London has held on to one of the top spots for green finance quality in Z/Yen’s latest index, but Western Europe’s overall dominance is starting to slip.
In its Global Green Finance Index (GGFI), the City of London think tank ranked 78 financial centres across the world for their public, private and nonprofit investment in sustainable development projects.
Sustainable finance has become increasingly central in the financial services industry as the effects of climate change continue to have a devastating impact globally.
London sits closely behind Amsterdam and Zurich, remaining a number of spots ahead of Paris and Brussels.
The UK launched its Green Finance Strategy in 2019, in a bid to strengthen Britain’s economic policy for balanced growth in line with climate change commitments. It has seen the government pour investment into Britain’s low carbon economy, as it seeks to reach net zero carbon emissions by 2050.
Some business leaders think more can be done in the capital, recently calling on the Prime Minister to commit to developing a net zero financial system ahead of this year’s COP26 climate summit.
In a letter seen by City A.M. industry leaders Aviva and L&G among others said it was a “vital requirement for achieving the Paris Agreement and for delivering the government’s agendas of building back better, net-zero, and levelling up”.
Green finance US and Asian centres starting to mature
Encouragingly ratings of green finance rose in nearly all centres analysed for both depth and quality. Western Europe continues to dominate the top 10 centres but centres in North America and Asia Pacific are starting to vie for the crown.
San Francisco rose four places into fifth place while Los Angeles moved into the top 10 for the first time. And a strong performance in Asia saw Tokyo, Beijing and Singapore all firmly placed in the top 20.
For the first time the average rating of the top five Western European centres saw a decline, while the top five in other regions rose. While the region maintains its reputation for quality, the rapid expansion of the green finance industry has enhanced the depth of the products offered.
Additionally as their time in the sector increases, these centres are starting to build a solid reputation for their own offering.
“For the first time, Western Europe’s domination of the Global Green Finance Index is under pressure from Asia/Pacific and North American financial centres,” Professor Michael Mainelli, Executive Chairman of Z/Yen Group, said.
“The encouraging focus on green and sustainable finance by financial centres could materially improve the nature of economic recovery from the covid-19 pandemic.”