In focus

Economics

Chinese cities tumble down Global Cities rankings on climate concerns


Tom Walker

Tom Walker

Co-Head of Global Real Estate Securities

See all articles

Environmental issues cost Chinese cities Beijing and Shanghai their places in the top ten of Schroders’ Global Cities Index. Poor air and water quality saw Beijing fall 11 places to 19 and Shanghai fall 13 places to 20.

Los Angeles (LA) retained its position at the top of the index for the fourth year in a row. But its overall score slipped because of a mediocre Environmental Impact Score (EIS).

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

London holds on to its number two position, despite Brexit concerns. The UK’s financial centre continues to attract multi-national companies, is home to outstanding universities and received a good EIS.

Schroders’ Global Cities Index, now in its fifth year, ranks the economically strongest cities for global real estate investing based on three proprietary categories: the Economic Impact Score (EcIS), the University Impact Score (UIS) and, for the first year, the Environmental Impact Score (EIS).

Global Cities Index

Global-cities-index-jan2020-392920.jpg

Chinese cities down but not out

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 (19 and 20 respectively), given their high ratings in the other impact scores.

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

Tom Walker, Co-Head of Global Cities, said:  “Cities are responsible for more than 70% of global CO2 emissions. 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.

“Cities with poor EIS are the ones which 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. 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.

“We believe the transition to renewable energy from coal and the increasing utilisation of electric vehicles are two examples where emissions from Chinese cities will decrease at a fast pace.”

Stockholm enters top 30 for the first time

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 (up 10 places to 5th) and Austin (up 7 places to 18th) also climbed the list.

Both cities are at the forefront of the knowledge economy and attract new jobs that pay well compared to other locations. This result is despite the fact that the two cities are not large compared to global peers.

Important Information: This communication is marketing material. The views and opinions contained herein are those of the author(s) on this page, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results. The value of an investment can go down as well as up and is not guaranteed. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. Some information quoted was obtained from external sources we consider to be reliable. No responsibility can be accepted for errors of fact obtained from third parties, and this data may change with market conditions. This does not exclude any duty or liability that Schroders has to its customers under any regulatory system. Regions/ sectors shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell. The opinions in this material include some forecasted views. We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee than any forecasts or opinions will be realised. These views and opinions may change.  To the extent that you are in North America, this content is issued by Schroder Investment Management North America Inc., an indirect wholly owned subsidiary of Schroders plc and SEC registered adviser providing asset management products and services to clients in the US and Canada. For all other users, this content is issued by Schroder Investment Management Limited, 1 London Wall Place, London EC2Y 5AU. Registered No. 1893220 England. Authorised and regulated by the Financial Conduct Authority.