��Ī - finance

��Ī research: First global bond index to address fossil fuel expansion

plc32 — Fri, 11 Apr 2025 11:48:40 +0000

This is a critical – and hugely challenging – moment for climate action. Legal and political pressures have paralysed asset managers and other financial service providers, leading to a recent wave of actors leaving investor climate coalitions. However, asset owners are increasingly seeing the need to take a leadership role in addressing climate change, which threatens the long-term future of their portfolios and the wider economy.

That’s why we are delighted to announce that ��Ī researchers based at the Department for Land Economy have selected index provider Bloomberg Index Services Limited to launch the first global corporate bond index to cover fossil fuel producers, utilities, insurance, and financing, with the aim of driving investment to reduce real-economy emissions.

You can read the University press release here.

“We are delighted that this project has reached such a key milestone," said Professor Martin Dixon, Head of the Department of Land Economy. "As a multidisciplinary department with a focus on outstanding academic publication and teaching, this project has the potential to serve as a ‘systems demonstrator’ for ongoing research in this important area.”

Why a bond index?

The launch of the bond index by an 816-year-old institution is an unusual process and a tale worth telling. It began with a peer-reviewed paper by Dr Ellen Quigley, Principal Research Associate at Land Economy, exploring the case for evidence-based climate impact by institutional investors. This was followed by an internal feasibility study based at Jesus College, ��Ī (which continues to co-host the project), and supported by several other parts of the University.

With feasibility assessed, the team went out to global index providers to explore their interest. All of the leading players were interested in building this index, yet all grappled with a lack of access to data and the complexity of assessing companies based on their activities (e.g., whether they were building new fossil fuel infrastructure), not their business classification. An extensive Request for Proposals process resulted in naming Bloomberg Index Services Limited as our provider. The project aims to provide a genuine solution for asset owners looking to align their corporate debt instruments with their climate targets and to avoid both ineffective blanket interventions and greenwashing.

The central problem, on which the industry has faltered for decades, is how to manage the risk presented by a fossil fuel industry that continues to grow. Leading climate scenarios such as the International Energy Agency’s Net Zero by 2050 scenario are clear that fossil fuel expansion is inconsistent with the transition to a decarbonised economy. With approximately 90% of new financing for fossil fuel expansion coming from bonds and bank loans, debt markets must be the focus of investor efforts to transition away from fossil fuel expansionism. Bonds offer a larger pool of capital than equities, and a greater proportion are purchased in the primary market, where companies gain access to new capital.

The past decade has seen a significant rise in passive investment strategies and therefore an increase in financial flows into index funds, which have as a consequence become significant ‘auto-allocators’ of capital. This research project aims to study the extent to which the new bond index influences cost, volume, and access to capital among companies who are seeking to build new fossil fuel infrastructure and delaying the phase-down of their operations. Bond markets are not just a key part of investor action on climate change: they are the very coalface of fossil fuel expansion, i.e. new gas, oil, and coal extraction and infrastructure.

“This is an enormously impactful project which showcases the high-quality research undertaken at ��Ī," ��Ī Chief Financial Officer Anthony Odgers said. "The index is a game-changer for the growing number of asset owners who invest in corporate debt and understand its impact on fossil fuel expansion, particularly the construction of new fossil fuel infrastructure such as coal- and gas-fired power plants which risk locking in fossil fuel usage for decades."

“Once the index launches, ��Ī expects to invest some of its own money against financial products referencing it. This will enable us to align our fixed income holdings with our institution-wide objectives,” Odgers said.

There are currently no off-the-shelf products that allow for passive investments in global corporate bond markets without financing fossil fuel expansion, through fossil fuel production, utilities building new coal- and gas-fired power plants, and through the banks and insurers that continue to finance and underwrite these activities. By supporting the development of this ‘systems demonstrator’, we will be able to conduct essential research on the efficacy of such a lever.

“Instead of linear year-on-year reductions or blanket bans by business classification, the index methodology identifies companies that present the greatest systemic risks to investors, while ensuring that those companies that meet the criteria can rejoin the bond index,” said project leader Lily Tomson, a Senior Research Associate at Jesus College, ��Ī.

