As the world shifts towards sustainable finance to tackle climate change, several financial hubs are racing to lead this green revolution. Notably, London, Abu Dhabi, and Singapore are positioning themselves at the forefront of sustainable finance, earning the nickname “Green Wall Street” contenders.
Each of these global centres is leveraging its strengths (be it deep capital markets, sovereign wealth, or strategic location) to attract green capital and innovation. They are issuing green bonds, establishing climate investment funds, and pioneering regulatory frameworks that encourage environmental, social, and governance (ESG) investments.
This competition, along with collaboration, to become the premier sustainable finance hub, could shape the future of global finance and accelerate the fight against climate change.
London: Pioneering The Green Finance Revolution
London has taken an early lead in sustainable finance, building on its centuries-old status as a global financial capital. In recent years, the UK government and City of London institutions have launched a flurry of green finance initiatives. For instance, in 2021, the UK Treasury issued its first “green gilts” (sovereign green bonds), raising funds dedicated to environmental projects.
This signalled government commitment and helped spur a domestic green bond market. The Financial Conduct Authority (FCA), Britain’s regulator, has been developing rules to curb greenwashing and define clear standards for investment products labelled as sustainable. London also set up a dedicated Green Finance Institute in 2019 to coordinate public-private efforts and innovation in climate finance.
Policy support has been bipartisan, with the United Kingdom seeing green finance as an economic opportunity as much as an environmental one. “What we’ve got here is an economic growth story of the 21st century,” says Alok Sharma, former COP26 President, highlighting that scaling climate finance can create jobs and wealth.
Indeed, estimates suggest that by the 2030s, sustainable finance globally will be worth tens of trillions of dollars, and London wants a large share of that business. To that end, in 2023, the United Kingdom also established a national infrastructure and innovation fund for low-carbon technologies, effectively a sovereign climate wealth fund to co-invest alongside private capital.
London’s long history of financial innovation (from inventing joint-stock companies and modern insurance centuries ago to today’s carbon markets) gives it an edge. The City of London’s deep capital pools and talent are now being mobilised for climate solutions.
A new “Transition Finance Council,” chaired by Sharma, is working on strategies to finance the decarbonisation of heavy industries. This is a frontier of sustainable finance that involves funding cleaner practices even within traditionally “dirty” sectors. Furthermore, the United Kingdom was among the first major economies to mandate climate risk disclosures for large companies, aligning finance with net-zero goals. All these moves have coalesced to make London a leading sustainable finance hub. During the city’s annual “Climate Action Week,” tens of thousands of global delegates convene at venues like Guildhall and the London Stock Exchange, which is symbolic of how London is marketing itself as the place where finance fights climate change.
Abu Dhabi: From Oil Wealth To Climate Investment Hub
Over 3,000 miles away, Abu Dhabi is crafting its own niche in green finance, somewhat counterintuitively leveraging its oil wealth to pivot into sustainability. The capital of the UAE has launched ambitious initiatives to diversify from hydrocarbons and attract sustainable finance, recognising that petrodollars can be reinvested into the industries of the future.
A cornerstone of Abu Dhabi’s strategy was the 2023 creation of Alterra, a $30 billion climate investment fund. Backed by government capital, Alterra is structured as a “fund of funds” that partners with other asset managers to invest in climate solutions, particularly in developing countries.
The fund’s goal is to mobilise an impressive USD 250 billion in total investments by crowding in co-investors around the world. This scale and Global South focus drew praise as a unique approach. As Alterra’s director, Majid Al Suwaidi, notes, it proved there is an appetite to invest in emerging-market climate projects when anchored by credible capital.
Abu Dhabi’s financial free zone, the Abu Dhabi Global Market (ADGM), has been central to building the emirate’s green finance ecosystem. ADGM, which operates under common-law regulations, has rolled out the region’s first comprehensive sustainable finance regulatory framework.
This framework, introduced in 2022 to 2023, provides clear criteria and designations for green funds, green bonds and sukuk (Islamic bonds), sustainability-linked securities, and ESG disclosures. In fact, ADGM was the first globally to introduce a regulated Climate Transition Fund category, a vehicle specifically meant to channel investment into “greening” carbon-intensive assets and guiding companies toward net-zero transitions.
By creating these rulebooks and even a green product “designation” mark, ADGM is putting wind in the sails of sustainable finance efforts in Abu Dhabi. It gives investors confidence that labelled green products in Abu Dhabi meet robust standards.
ADGM now hosts over 180 investment funds and entities focused on sustainability as of 2023. Institutions from around the world are setting up sustainable investment operations in Abu Dhabi, drawn by government support and by the UAE’s advantageous position bridging global markets.
The government has also used its influence and diplomatic ties to advance green finance. For example, the UAE chaired climate finance work at COP28 and frequently highlights its net-zero by 2050 commitment. The apparent paradox of a major oil producer spearheading green finance is not lost on observers; Abu Dhabi faces scepticism given its fossil fuel legacy.
However, the leadership is trying to confront that by practising what they preach. Recently, the state-owned clean energy firm Masdar issued a USD 1 billion green bond, and other Emirati entities are following suit in sustainable debt markets.
Singapore: Asia’s Sustainable Finance Trailblazer
In Asia, Singapore has emerged as a leader in green finance through a mix of long-term planning and public-private collaboration. The city-state has a track record of turning strategic vision into reality, and now that vision is firmly focused on climate finance. Singapore’s approach is holistic, involving taxonomies, investment funds, market infrastructure, and technology.
A key development is the Singapore-Asia Taxonomy for Sustainable Finance, released by the Monetary Authority of Singapore’s Green Finance Industry Taskforce. This framework provides a common classification for what counts as green or transition activities, not just for Singapore but calibrated for Asia’s diverse economies.
By creating an Asia-focused taxonomy, Singapore positions itself as the standard-setter in the region, which encourages multinational banks and issuers to use Singapore as their base for regional sustainable finance operations.
Singapore’s government is also directly catalysing investment. It committed SUSD 700 million (USD 500 million) of public capital to a blended finance initiative (anchoring a fund with both public and private money) dedicated to climate projects in Asia.
This public seed money has attracted additional funds from private investors, magnifying the total capital available for green infrastructure and technology in emerging Asian markets. In effect, Singapore is using public finance to de-risk and leverage much larger pools of private capital, a model very much needed to close the climate funding gap in the Global South.
Perhaps Singapore’s strongest asset is its sophisticated financial institutions, notably Temasek, the USD 300-plus billion state investment fund. Temasek has explicitly made sustainability a core pillar of its strategy, under a mandate to secure long-term returns for future generations.
Temasek has been especially active in the carbon markets space, investing in carbon-credit start-ups and exchanges. Coupled with supportive government policy, this has turned Singapore into a global carbon credit trading hub.
Over 100 carbon trading and related firms are now based in Singapore, operating under a clear regulatory framework for carbon credits and offsets. This is significant because carbon markets are expected to grow exponentially as companies seek cost-efficient ways to meet emissions targets, and Singapore is grabbing first-mover advantage in this sector.
Additionally, Singapore has encouraged green bond issuance (the government itself has issued green bonds to fund sustainable infrastructure, like its green rail line project) and requires climate-related financial disclosures in line with international best practices. The Monetary Authority of Singapore (central bank) offers grants to offset the costs of issuing green bonds or sustainability-linked loans to stimulate market activity.
It also actively partners with other financial centres. For example, it collaborates with London on green finance research and with other ASEAN countries to harmonise standards. All these efforts underscore Singapore’s intent to be the future of sustainable finance in Asia. This patient and comprehensive strategy has made Singapore a leading sustainable finance hub that punches above its weight globally.