Luxembourg’s green finance offering placed 7th in an international index of such activities within worldwide financial centres published on 22 April. The financial centre placed third within the EU. It fell two spots in the index since last year’s results. A separate survey-based rating on the depth and quality of its offering was up 1 point.
Interestingly, the index ranked Luxembourg 6th, punching slightly above its weight, in the one of the four “areas of competitiveness”: human capital., which the index examined by grouping “availability of skilled personnel”, ‘flexible labour market”, “wealth and economy” and “governance”. In the area of infrastructure, Luxembourg wasn’t included in the 15 financial centres considered.
In the previous year’s results of the Global Green Finance Index (GGFI), Luxembourg had risen one spot to 5th place and was rated three points higher. In that edition, many Western European centres had lost ground, with 19 of 28 Western European centres dropping in the ranking.
Nicolas Mackel, CEO of Luxembourg for Finance, noted that “despite being one of the leading green financial centre, we must continue to work together on the goal of a true sustainable financial system globally.” However, Mackel also noted that “we are in a transition period it is clear that the onboarding of sustainable finance must speed up if we are to avoid the very dire consequences which the latest IPCC report warns for.”
Stiff competition
The green finance area is subject to stiff international competition, with progress by other centres, especially in the US and Asia/Pacific areas, inevitably eroding the position of other centres. However, Western European centres continue to dominate, with 7 Western European centres featuring in the top 10 of this year’s GGFI. All but one of these leading centres maintained or improved their rating,.
“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,” said the report for the 9th edition of the index. Western European centres including Luxembourg took seven of the top 10 spots, with US centres taking the other three.
War sets back energy transition
The Russian Federation’s illegal invasion of Ukraine will first of all “severely affect” the position of Moscow’s financial centre. The economic shock caused by the war, and the associated energy security will “slow down the transition away from fossil fuels in the short term,” said the report, “although it may lead to increased investment in renewable energy over the longer term.”
London and Amsterdam’s green finance centres have maintained their first and second positions in this year’s index, simultaneously improving their rating by more than 10 points. New York moved into the top 10, taking 5th place. Six Asia/Pacific centres are in the top 20, with Sydney, Australia taking a leading position in the region.
Rises and falls
Within Europe, some of the biggest shifts were Madrid’s 15 spot ranking increase and falls of more than 10 places for Berlin and Vienna.
The GGFI describes itself as a factor assessment index based on a range of instrumental factors - quantitative measures, and a parallel world-wide survey of finance professionals’ assessments on the quality and depth of green finance offerings in 126 financial centres.