Several years of close collaboration with leading global asset owners such as California State Teachers Retirement System (CalSTRS), Universities Superannuation Scheme (USS), Swiss Federal Pension Fund PUBLICA and the United Nations Joint Staff Pension Fund (UNJSPF) provided input and technical market expertise that underpins the index. Alongside the ��Ī, the index will be used at launch by investments from the United Nations Joint Staff Pension Fund.

“Finally, large asset owners around the world have an index for this market that aims to discourage the expansion of fossil fuels,” said Pedro Guazo, Representative of the Secretary-General (RSG) for the investment of the UNJSPF assets.

Rules-based engagement: a lever for behaviour change

Debt benchmarks have a key role to play in any real efforts to tackle the expansion of fossil fuels. This project is innovative because it focuses on exclusions and weightings of companies based on their current corporate activity, instead of using an approach that relies on blanket exclusions by business classification (which does not generate incentives to change behaviour). For example, a company might be classed as a fossil fuel company, but if it stops expanding new fossil fuel operations and aligns to an appropriate phase-down pathway, the company has an opportunity to be included in the index and gain access to capital via funds which use the index, as a result.

Across the project, we are using data sources that have never previously been used to build an index – for example, the Global Coal Exit List (GCEL) and Global Oil and Gas Exit List (GOGEL) from Urgewald. We are taking a novel approach that focuses investor attention on those actors that our framework considers ‘edge cases’: companies close to reaching, or moving away from, alignment with the index. Companies have the option of being (re-)included in the index if they change their behaviour to align with the rules of the index. Academic literature suggests this is a lever for behaviour change in equities, but as an approach it is new to debt market indices. This is one of many key hypotheses that this project tests. We are convening a community of leading global academics who will support the creation of this new form of rules-based bondholder engagement.

This bond index project is one of a suite of actions rooted in academic research and collaboration that have been developed by the collegiate University. Alongside 74 other higher education institutions, ��Ī is delivering a parallel project focused on cash deposits and money market funds. We will continue to conduct research as the associated new products begin to operate through 2025.

At a time when climate damage is growing rapidly and is visible in news stories around the world, many actors across investment markets are looking for a clear path to take necessary action. As an academic institution and a long-term investor, the ��Ī is committed to supporting evidence-based research and action on climate change.

The bond index will be launched later this year. If you are interested in finding out more about the project or the team’s research, contact us here: bondindex@landecon.cam.ac.uk.

��Ī researchers based at the Department for Land Economy have selected index provider Bloomberg Index Services Limited to launch the first global corporate bond index to cover fossil fuel producers, utilities, insurance, and financing, with the aim of driving investment to reduce real-economy emissions.

This is an enormously impactful project which showcases the high-quality research undertaken at ��Ī

Anthony Odgers, ��Ī Chief Financial Officer

The text in this work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License. Images, including our videos, are Copyright ©��Ī and licensors/contributors as identified. All rights reserved. We make our image and video content available in a number of ways – on our main website under its Terms and conditions, and on a range of channels including social media that permit your use and sharing of our content under their respective Terms.

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The price of ecological breakdown

fpjl2 — Mon, 07 Oct 2024 23:00:00 +0000

��Ī researchers are investigating the economic consequences of climate change and biodiversity loss, and identifying ways to drive a more sustainable global economy.

UK-US Summit for Democracy announces ��Ī team as joint winners of challenge to detect financial crime

cjb250 — Fri, 31 Mar 2023 12:53:46 +0000

The announcement came at the second UK-US Summit for Democracy on 30 March 2023. The prize challenges innovators on both sides of the Atlantic to build solutions that enable collaborative development of artificial intelligence (AI) models, while keeping sensitive information private.

Driven by a shared priority to employ data to help solve critical global challenges in a manner that supports US and UK commitments to democratic values and the fundamental right to privacy, the challenges focused on developing PETs solutions for two scenarios: forecasting pandemic infection and detecting financial crime.

