Rating the progress of the world’s green financial centres

In the sixth Global Green Finance Index (GGFI 6), Western Europe continues to lead world centres in green finance depth and quality, taking nine of the top 10 places in depth and all top 10 places in quality. This reflects the continuing work being undertaken by European financial institutions, central banks, regulators, and the European Union to embed sustainability in their regulatory work, including their economic support in response to the covid-19 pandemic.

We indicated in GGFI 5 that London’s lead in the quality index had been narrowing and that its leading position for quality was threatened. This prediction came to pass in GGFI 6. Zurich and Amsterdam have overtaken London to lead the quality index.

The leading driver of green finance continues to be Policy And Regulatory Frameworks, reinforcing the fact that green finance is a policy-driven sector, to date requiring government and regulatory action to thrive. Green Bonds are seen as a less interesting area of green finance than in previous editions of the GGFI, perhaps reflecting growing criticism of the uses to which green bonds have been harnessed.

Index Results

• Amsterdam retained its leading position in the depth index. Zurich has risen to second place. In the quality index, these positions are reversed, with Zurich leading and Amsterdam second.
• San Francisco was the leading centre outside Western Europe, ranking seventh for depth and equal 10th for quality.
• New entrant Helsinki ranked 19th equal for depth and 12th for quality.
• On depth, San Francisco and Oslo moved into the top 10, while Montreal and Hamburg fell back.
• On quality, Oslo rose nine places to fourth, Munich and San Francisco moved into the top 10, and Hamburg and Vienna fell back.
• Narrow margins separate centres at top of the tables. Among the top 10 centres the spread of ratings is 31 out of 1,000 for depth (44 in GGFI 5) and 43 for quality (44 in GGFI 5).

The top 20 ranked centres for depth and quality in GGFI 6 are shown in the table below:

Covid-19 & The UN Sustainable Development Goals
In the supplement to this edition of the GGFI, we take the fifth anniversary of the UN’s Sustainable Development Goals (SDGs) as our theme. We explore the progress made towards the goals, and the likely impacts of the covid-19 pandemic on their attainment. We also consider the threats and opportunities to SDGs associated with financial services, and the leadership role that financial centres can play in directing humankind onto sustainable pathways.

Professor Michael Mainelli, executive chairman of Z/Yen, said: “As in many other areas seeking reform, the covid-19 pandemic has ‘zoomed in on’ (sic) sustainability and finance. Green finance is moving fast, driven too by governments and regulators across the world. Innovation is increasing, not least in policy performance bonds, and now policy performance derivatives. Global financial support for sustainability is essential if we are to achieve the UN sustainable development goals.”

Full details of GGFI 6 can be found at www.greenfinanceindex.net