New Climate Finance report: The invisible hand of the free market does not have green fingers

Amsterdam and London have topped the latest global rankings of green financial centres, according to the latest edition of the Global Green Finance Index released last week (27 September). Copenhagen and Paris came second. But overall scores reflect that the share of financial markets that can be considered sustainable remains very low.

The report, which is updated and published twice a year, is based on a worldwide survey of finance professionals’ views on the quality and depth of green finance offerings across 110 international financial centres. It seeks to chart the progress of financial centres towards a financial system that delivers sustainable development, and values people and the planet as much as profit.

Rankings

Amsterdam and Copenhagen came first and second for depth, pushing London into third place. In the quality rankings, Paris moved up three places to second, with London retaining its top spot. In North America, Montreal came first for depth and San Francisco first for quality. Shanghai, Casablanca, São Paulo and Prague topped the rankings for both depth and quality in their regions.

There were 12 new entrants added to the index: British Virgin Islands, Calgary, Casablanca, Cayman Islands, Istanbul, Malta, Mauritius, Montréal, Prague, São Paulo, Vancouver, and Warsaw. This demonstrates the growth in interest in green finance worldwide, however, the overall ratings are still low and there is significant room for growth in the range and quality of green finance products on offer. The ratings for quality given to centres range between 315 and 481 out of 1,000.

Policy frameworks and investor demand

The ratings for depth of green finance in a centre’s overall financial offering range between 307 and 435 out of 1,000, equivalent to between three and four out of ten on a ten point scale. This underlines that perceptions of green finance are ahead of market reality as well as the scale of transition needed, but also the attention it is receiving and that respondents expect green finance to be growing rapidly in significance. 

The report also recognises the importance of policy frameworks and investor demand in fueling the growth of green finance markets. Respondents to the report commented that the uptake of green finance is most strongly influenced by policy and regulation, closely followed by investor demand and climate change itself. The clear message to policymakers is not to be afraid to use policy and regulatory interventions to promote green finance.

Perceptions of green finance ahead of market reality

Renewable energy investment, sustainable infrastructure finance, and green bonds remained the areas of most interest, and there was increasing interest in fossil fuel disinvestment, carbon disclosure and green insurance.

The data suggest that leadership on quality of life issues may be an enabling factor for the growth of green finance.

Developed jointly by Z/Yen and Finance Watch, the new report underlines that while there is significant room for growth in the range and quality of green finance products on offer, respondents expect green finance to be growing rapidly in significance. Additionally, it highlights that perceptions of green finance are ahead of market reality.

“As this report demonstrates, the share of financial markets that can be considered sustainable remains very low. Progress is being made, with more financial centres entering the index this year and, with the support of the MAVA Foundation, improvements to the methodology are promising. Yet the pace of the deployment of innovation and the mobilisation of finance remain a long way off, both in terms of urgency and of scale,” says Kirsten Dunlop, CEO, EIT Climate-KIC in the foreword of the report. 

A systemic approach

“At EIT Climate-KIC, our work increasingly focuses on connecting ecosystems of innovative partners and activities to accelerate complex, systems-level solutions. New business models, ways of investing, accounting and reporting are fundamental to action on climate change. But they can only fulfil their potential if they are matched with efforts across agriculture, buildings, energy, industrial and transport sectors,” Dunlop adds.

This systemic approach – innovation for sustainable finance – will be the focus of this year’s Climate Innovation Summit 2018 taking place in Dublin from 6-8 November.

As part of the summit programme, the Chairman of Z/Yen Michael Mainelli will be introducing and hosting our ‘Great Debate’ – an Oxford-style debate, asking the question ‘Can Self-Reporting Ever Be Effective?’ to the group of panellists:

  • Manuel Coeslier, MIROVA
  • Hanna Waltsgott, Responsible Investment
  • Andreas Hoepner, University College Dublin
  • Isabella Laurent, EBRD
  • Stan Dupre, 2dii

Read more and register for the Climate Innovation Summit 2018 here.

 

Z/Yen is a commercial think-tank, consultancy and venture firm headquartered in the City of London. It works in the financial services, technology and voluntary sectors on a range of projects from research to performance review and strategic management. One of its specialisms is the development and publication of research combining factor analysis and perception surveys.

Finance Watch is a European non-governmental organisation that conducts research and advocacy on financial regulation. Based in Brussels, the organisation works for a financial system that allocates capital to productive use through fair and open markets, in a transparent and sustainable manner without exploiting or endangering society at large.

 

 
Location
Related Goal
Goal 12: Foster bankable green assets in cities
Articles you may be interested in
In The News
Five EIT Climate-KIC startups announced as Cleantech Innovate finalists

Five EIT Climate-KIC supported startups are among the 30...

Five EIT Climate-KIC startups announced as Cleantech Innovate finalists
In The News
Drawdown book: Global warming is reversible

Climate protection initiative gives a preview of the German...

Drawdown book: Global warming is reversible
In The News
International effort launched to determine best CO2 capture & utilisation ...

Economic and environmental guidelines will support new industries and...

International effort launched to determine best CO2 capture & utilisation technologies
In Detail
New report cements wood as the future of construction

In a new report, 25 examples of using wood in construction showcase that reducing the carbon footprint of our buildings is not only possible,...

New report cements wood as the future of construction
In The News
Transatlantic bridge for European innovation: EIT Community opens its first Hu...