A team led by Professor Nic Lane from the Department of Computer Science and Technology at the ��Ī was named joint winner in the financial crime category. Their challenge was to develop a privacy-preserving solution to help tackle the challenge of international money laundering.

Xinchi Qiu, a PhD student in Professor Lane’s lab, said: “We developed an end-to-end privacy-preserving federated learning solution to detect potentially anomalous payments, leveraging a combination of inputs from a number of financial institution and different banks. Our project aims to develop a method that can utilise all the inputs from different institutions while protecting the original data.”

Professor Lane said: "Right now, machine learning with federated and other privacy preserving methods are niche. But in the near future they will be the norm. Most of the world's data is inaccessible for machine learning – however these new methods are making such data available in safe manner. This will be a game changer for many high impact domains that are currently starved of sufficient data, such as health, finance and legal. Our solution shows how this can be done effectively for money laundering, but our methods can migrate to these other domains."

Experts from academic institutions, global technology companies, and privacy start-ups competed for cash prizes from a combined UK-US prize pool of $1.6 million (£1.3 million). The winning solutions combined different PETs to allow the AI models to learn to make better predictions without exposing any sensitive data. This focus on combining privacy approaches encouraged the development of innovative solutions that address practical data privacy concerns in real world scenarios.

In the final phase of the challenges, the privacy guarantees of the solutions were put to the test by ‘red teams’, who attempted to reveal the original data used for training the models. The resilience of the solutions to these attacks determined the final winners.

Michelle Donelan, Secretary of State for the UK Department for Science, Innovation and Technology, said: “Never before has our privacy been so important and we must protect our democratic values by safeguarding the right to privacy. That is why the UK and its allies are collaborating to create innovative technologies that enable public institutions to combat financial crime and promote public health without compromising the confidentiality of the sensitive data they manage.”

UK participants also received support from the UK Information Commissioner’s Office to help them consider how their solutions could demonstrate compliance with key UK data protection regulation principles.

John Edwards, UK Information Commissioner, said: “Privacy enhancing technologies can help analyse data responsibly, lawfully and securely and it will be important for regulators and industry to continue to work together to support responsible innovation in these technologies.”

Arati Prabhakar, Assistant to the President for Science and Technology and Director of the White House Office of Science and Technology Policy, added: “Data has the power to drive solutions to some of our biggest shared challenges, but much of that data is sensitive and needs to be protected.”

Adapted from a press release from the Centre for Data Ethics and Innovation

A ��Ī team has been announced as one of the winners of a prize to drive ‘innovation in privacy-enhancing technologies that reinforce democratic values’ for its work on tackling international money laundering.

Most of the world's data is inaccessible for machine learning – however, these new methods are making such data available in a safe manner. This will be a game changer for many high impact domains

Nic Lane

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��Ī engagement with banks wins Green Gown Award

plc32 — Thu, 17 Nov 2022 12:04:24 +0000

��Ī, Jesus and Trinity were leading participants in efforts of the Responsible Investment Network – Universities (RINU) to focus engagement on persuading banks to stop financing companies that continue to build new fossil fuel infrastructure.

“Banks have a key role to play in the energy transition," ��Ī Chief Financial Officer Anthony Odgers said. "Our historic relationship with major banks, combined with our academic expertise, puts the ��Ī in a strong position to influence finance towards net zero goals. This award will help us share this approach with other institutions.”

The University and the two colleges helped a global bank include methane emissions in its methodology, and to report on absolute emissions for the first time.

They also persuaded a second global bank to commit to phasing down their financing of the fossil fuel industry on a timeline consistent with the UN goal to limit global temperature rises to 1.5 degrees Celsius above pre-industrial levels, and to update oil, gas and coal policies by the end of 2022.

“Our engagement with HSBC and other banks, including through the activities of the Trinity Responsible Investment Society, has shown how influential networks can be in accelerating the energy transition, especially when communicating expectations both as shareholders and clients,” Trinity College Investment and Sustainability Officer Romane Thomas said.

Jesus College Bursar Dr Richard Anthony said the award was a significant achievement, which shows how working in partnership to effect change can deliver on a scale that is much bigger than the College.

