London leads new global green finance rankings

London’s reputation as a leading financial centre has now extended to include the field of sustainability.

A new Global Green Finance Index (GGFI) has found the city as the top destination for green finance, leading in both the categories of ‘penetration’ and ‘quality’.

The Index, launched by think tanks Z/Yen and Finance Watch, was compiled using survey data from finance professionals and over 100 relevant instrumental factors. These included human capital, infrastructure, legal, and policy factors.

It found that Western Europe scored the highest, featuring nine of the top 10 centres for quality of its green finance offering, and seven of the top 10 for penetration.

Amsterdam, Luxembourg, and Copenhagen performed highly; Chinese cities were also strongly represented with Shenzhen, Guangzhou, Shanghai and Beijing all rated for green finance penetration.

Paris scored the highest for the centre most cited to become more significant in green finance over the next two to three years, followed by Frankfurt and New York.

The survey data provided 1,790 rating from 337 experts over a two month period from December 2017-February 2018. The survey will continue to run online and sampled every six months in future editions of the index.

Respondents were most interested in green bonds and renewable energy as areas of investment, followed by sustainable infrastructure investment and energy efficiency. However, divesting from fossil fuels, carbon disclosure and green insurance showed the least amount of interest.

In addition, the two main drivers behind sustainable finance were seen to be the enabling policy framework in place, taking in tax incentives, mandatory disclosure, and technological change; secondly, demand from investors, climate change, public awareness, and infrastructure investment.

Dr. Simon Zadek, Co-Director, UN Environment Inquiry into the Design of a Sustainable Financial System commented: “Ratings and indexes are important instruments to enable effective communication of relative and absolute progress, as well as encouraging a race to the top, and a healthy debate of what constitutes success and how it can best be measured. In this spirit, Finance Watch and Z/Yen have taken us all to the next level in providing us with the first globally applicable index of developments in greening the world's financial centres”.

Professor Michael Mainelli, Executive Chairman of Z/Yen, added: “The core of the GGFI is a perception survey which observes and promotes change where it matters most – in people’s minds. The more we can get people talking about a sustainable transition, the quicker it will happen. The high level of interest in GGFI 1 is a step in that direction.”

 

Green Finance Penetration

 

Green Finance Quality

Source: Finance Watch, Z/Yen