Green Finance refers to any financial instrument or financial services activity – including insurance, equity, bonds, commodity and derivatives trading, analytical or risk management tools – which results in positive change for the environment and society over the long term (sustainability). The most basic “greenness” criterion of a company or project it that is contributes to reduce Green House Gases emissions.
Over the last two decades, the rise of new financial instruments, such as Green Bonds, and environmental markets, such as carbon, forestry, or water services, along with increasing analytical investigation, have increased attention on green finance.
Green finance is no longer seen as a fringe activity, but a profitable and desirable activity, which drives financial markets, serves society and enhances the status of financial centres which demonstrate expertise. Financial services are an essential component of a sustainable economy, which meets the needs of stakeholders, enhances quality of life, protects the environment and addresses global issues such as climate change.
The Global Green Finance Index (GGFI) gives a measure of how financial centres are responding to this challenge. We hope that enabling centres to compare their performance with their peers, will improve policy makers’ understanding of the drivers of green growth, and assist them in shaping the financial system to support sustainability goals.
The index is created 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. Details of our methodology can be accessed here.