"We must all work together as we face the real and immediate challenge of climate change," Anthony said.

Green Gown judges were incredibly impressed with the quality of the Collegiate ��Ī initiative, calling it “innovative” and “sector-changing”.

“This initiative is leading the way and we cannot wait to see the change they create using money for good,” the judges said.

Green Gown Awards are awarded by the Environmental Association for Universities and Colleges (EAUC), an alliance for sustainability leadership in education with more than 300 member institutions in the Further and Higher Education sector of the UK and Ireland.

The ��Ī, alongside Trinity and Jesus Colleges, shared a prestigious 2022 Green Gown Award in the Money for Good category for effective engagement with the banking sector on climate finance.

Our historic relationship with major banks, combined with our academic expertise, puts the ��Ī in a strong position to influence finance towards net zero goals

Anthony Odgers, Chief Financial Officer

The text in this work is licensed under a Creative Commons Attribution 4.0 International License. Images, including our videos, are Copyright ©��Ī and licensors/contributors as identified. All rights reserved. We make our image and video content available in a number of ways – as here, on our main website under its Terms and conditions, and on a range of channels including social media that permit your use and sharing of our content under their respective Terms.

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New industry collaboration to study cryptocurrencies and other digital assets

Anonymous — Tue, 01 Mar 2022 15:07:17 +0000

The ��Ī Centre for Alternative Finance (CCAF) at ��Ī Judge Business School has announced the launch of the ��Ī Digital Assets Programme (CDAP), a research initiative in collaboration with 16 leading banks, public sector agencies and private organisations to study the rapid digitisation of assets and value transfer systems.

Over an initial period of two years, the CCAF will work with public and private organisations to create the data, tools, and insights necessary to facilitate an evidence-based public dialogue about the opportunities and risks presented by the growing digital asset ecosystem.

The CDAP’s institutional research collaborators are: Accenture, Bank for International Settlements (BIS) Innovation Hub, British International Investment (BII), Dubai International Financial Centre (DIFC), EY, Fidelity, UK Foreign, Commonwealth & Development Office (FCDO), Goldman Sachs, Inter-American Development Bank (IDB), International Monetary Fund (IMF), Invesco, London Stock Exchange Group (LSEG), Mastercard, MSCI, Visa, and the World Bank.

The programme builds on the CCAF’s work in creating digital tools such as the ��Ī Bitcoin Electricity Consumption Index (CBECI) and the Global Cryptoasset Benchmarking Study series. It is designed to address the broader ecosystem trends and issues through research that can help guide public opinion, inform regulation and policy discussion, as well as support evidence-based decision making by individuals and institutions.

Supporters of the programme include prominent public and private stakeholders from a variety of sectors to promote diversity in views and facilitate exchange of insight. These supporters will also provide input and guidance to ensure practical and meaningful research output.

“The growing adoption of digital assets increasingly blurs the lines between roles, responsibilities and applicable rules, stretching the boundaries of long-term institutional arrangements,” said Bryan Zhang, Executive Director, CCAF. “The ��Ī Digital Assets Programme aims to meet the resulting need for greater clarity by providing data-driven insights through collaborative research involving public and private sector stakeholders.”

The programme's research will be centred around three distinct but related areas. The first is the environmental implications and broader ESG (environmental, social and governance) considerations of digital assets and their associated services. The second area will look at the processes and configurations of Distributed Financial Market Infrastructure (dFMI), including the evolving constellation of networks, platforms, applications, and services. The third research stream will focus on emergent money systems – the “asset” side of the ecosystem – comprising crypto-assets, stable-coins, Central Bank Digital Currencies (CBDCs), as well as enterprise and consumer tokens.

“We've spent a lot of time developing a consistent framework that consolidates our efforts in the digital assets space and ensuring that we have the right collaborations in place to deliver insight and clarity,” said Michel Rauchs, Digital Assets Lead, CCAF. “We believe this programme will provide decision-makers with the objective analysis and empirical evidence that they need to navigate the digital assets maze.”

Each research stream will convene a dedicated working group of CCAF researchers, domain experts, and representatives from supporting institutions of the programme.