The European Institute of Innovation and Technology (EIT) opened...

Transatlantic bridge for European innovation: EIT Community opens its first Hub in Silicon Valley
In The News
EIT Climate-KIC supported Beyond Ratings registered as credit rating agency by...

EIT Climate-KIC supported firm Beyond Ratings, a financial services...

EIT Climate-KIC supported Beyond Ratings registered as credit rating agency by European Securities and Markets Authority
In our community
Interview with Nico Wolf, CFO, Endless Energy – Winner of the EIT Climate-...
Interview with Nico Wolf, CFO, Endless Energy – Winner of the EIT Climate-KIC Finance Incubator Competition
In The News
EIT Climate-KIC supported Ombrea raises €1 million to commercialise its smar...

EIT Climate-KIC supported start-up Ombrea, which offers a tool...

EIT Climate-KIC supported Ombrea raises €1 million to commercialise its smart agriculture system
In The News
EIT Climate-KIC announces partnership with Silicon Valley innovation hub

EIT Climate-KIC has announced its partnership with cleantech innovation...

EIT Climate-KIC announces partnership with Silicon Valley innovation hub
In The News
Eight EIT Climate-KIC innovators in prestigious Forbes 30 Under 30 Europe List...

In the last four years, the EIT Community has...

Eight EIT Climate-KIC innovators in prestigious Forbes 30 Under 30 Europe List 2019
In The News
Bill Gates lists EIT Climate-KIC’s Climeworks on 2019 Breakthrough Techn...

Bill Gates was invited to be the first guest...

Bill Gates lists EIT Climate-KIC’s Climeworks on 2019 Breakthrough Technologies list
Innovation Spotlight
AI and robotics could revolutionise municipal waste sorting

Ferrovial, a leading infrastructure operators and municipal services company, and EIT Climate-KIC partner, is collaborating with start-up...

AI and robotics could revolutionise municipal waste sorting
In Detail
Accelerating the transition to a circular economy

A new report, “Accelerating the transition to a circular economy: Improving access to finance for circular economy projects,” provides key recommendations to drive increased...

Accelerating the transition to a circular economy
In The News
EIT Climate-KIC launches ‘Call to Action’

This week, EIT Climate-KIC launched its call for proposals....

EIT Climate-KIC launches ‘Call to Action’
In The News
EIT Climate-KIC supported Ÿnsect raises €110 million, becoming global leade...

Ÿnsect announced yesterday that it has raised €110 million...

EIT Climate-KIC supported Ÿnsect raises €110 million, becoming global leader in alternative protein
Opinion
Policy: The circular designer’s secret weapon
Joe Iles & Simon Widmer Circulate News & The Circular Design Guide
Policy: The circular designer’s secret weapon
In The News
EIT Climate-KIC supported Climetrics announces top ten European equity funds f...

Climetrics, the world’s first and only independent climate rating...

EIT Climate-KIC supported Climetrics announces top ten European equity funds for climate performance
In The News
EIT Climate-KIC supported WINnERS secures over €1.5 million in funding

WINnERS, an agricultural supply chain de-risking service supported by...

EIT Climate-KIC supported WINnERS secures over €1.5 million in funding
In our community
Interview with Marian-Constantin Vasile, Trainer, EIT Climate-KIC
Interview with Marian-Constantin Vasile, Trainer, EIT Climate-KIC
In our community
Interview with Piotr Magnuszewski, Programme Leader, Centre for Systems Solu...
Travis Hendrix tbd
Interview with Piotr Magnuszewski, Programme Leader, Centre for Systems Solutions
Opinion
How the climate community breeds its own inaction
Dominic Hofstetter EIT Climate-KIC
How the climate community breeds its own inaction
Innovation Spotlight
Not your ordinary reusable bag: Plant trees & earn discounts while you s...

Remember a time when you’d carry your purchases home in a plastic bag? Neither can we. That’s...

Not your ordinary reusable bag: Plant trees & earn discounts while you shop with goodbag
In our community
Interview with Mike Asquith, Project Manager – Integrated Environmental As...
Interview with Mike Asquith, Project Manager – Integrated Environmental Assessment, European Environmental Agency
In The News
EIT Climate-KIC launches strategy for 2019-2022

EIT Climate-KIC, innovation community established and funded by the...

EIT Climate-KIC launches strategy for 2019-2022
Opinion
A systemic approach to innovation in land use and nature-based solutions
Daniel Zimmer Director Sustainable Land Use at EIT Climate-KIC
A systemic approach to innovation in land use and nature-based solutions
Opinion
How moderation could accelerate climate action
Dominic Hofstetter EIT Climate-KIC
How moderation could accelerate climate action
In The News
Close the circularity gap to avert catastrophic climate change, Davos told tod...

A new report by Circle Economy, supported by EIT...

Close the circularity gap to avert catastrophic climate change, Davos told today
In our community
Interview with Mia Dragovic Matosovic, Scientific Researcher, Institute for ...
Interview with Mia Dragovic Matosovic, Scientific Researcher, Institute for European Energy and Climate Policy
In our community
Interview with Charlotte Breen, from C40’s Business & Innovation Team
Interview with Charlotte Breen, from C40’s Business & Innovation Team
In The News
EU group invites feedback on sustainable finance definition

The Technical Expert Group on Sustainable Finance (TEG) set...

EU group invites feedback on sustainable finance definition