LUMS teams up with Cambridge & Counties Bank to explore impact of climate change on long-term lending

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

As part of the three-year partnership, three student interns have been appointed to support the first phase of the project, which will focus on potential regulatory responses to the UK’s net zero commitment.

Elizaveta Paskal, Alex Cook (current and former LUMS MSc students, respectively) and Katie Thornton (a second-year physics student), were appointed in July and will work on the project for four months.

The interns will explore how legal and regulatory changes may impact long-term real estate lending, as tightened energy performance requirements and carbon pricing could potentially prevent landlords from letting or even selling properties, leaving certain types of properties stranded.

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, and leader of the overall project, said: “We are delighted to be working with Cambridge & Counties Bank on this innovative and exciting project.

“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 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 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, added: “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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