The city on the Main is catching up in the tough competition for the leading center for sustainable investments.
(Photo: Reuters)
Frankfurt The competition was fierce and the decision was eagerly awaited in financial centers around the world. In the end, Frankfurt prevailed in the fight for the seat of the planned international body to set global standards for climate-related financial reporting (ISSB) – at least the Main metropolis will be the most important location for the new institution.
Frankfurt will not host the ISSB all on its own, however, according to a notification on Wednesday, the chairperson and board of the committee will be based in Germany, but key functions will also be based in Montreal, and offices in San Francisco and London are also planned as further locations are being discussed in Beijing and Tokyo.
The International Sustainability Standard Board (ISSB) is to develop global standards for corporate sustainability reporting under the umbrella of the International Financial Reporting Standards Foundation (IFRS Foundation). The IFRS Foundation is a non-profit, private organization that was founded with the aim of developing understandable and globally recognized accounting standards.
Sustainable investments are seen as a global growth business. Supervisors and politicians have discovered the financial markets as a central control element for combating climate change, while at the same time banks and asset managers have identified the ESG trend as a lucrative business area.
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Is sustainability just a cover?
This mixing of business interests and social engagement has recently caught critics who accuse the industry of using sustainability only as a cover to maximize its profits. One reason for the criticism: there is no uniform definition of what exactly is “sustainable”. There is a lack of globally applicable criteria, for example for so-called green investments, and the ISSB is intended to help close this gap.
All around the world, the major financial metropolises want to benefit from the “sustainable finance” growth trend. In a survey conducted by the British consultancy Z Yen among capital market and banking professionals on the quality of financial centers in terms of sustainability, European cities dominate.
In the latest ranking, London tops the list worldwide, followed by Amsterdam. In total, Western European financial centers achieved eight places in the top ten. So far, Frankfurt is not represented among the 20 most important cities for sustainable banking and green investments.
That should change, also with the help of politics. The federal government supported Frankfurt’s application for the headquarters of the ISSB “at the very highest level”. Overall, the Frankfurt Main Finance initiative secured the support of 185 companies and associations.
In Frankfurt there is still bitterness that Paris will be the location for pan-European banking supervision in 2017 Eba prevailedwho had to move away from London because of Brexit. Many in the financial scene on the Main blamed the lack of political support for this defeat.
More: Europe’s financial metropolises want supremacy in green investments.