Which global cities are leading on climate change?

London has retained its popularity with investors

Schroders has shaken up its influential Global Cities Index with the addition of an environmental impact score (EIS) to enable investors to rate which cities are leading the climate change charge.

The EIS was introduced this year to quantify which regions have the lowest environmental impact.

Los Angeles has retained its position at the top of the Index – despite its overall score slipping due to its “mediocre” Environmental Impact Score (EIS).

As well as the EIS, the index, which ranks the economically strongest cities for global real asset investing, is based on two other proprietary impact scores – the Economic Impact Score (EcIS), and University Impact Score.

While LA came out on top for the fourth year in a row, its overall score slumped to 8.2 in 2020 from 8.6 last year, as its environmental targets came below par.

London remains in second place as its economy continues to attract multi-national companies, is the home of outstanding Universities and received a good EIS.

Notable movers include Stockholm, which entered the top 30 for the first time in 29th place, due to its strong EIS and GDP score. It is the only Scandinavian city to make the top 30.

US cities Seattle and Austin also climbed the list, with both at the forefront of the knowledge economy. The two cities also attract well-paying new jobs compared to other locations, reflected in their strong median income scores.

On the other end, Chinese cities fared less well on EIS causing them to fall in the rankings.

Although Beijing and Shanghai score poorly on air and water quality, they still hold positions in the top 20, at 19 and 20 respectively, given their high ratings in the other impact scores.

Schroders said it remains “extremely optimistic” for Chinese cities as they convert to low emission fuels, although this is not yet reflected in the data.

“Cities are responsible for more than 70% of global CO2 emissions and how they respond to the demands of rapid global urbanisation, as well as environmental and social concerns, represents both a challenge and opportunity for policy makers, residents and investors,” Tom Walker, co-head of global cities at Schroders, said.

“Cities with poor EIS require the strongest policy response in order to safeguard their futures. There are many examples of cities with a poor EIS score that are at the vanguard of sustainable urban policies. We expect to see many of these cities improve their EIS score over the coming years, in particular the Chinese cities,” Walker added.

According to data from Climate Action Tracker, whilst China’s greenhouse gas emissions are approximately 27% of the world’s total, they are lower on a per capita basis than the US.

Walker said it he believes the transition to renewable energy from coal and the increasing utilisation of electric vehicles will help enable emissions from Chinese cities to decrease at a fast pace.

“We weren’t surprised to see London maintain its second spot in the Index,” Walker continued.

“With an economy that continues to attract multi-national companies and highly skilled talent, boasts a high quantity of green spaces, has access to clean and reliable water, as well as reliable energy and public transport, London has retained its popularity with investors,” Walker said.