Many international finance centres are setting up or piloting sustainable finance bond programmes. But inconsistency in the way sustainability is measured makes it hard to assess just how green they really are. Silvia Pavoni reports.

Sustainable finance is becoming a growing area of interest for international financial centres (IFCs) eager to attract new business or find a new niche. Measuring IFCs’ environmental credentials is harder, however, as available indicators are often difficult to quantify and centres’ performances vary according to which indicator is used.

Take green bonds issuances, for example. This type of debt has gained momentum since the signing of the Paris Agreement in December 2015, when 195 countries officially committed to fight climate change. Rating agency Moody’s forecasts that this year their issuance will approach $120bn, surpassing 2016’s record of $93.4bn.

Nearly $26.5bn was raised in G7 hubs alone, according to a UN analysis of data provided by think tank Climate Bonds Initiative. Meanwhile, nine stock exchanges around the world have set up, or are piloting, green bond programmes.

New York leads the green bond ranking by an overwhelming margin. With $15.5bn raised in 2016, the US hub is more than three times larger than second ranked Paris. In relative terms, however, the French IFC appears greener. When compared with the size of the local stock market’s capitalisation, the Parisian green bonds market is larger than all others.  

There are other indicators that also help quantify IFCs’ environmental appeal, such as the revenues generated by renewable energy, energy storage and energy-efficiency companies in proportion to revenues earned by all companies listed on stock exchanges. In this case, Milan takes the lead with green revenues representing 2.35% of the total, according to a UN analysis of Bloomberg data.

Corporate disclosure on sustainable policies also confirm Paris’s green credentials. Based on Corporate Knights magazine’s Sustainable Stock Exchanges ranking, the UN reports that companies listed in Paris do better than others within the G7 when it comes to communicating their energy, water and waste policies, and other sustainable indicators. Businesses listed in New York and Tokyo do worst.

IFCs in G7 countries


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