Are you a researcher with demonstrable expertise in understanding the financial system? Do you have an interest in agricultural systems and how to transition these to zero carbon? Do you enjoy engaging with stakeholders, particularly key actors from across the financial sector? 

The successful candidate will report to Professor Iain Clacher, of Leeds University Business School. Funded by the University’s Horizon Institute, the successful candidate will be part of the Centre for Financial Technology and Innovation (CFTI) and the Global Food and Environment Institute (GFEI), and contribute to developing a research area for cross-disciplinary collaboration on green finance and zero-carbon agriculture.

The Problem

UK financial institutions are the 9^th largest emitter of carbon globally. The Bank of England’s first climate stress test suggested that UK banks and insurers would take on £340bn-worth of climate-related losses by 2050 and £650bn of UK public and private infrastructure investment planned by 2030 is at risk unless action was taken. Agriculture is responsible for 10% of total UK GHG emissions. Decision making for farming is complex, risky and expensive. Transitioning to low carbon systems has been slower than circumstances demand. In 2020, UK farming businesses borrowed £19.6bn from banks and sums are rising.

For banks, one of the biggest sources of scope 3 emissions on their balance sheet is the financed emissions to agriculture, despite lending to the sector being a relatively small part of their loan book. Banks have the power to change this and could also drive zero-carbon agriculture. To enable this, banks would need to develop innovative financial instruments that recognise the environmental benefit of particular methods of farming, which would have to be grounded in the latest science. From this, banks could price credit differentially such that zero-carbon agriculture is rewarded with a lower cost of credit while other modes of farming have a higher cost of credit, which reflects its increased risk.

In addition to the banking system, insurance may have a crucial role to play in the transition to net zero in agriculture. Much of the insurance provided to the agricultural sector is for buildings, plant, and machinery. However, insurance is provided for environmental harm such as pollution and damage from run-off and so on. Given that these risks are only going to increase through time and are exacerbated or mitigated by farming practice, it is crucial to understand how the pricing of these policies operates currently and whether differential pricing could better manage the risks of the insurer and incentivise more sustainable farming practice.   

To explore the post further or for any queries you may have, please contact: 

Professor Iain Clacher  - Faculty of Business 

Tel: +44 (0) 113 343 6860, email: [email protected]

or

Dr. Gesa Reiss - Global Food and Environment Institute (GFEI)

Email: [email protected]