business School in London. The centre will work with companies to manage the risks and financial opportunities posed by climate change and unlock a “multi-trillion investment” opportunity for investors big and small.

 

The new Centre for Climate Finance and Investment, which will provide a platform for “good return on investment”, aims to assist businesses making better financial decisions when choosing to invest in technologies that help stabilize the climate - from solar to wind energy and smart energy transportation. 

 

As the first facility of its kind tackling green investment issues within a leading business school, the centre builds on Imperial’s global reputation for innovative research on climate change. 

 

Researchers at Imperial will seek to assist investors in identifying the risks and financial opportunities posed by climate disruption and address the current lack of information on emerging industrial sectors encompassing clean energy, energy efficiency and climate-resilient infrastructure. For example, an investor might wonder is a cement company that manages carbon emissions better than its peers and actually outperform them.

 

This requires “empirically driven research that speaks the language of investors,” according to Dr Charles Donovan, who heads up the centre, adding that requires analysis addressing the “real rate of profitability taking into account risk”. 

 

Researchers at the school intend to examine how large firms, SMEs and entrepreneurs are already responding to climate change and recommend new approaches to solving investment issues. The centre aims to support research by established experts and emerging scholars on the business models, financial instruments and investment strategies taking shape in the new climate economy.

 

Donovan noted: “Every year a trillion dollars of investment in the energy sector could be wasted simply because the majority of investors do not understand the risks or opportunities presented by climate change.”

 

Until now information enabling business leaders to accurately assess the risks and returns of making a transition to a low-carbon economy has not been sufficiently robust. As such the centre will assist businesses “avoid the serious impact of climate change, whilst raising the prospects for global economic growth”, Donovan said.

 

The centre’s work is divided into three main themes: (1) Tools for financing climate-ready infrastructure; (2) Routes to sourcing clean energy investing (new forms of investing/barriers to business growth); and, (3) Managing firms in carbon-constrained economies.