Europe takes pole position in race for green finance depth & quality, reveals latest Global Green Finance Index

The Index rates some 74 financial centres across the world on the depth and quality of their green finance offering, combining assessments from financial professionals with quantitative data which forms instrumental factors.

According to the GGFI, Western Europe’s pole position is a result of the continued work by European financial institutions, central banks, regulators and the EU to embed sustainability in their regulatory work, including their economic support in response to the pandemic.

Prof. Michael Mainelli (pictured above), executive chairman of Z/Yen, explained: “The GGFI, has tracked the development of the depth and quality of green finance in financial centres across the globe. 74 centres now feature in GGFI 6. Western Europe continues to lead the way, reflecting both actions taken by the EU, governments, and regulatory authorities, as well as public demand for action on sustainability.

“This dependence on public policy and regulation marks green finance out from other parts of the financial system, and success in green finance for financial centres is closely related to the ‘greenness’ of countries and cities across the board. Places where sustainability is a hallmark of public life and discourse have a marked advantage in green finance.”

Previously, London had sat atop the quality index, although since the release of the previous GGFI in March 2020, the city’s leading position has been lost. In the latest edition, Zurich and Amsterdam have overtaken London to lead the quality index, with Amsterdam retaining its leading position in the depth index, and Zurich rising to second place.

As with previous editions of the Index, the leading driver of green finance was revealed to be policy and regulatory frameworks, supporting the idea that in order to thrive the sector must be led by government and regulatory action.

Top 20 ranked centres for depth and quality in GGFI 6

Additional results from the Index revealed that:

• San Francisco is the leading centre outside Western Europe, ranking seventh for depth and 10th for quality, equal to Munich;
• New entrant Helsinki ranked 19th for depth – equal to Tokyo – 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;
• Among the top 10 centres, the spread of ratings is 31 out of 1,000 for depth (44 in the previous edition) and 43 for quality (44 in the previous edition).

Mainelli continued: “As in many other areas seeking reform, the pandemic has accelerated change in much economic activity, and ‘zoomed in on’ 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.”

The GGFI was formed in 2018 by London-based commercial think-tank, Z/Yen, as part of the organisations’ Long Finance initiative. The initiative undertakes a variety of research programmes on financial centre futures, sustainable futures, distributed futures, eternal coin and meta-commerce.

In each edition of the Index, the results have been formed by combining questionnaire assessments from financial services professionals, NGOs, regulators, and policy makers with instrumental factor analysis to produce rankings of green financial centres on a variety of indicators.

With the next edition of the Index – GGFI 7 – looming on the horizon, Z/Yen have invited those with an interest in green finance to take part by rating the financial centres here: www.greenfinanceindex.net/survey