Mike Wardle, Professor Michael Mainelli, Simon Mills & Djellil Bouzidi

Published by
Long Finance & Financial Centre Futures (April 2022), 81 pages.

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The Global Green Finance Index 9 - Supplement "Chile Sets A High Bar"

The ninth edition of the Global Green Finance Index (GGFI 9) was published on 28 April 2022. GGFI 9 provides evaluations of the green finance offerings of 81 major financial centres around the world. The GGFI serves as a valuable reference into the development of green finance for policy and investment decision-makers.

As ESG analytics and other aspects of green finance penetrate mainstream financial activity, there is growing confidence in the development of green finance across all regions.

Western European centres take seven of the top 10 places, with US centres taking the other three places. Six Asia/Pacific centres feature in the top 20, with Sydney moving into a leading position in the region. While Western European centres continue to lead the way, the results for US and Asia/Pacific centres continue to show that the challenge to Western European dominance is intense.

Policy & Regulatory Frameworks continue to be identified as the leading driver in the development of green finance, underlining the reliance of green finance on robust and stable policy frameworks, which require government and regulatory action. Other leading drivers were focused on Public Awareness, Risk Management Frameworks, and Academic Research around climate change. Green Bonds are again identified as the most interesting area of green finance and ESG Analytics retains its strong position, along with Sustainable Infrastructure Finance.

The invasion of Ukraine by the Russian Federation will have a major impact on the world economy and we expect the position of Moscow as a financial centre to be severely affected. In addition, the economic shock that will arise from the war, and the energy insecurity that has already been seen, will slow down the transition away from fossil fuels in the short-term, although it may lead to increased investment in renewable energy over the longer-term.

In the supplement to this edition of the GGFI on pages 28 to 40, we focus on the issuance of the first Sovereign Sustainability–Linked Bond by the Republic of Chile, and the implications of this new product for both the sovereign bond and green bond markets. The concept of policy performance bonds was developed by Z/Yen in 2005 and they have been used in the corporate world in recent years. This is the first example of a sovereign policy performance bond.

Index Results

  • London and Amsterdam maintained their first and second positions in GGFI 9, both improving their rating by more than 10 points.
  • London may have benefitted from both recent UK government action on green finance, including the issue of the first UK sovereign green bond, and from its position as host of COP 26.
  • New York moved into the top 10, taking fifth place.
  • The margins separating centres at the top of the index have broadened in GGFI 9. Among the top 10 centres the spread of ratings is 45 out of 1,000, compared to 31 out of 1,000 in GGFI 8.
  • We researched 126 financial centres for GGFI 9. The number of centres in the index has increased to 81 (80 in GGFI 8), with the addition of Santiago.