London slides down rankings for global green finance leaders
London has dropped from first to third place in a global ranking of the world's "greenest" financial centres, with ties to “legacy assets” focusing on “non-green” financial offerings impacting its score.
Published today (October 1), the second edition of the bi-annual Global Green Finance Index (GGFI) from Z/Yen and Finance Watch ranks 59 cities in accordance to the quality, delivery and depth of green financial services and offerings.
The report names Amsterdam as the overall global leader and ranks Copenhagen in second place, claiming that both cities have outranked London in terms of depth in the past six months. London has been placed joint third with Luxembourg.
Nonetheless, the report hails London as the world leader in terms of sustainable finance and green finance infrastructure, noting that Western Europe outperformed all other regions. Indeed, more than one-third (37%) of cities to be named in the index are in this region.
London claimed the top spot on the first edition of this report in March. The document explains a trend towards smaller financial centres such as Luxembourg, Casablanca and Montréal overtaking their larger counterparts as their size offers them “more scope to advance through specialisation” as one reason for London’s lack of progress.
It states that larger financial centres such as London, New York and Paris are beginning to “suffer from negative perceptions linked to their legacy brown assets”, as these cities also play host to many “non-green” financial services and offerings. The report notes that large cities tended to fare worse in the index for depth than for quality.
The report arrives as green campaigners continue to accuse London-based organisations including City Hall of being slower to divest from oil, gas and coal projects than their global counterparts. London councils, for example, collectively held more than £16bn of shares in fossil fuel companies as of January 2018, while the London pension fund still has £69m of fossil fuel assets.
“In the first edition of the index, we set out our intention that the index should chart the progress of the world’s financial centres towards a financial system that delivers sustainable development and values people and the planet as much as profit,” Z/Yen’s executive chairman Michael Mainelli said.
“The combination of instrumental factors and perceptions measured in this index, as in many other areas, can be a leading indicator of future activity. We believe that the index is one element of the work required to measure the development of green finance, by showing how green finance centres are evolving.”
A green future?
On a more positive note for the UK, London has been named in the GGFI as one of the six best global cities for future green finance prospects, according to a survey of 535 respondents in the global finance industry.
The report comes shortly after The City of London Corporation pledged to invest £2m in the UK’s new Green Finance Institute once the new body launches next year.
The London-based Institute will see top financial experts from Aviva, Barclays, HSBC, Legal & General and the Bank of England working alongside academics and sustainability experts to accelerate private sector funding in green technologies, infrastructure and innovative start-ups.
In other good news for the UK’s green finance movement, a recent report from sustainable investment firm Triodos Bank revealed that the UK’s socially responsible investing (SRI) market is set to grow by 173% by 2027 to reach £48bn.
Triodos Bank’s findings echoed those of a recent Climate Bonds Initiative report, which found that the global green bonds market grew by a staggering 78% between 2016 and 2017, with investors funnelling more than $150bn into low-carbon projects.