Amsterdam ranks second, London tops, and Western European centres dominate: Key takeaways from Global Green Finance Index

Amsterdam has retained its second place on the Global Green Finance Index for the second consecutive year. The ninth edition of Global Green Finance Index shows the Dutch capital not only managed to retain its place but also improved its rating by more than 10 points. However, London maintains its numero uno position in the index.

The Global Green Finance Index (GGFI) is a factor assessment index based on a range of instrumental factors and quantitative measures. The index is also a worldwide survey of finance professionals’ assessments on the quality and depth of green finance offerings in financial centres.

In simple terms, the index looks at the efforts of financial institutions across the world to support the UN Sustainable Development Goals. If you have ever wondered whether your financial city centre has made any progress to become a green city then look no further than the GGFI for an answer. Here is a look at some of the key lessons from the ninth edition of Global Green Finance Index.

Amsterdam ranks second on the index

Amsterdam maintained its second place on the Global Green Finance Index for the second consecutive year. It not only managed to retain its place but registered 11 points change in its rating. The city scored 562 in the eighth edition of GGFI and has now seen its rating jump to 573.

The report also shows that Amsterdam is able to not only retain its place but improve its rating because of the Dutch financial centre’s focus on green finance through both quality and depth. It is important to understand that the GGFI rating is different from the Global Financial Centres Index (GFCI), which has been measuring the competitiveness of financial centres since 2007.

Amsterdam ranks second in GGFI, in Green Finance Depth and also in Green Finance Quality. However, the financial centre falls behind other cities in terms of financial centre competitiveness, where it ranks only 20th and is behind the likes of Frankfurt and Madrid but ahead of Zurich.

Amsterdam and a look at its competitiveness

The Global Green Finance Index takes into account a number of factors and Amsterdam has already shown leadership in terms of green finance depth and quality. However, the city also comes second when it comes to factors such as sustainability, business, and human capital. This should not come as a surprise as the city has embedded UN Sustainable Development Goals into its core policies.

A number of new startups, entrepreneurs, and businesses are increasingly working with sustainable goals in mind and are doing their best to lower their carbon footprint. Even events like World AI Week being held in Amsterdam are doing their bit to reduce their carbon footprint. However, Amsterdam ranks only fourth when it comes to infrastructure.

The index shows that Amsterdam has skilled personnel, green finance activity, political stability, and rule of law but it lacks built infrastructure to support green activities compared to cities like London, Seoul, and New York. The Dutch capital also needs to improve its ICT infrastructure, transport infrastructure, and lower fossil fuel usage.

Amsterdam’s role in industry sectors

One of the key things to watch in the Global Green Finance Index is the differing assessment provided by respondents working in various industry sectors. This often leads to an interesting take about a city and Amsterdam fares well in this category as well. Amsterdam ranked second in the sub-sectors of knowledge and investment.

The knowledge sub-sector looks at universities and non-governmental organisations and their work in the field of green finance. Amsterdam, however, drops to fifth place in policy and its ranking further declines among respondents from the field of banking and trading. While Amsterdam manages 15th place in banking, London does not even appear despite being the top ranked city in the index.

London tops the index once again

London managed to retain its top place in the Global Green Finance Index again and its rating improved by 15 points in the ninth edition. This improvement in the rating of London could be owed to the recent government action on green finance, including the issue of the first UK sovereign green bond.

The city also benefits from its position as host of COP26, the United Nations Climate Change Conference held between October 31 and November 21 last year. The British capital saw its rating improve in green finance quality and depth and it also managed to come second in the financial centre competitiveness index.

Western European centres take seven out of top 10 ranks

Apart from Amsterdam holding the fort for European financial centres, Western European centres took seven of the top 10 places in the index. The US centres took the other three places. The Western European centres have always performed well in the Global Green Finance Index but the rise of US and Asia/Pacific centres shows the challenge is intense.

Among Western European centres, Madrid gained 15 rank places while Berlin and Vienna fell more than 10 places. Stockholm climbed three rank places to take fourth place with a rating of 552 while Oslo also improved a place. Zurich and Luxembourg saw their rank places drop by two positions while Geneva lost three rank places in the ninth edition of the Global Green Finance Index.