Originally published on the ��Ī Judge Business School website.

Multi-year ��Ī Digital Assets Programme launched with 16 institutional research collaborators to create open-access datasets and tools to inform digital public dialogue and decision-making in such areas as the environment, infrastructure and cryptocurrencies.

The growing adoption of digital assets increasingly blurs the lines between roles, responsibilities and applicable rules, stretching the boundaries of long-term institutional arrangements

Bryan Zhang

Teradat Santivivut

Business fund investor planning for investment

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The first 'climate smart' sovereign credit ratings

fpjl2 — Thu, 18 Mar 2021 08:53:59 +0000

��Ī economists add climate science to Standard & Poor’s global credit formula and find that 63 nations face downgrades by 2030 unless action is taken to reduce emissions.

��Ī launches Regulatory Genome Project

Anonymous — Mon, 21 Dec 2020 10:22:21 +0000

The ��Ī has launched the Regulatory Genome Project, a transformational initiative to sequence the world’s vast amount of regulatory text to create a comprehensive open repository of machine-readable regulatory information for use by regulatory agencies and businesses around the world.

This multi-year project – which includes an expanding collaboration network of regulatory agencies, companies, and academic researchers – has been inspired by the scientific and commercial innovation that followed the collective effort to code the human genome.

The project aims to provide an open-source infrastructure for all countries, particularly in developing regions, to have the same digital capabilities as advanced economies to identify regulatory obligations around the world. This is particularly important as consumers have increasingly adopted digital financial services, which has opened up new areas of risk that require regulation.

Drawing on research from the ��Ī Centre for Alternative Finance (CCAF) at ��Ī Judge Business School and the Department of Computer Science and Technology, the project uses machine learning and natural language processing to ‘sequence’ huge amounts of regulatory text, starting with financial regulation. This offers regulators and firms the opportunity to acquire unprecedented capabilities in the development, processing and analysis of regulation.

“The Regulatory Genome Project combines the University’s research with its convening influence to deliver societal and economic impact with the potential to be global, transformational and enduring,” said Professor Eilís Ferran, Pro-Vice-Chancellor for Institutional and International Relations at the ��Ī.

As part of the project’s structure, a new University-affiliated company called Regulatory Genome Development Ltd has been formed to provide support to third parties building applications using the code and data in the Regulatory Genome.

The Regulatory Genome originated out of a research project led by the CCAF with initial funding provided by the Omidyar Network to create a solution – named RegSimple – that simplifies the comparison of regulations across different jurisdictions. Additional funding has been provided by the UK’s Foreign, Commonwealth & Development Office to expand the scope and functionality of RegSimple to serve the needs of regulators in developing and emerging economies. Regulators from more than 20 jurisdictions are already contributing to the project.

“We are excited about the vast potential of this project to benefit both public and private sector interests,” said Dr Robert Wardrop, Director of the ��Ī Centre for Alternative Finance. “An open access repository of regulatory information will serve to level the regulatory playing field for those who develop and comply with regulation, particularly in emerging markets, and serve as a key resource for researchers in deepening their understanding how the regulatory landscape for digital financial services is evolving.”

Originally published on the ��Ī Judge Business School website.

The project will use machine learning to sequence the world’s regulatory text and create an open-source repository of machine-readable regulatory information.

An open access repository of regulatory information will serve to level the regulatory playing field for those who develop and comply with regulation, particularly in emerging markets

Robert Wardrop

Tanner Boriack on Unsplash

Red bars

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��Ī Zero

sc604 — Tue, 26 Nov 2019 09:29:39 +0000

If we are to avert a climate disaster, we must sharply reduce our emissions, starting today. ��Ī Zero, the University's ambitious new climate initiative, will generate ideas and innovations to help shape a sustainable future - and equip future generations of leaders with the skills to navigate the global challenges of the coming decades.

�������������Ī - finance

�������������Ī research: First global bond index to address fossil fuel expansion

The price of ecological breakdown

UK-US Summit for Democracy announces �������������Ī team as joint winners of challenge to detect financial crime

�������������Ī engagement with banks wins Green Gown Award