Lancaster University: New LUMS partnership explores impact of climate change on specialist UK bank

Lancaster University Management School (LUMS) is partnering with Cambridge & Counties Bank to explore how sustainability and climate change may impact the bank’s future and support the development of its strategy.

The new three-year partnership between LUMS and Cambridge & Counties Bank – a specialist bank based in Leicester which offers loans to experienced property investors – has kicked off with the appointment of three student interns to support the first phase of the project. This will focus on potential regulatory responses to the UK’s Net-Zero commitment.

The interns, all Lancaster University students, will explore how legal and regulatory changes may impact long-term real-estate lending. Tightened energy-performance requirements and the introduction of carbon pricing, for example, can potentially prevent landlords from letting or even selling properties. This means certain types of properties may be left ‘stranded’ by regulatory changes, which can be detrimental to their market value. The project aims to develop ‘risk scores’ to gauge the likelihood of properties being ‘stranded’ in this way.

Dr Kim Kaivanto, Director of LUMS’ MSc in Money, Banking and Finance, is leading the overall project. He said: “We are delighted to be working with Cambridge & Counties Bank on this innovative and exciting project which, to the best of our knowledge, is the first of its kind within the UK banking sector.

“There is a growing sense of urgency around the UK’s response to the climate crisis which will inevitably disrupt sectors as we get closer to Government-set targets, and see increasing regulatory change. The pace of change on the horizon means there is a growing risk to long-term lenders and borrowers in particular, who may have the rug pulled from under them when, part way through agreements, the regulatory landscape changes.

“Cambridge & Counties Bank is in a unique position as it is fully aware of the risks climate change presents to its business over the coming years, and also to its responsibility as an employer within the sector, consciously thinking about the changes it can make internally in order to become more sustainable and meet its green ambitions.

“We are looking forward to working closely with the Cambridge & Counties Bank over the coming months and years to help them future-proof their business and embed awareness of climate change risk across its operations.”

Mike Hudson, Chief Risk Officer at Cambridge & Counties Bank, said: “The impact of climate change has become a fundamental business priority and we are dedicated to being a positive influence within the industry and local community for the benefit of all stakeholders. Importantly, this is just the start of the journey – we are busy further refining our programme, including identifying other areas where we can continue to make positive strides.”

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