Tokyo (SCCIJ) – Zurich has been ranked second in the latest Global Green Finance Index, exchanging its previous first place with Amsterdam, but with a very narrow difference of only four points and London a close third. Geneva rose two places and ranked 7th, making Switzerland the only country to have two financial centers in the Top 10.
Gains for Asia-Pacific
Western Europe continues to dominate both the ‘depth’ and ‘quality’ green finance ratings, taking nine of the top 10 places in-depth, and all top 10 places in quality. This reflects the continuing efforts made by European financial institutions, central banks, regulators, and the European Union to embed sustainability in their regulatory work, including in the economic support offered in response to the Covid-19 pandemic.
The margins separating centers at the top of the index are narrowing. Among the top 10 centers, the spread of ratings is 29 out of 1,000, compared to 51 out of 1,000 in the last index version. Amsterdam, Zurich, and London retained their leading positions, though with falls in ratings. Scandinavian centers have slipped back. Madrid saw a particularly strong performance, gaining 28 points and rising 6 places. Respondents from Asia/Pacific rated Western European centers higher than average.
The majority of Asia/Pacific centers saw gains in ranking in the overall index. Tokyo maintained first place in the region but is hard-pressed by Beijing only one point behind. Sydney and Singapore are firmly ensconced in the top 20 in the index. They all consolidated gains and challenged or displaced incumbents from Western Europe. Seoul rose nine places to 22nd, tied with Guangzhou. Busan joined the index with a strong showing at 31st place. However, respondents from Western Europe and North America rated Asia/Pacific centers below average.
Rise of “green” financing
The Global Green Finance Index, now in its seventh edition, is an initiative to develop a ranking of the quality and depth of Green Finance activity in financial centers. The idea of “green” finance is related to financial instruments to support environmental, social, and governance investment causes, known as ESG.
As a factor assessment index, it is based on a range of quantitative measures and a global survey of finance professionals’ assessments of the quality and depth of green finance offerings in financial centers. This research is conducted by Z/Yen, one of the City of London’s leading commercial think-tanks.
Green Bonds have regained their status as the most interesting area of green finance despite some criticism of the uses to which green bonds have been harnessed. ESG analytics retains its strong position, whilst Carbon Markets and Carbon Disclosure, which were somewhat neglected issues, have seen a small rebound in popularity, possibly as a result of growing interest in the forthcoming COP 26 conference.
Text: Martin Fritz for SCCIJ, with material of Z/Yen