London has topped an index ranking financial centres across the world for their green finance offerings, with Western Europe the highest-performing region.
Launched in Brussels last Wednesday, the Global Green Finance Index (GGFI) defines green finance as any financial instrument or service that results in positive change for the environment and society over the long-term.
London was ranked best for penetration and quality, with Amsterdam and Paris also scoring highly, while smaller centers like San Francisco and Hamburg were often found to outperform their larger national rivals.
“It is urgent that sustainable finance becomes mainstream in all financial centres,” said Benoît Lallemand, secretary general at NGO Finance Watch, which launched the index with think tank X/Yen.
“The GGFI aims to contribute to the definition of green finance and identify best practices and areas for improvement – we hope it will promote bold policy initiatives and high-quality financing that can cut through greenwash.”
The top green finance centres in each region are London, San Francisco, Shanghai and Shenzhen, Johannesburg and Cape Town, Mexico City, and Moscow.
Paris, Frankfurt and New York are considered most likely to grow in significance over the next two to three years.
Policy frameworks that enable tax incentives, mandatory disclosures, and technological change were found to be one of the main drivers of green finance, along with demand from investors and public awareness.
Renewable energy investment, green bonds and sustainable infrastructure finance were rated as areas of high impact on sustainability and of high interest.
However, there is a disconnection between some areas of high impact, such as disinvestment from fossil fuels, and areas of interest and activity, suggesting a potential role for policy action.
“The core of the GGFI is a perception survey which observes and promotes change where it matters most – in people’s minds,” Z/Yen executive chairman, professor Michael Mainelli, said.
“The more we can get people talking about a sustainable transition, the quicker it will happen.”
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