About the Centre for Sustainable Finance

We recognise the central role that the financial sector has to play in order to achieve the development and environmental targets, as laid out in the United Nations Sustainable Development Goals and The Paris Agreement on climate change. It is through Sustainable Finance that financial markets will be able to adjust and allocate resources effectively. We established the Centre for Sustainable Finance to provide insights to practitioners, whether in markets, regulation, risk management or government policy.

The Centre is based in the heart of the City of London. One of our key institutional strengths is the relationships that we have fostered over time in the financial industry both at home and overseas. The London Institute of Banking & Finance works with commercial banks, investors, regulators and governments on a wide range of educational qualifications and advisory projects.

As part of our development, the Centre has established links in Asia, the Americas and the Middle East. It is also a founding member of the European Research Network for Sustainable Finance (www.RNSFin.com).

Chris McHugh, Director

Chris McHugh is the Director of the Centre for Sustainable Finance at The London Institute of Banking & Finance and a faculty member lecturing on derivatives and risk. He is a visiting lecturer at the Judge Business School, Cambridge University and a PhD researcher at the University of Southampton focusing on development finance. As a Senior Adviser to the International Association of Portfolio Managers, he works with development banks on active risk management strategies. He has over 20 years’ experience in derivative markets, has worked in corporate finance specializing in financial institutions and in management consulting.

As a Managing Director at HSBC for 14 years he ran trading and structuring teams responsible for the risk management of: counterparty risk (‘XVA’), funding and collateral discounting risk, energy derivatives, emerging market credit, and foreign exchange derivatives. He was at the forefront of the bank’s commercial response to regulatory change and capital optimization. Prior to that he worked in Markets at Credit Suisse and Deutsche Bank, and at Merrill Lynch in investment banking. Chris graduated from King’s College, Cambridge, with a degree in Engineering and has an MBA from London Business School.

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White Paper 2/21 The inclusion of environmental, social and governance (ESG) factors in financial markets by Marco Boldini and Teresa Mattioli

Demand for ESG, sustainable investments and green funds is growing, driven by rising awareness of sustainability issues and increasing appetite to tackle climate change. But without standardised terms and definitions, this presents several challenges for financial markets. We look at the challenges in the context of the European Union’s (EU’s) new regulatory frameworks.

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White Paper 1/21 Investing with ‘carrots’ and ‘sticks’: generating maximum impact through ESG-linked loans and ESG covenants by Stanley Kwong

In this paper Stanley Kwong from Aviva Investors explains different approaches in the form of incentives and deterrents. This form of financing is still developing and has the potential to inspire new templates for investing and lending in public markets.

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White Paper 2/20 Biodiversity risk in the finance sector by Ben Jobson, Olivia White and Guilla Guidi

November 2020: Biodiversity is a critical risk factor across the world and underpins many of the United Nations Sustainable Development Goals (SDGs). This white paper explains how biodiversity fits into sustainable finance for both banks and investors. We highlight the new demands that private sector corporations will need to consider. These demands are significant as biodiversity loss holds an existential risk for the world and is a clear focus of SDGs 14 and 15 – Life below Water and Life on Land.

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White Paper 1/20 Gender diversity: A quest for equal opportunity in financial services by Caroline Murray

June 2020: Gender equality is important to women, to society and to business. This paper explores how workplace gender inequality affects economic freedom, social empowerment, life, and lifestyle choices. It further highlights how a lack of diversity, including gender diversity, affects businesses’ ability to thrive. This work aligns with SDG 6 – Gender Equality.

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Our research agenda

We believe that sustainability is fundamentally different to other forces that have shaped the financial sector in the past. Regulatory change has typically been a driver for many structural changes that have developed in response to a crisis. Sustainable Finance is different because it is being driven as a set of ideals that challenge our beliefs and ways of working.

Climate risk has been centre-stage when considering the new risks that financial institutions and corporations will face. Banks are re-considering the structure of their loan portfolios and working on new stress tests. Investment managers and asset owners are reviewing the nature of their investments. Corporations are developing Environmental, Social and Governance (ESG) policies to demonstrate their commitments to shareholders, lenders and stakeholders. As part of this process of change it is important that social and governance issues are explored in more depth.

Traditional financial innovation for banks and investment managers has been focused on individual customer needs rather than designing for collective goals. Sustainable finance requires an acceptance of external principles that presents three core challenges.

First, a product design process that starts by having to agree to mutually acceptable sustainability principles is going to be challenging. While it might seem straightforward to agree on high-level development goals, there will be differences of opinion about how to pursue them. A bank, investment manager or asset owner will need to decide how to map their organisation’s activities and processes against its chosen set of sustainability principles.

The second challenge is codifying those ideas into financial products, whether loans, deposits or investments. The legal and regulatory frameworks exist but are changing. Every product design creates new incentives for borrowers, lenders, buyers and sellers which can be challenging to explain and understand. There are risks to getting this wrong, both commercially and reputationally.

The third and perhaps the biggest challenge is measuring impact. How can we know that these financial innovations are making a difference? Do they genuinely act in support of the principles that we adhere to? This is more than just a logistical issue - there are cultural and ethical issues to consider.

We have developed a series of work around these challenges and will be publishing insights over time that we believe will be relevant to practitioners along with academic insights.

Educational programmes

The Centre offers training and short courses that can be designed for purpose depending on the level of staff seniority and the degree of familiarity with sustainable finance. The Centre also supports qualifications and programmes that are created by The London Institute of Banking & Finance.

Typical content includes:

Introduction to the principles of sustainable finance
Aligning the organisation to the SDGs
Integrating climate/biodiversity risk into risk management
The role of ESG in wealth management
Reporting and disclosures (eg. TCFD)
Sustainability leadership and governance
The role of central banks and regulators
Designing financial products for ESG.

Short courses and training

The purpose of short courses is to impart specific knowledge to a focused audience. The outcomes from this type of course should be well-defined and have an immediate practical benefit for your organisation and staff.

We can design and deliver those programmes face to face, virtually – or through a combination of the two. Courses are taught using case studies, interactive exercises and group work to bring the learning to life.

Sustainability in trade finance

In our continued efforts to promote education around sustainable finance, we’re working with Coastline Solutions to provide access to a unique opportunity for you to upskill from the comfort of your own home, in just 12 hours.

The Sustainability in Trade and Trade Finance programme at a glance:

Online training – access material anytime, anywhere and earn 12 CPD points.
Extensive content – from Trade Finance Sustainability experts, learn about the issues, governance and best practices.
Supporting sustainability – demonstrate your knowledge and commitment to sustainability in international trade.

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Qualifications

LIBF runs a post-graduate level programme in Sustainable Finance that is currently only available in the Middle East through the Abu Dhabi Global Market Academy. We are currently exploring alternative formats and geographical venues for similar courses.

Certificate in Sustainable Finance - Registration

In conjunction with the Abu Dhabi Global Market Academy The London Institute of Banking & Finance is presenting its first Certificate in Sustainable Finance in the Middle East and North Africa region, please register your interest.

Register your interest

Contact Details:

Advisory services and research

The Centre offers bespoke research projects for your organisation which we can staff with relevant experts. Please contact the Centre Director for an informal discussion of what we can offer.

For further information about any of our activities please contact the Centre:

E-mail: csf@libf.ac.uk

Launch of the Green Finance Education Charter

We are pleased to play our part in financing the green recovery by signing the first Green Finance Education Charter & integrating green finance into members' professional development programmes.

Thematic Bonds: where next? - Webinar

Chris McHugh, Director of our Centre for Sustainable Finance, puts thematic bonds into context with the developing market infrastructure around sustainable finance.