Environmental initiatives boost Stockholm's Global Cities index rating

Stockholm has become the first Scandinavian city to enter the top 30 of the Schroders Global Cities Index. This is because of its robust economy and committment to reducing its environmental impact.

The index has this year included, for the first time, an Environmental Impact Score (EIS) to quantify which cities have the lowest environmental risks. This is in addition to the Economic Impact Score (EcIS) and the University Impact Score (UIS).

Developed by the Schroders Global Cities team, the index, which is now in its fifth year, ranks the economically strongest cities for global real asset investing.

Although Los Angeles and London retained the top two slots in the index, the change in methodology has resulted in some Chinese cities moving down the rankings on environmental concerns and poor air and water quality. 

Sweden’s capital has long been committed to reducing its environmental impact, with carbon dioxide emissions cut by 25% per citizen since 1990. In November last year, the city was presented with the Smart City 2019 award at the Smart City Expo World Congress for its GrowSmarter project, which is a public/private partnership that aims to promote green solutions in areas such as energy, infrastructure and mobility.

The city was commended for its “innovation, openness and connectivity” and its efforts to improve the living conditions of its residents. Stockholm has also outlined a series of ambitious climate goals. These include the aim to be the first climate positive city in the world by 2040, despite being one of Europe’s fastest-growing capital cities.

Apartment blocks in the city have been refurbished to reduce their impact on the environment. The city also promotes the use of electric cars and bicycle-sharing schemes to cut pollution. An innovative new waste management system, which uses high-pressure underground tubes to transport the waste to a single collection centres, means there are fewer garbage trucks on the streets. 

The high-tech system can measure how much waste each household creates and provide instant feedback to residents via their mobile phones. In the future, this could be used to determine how much each household is charged, providing a strong incentive for residents to reduce the amount of waste they produce.

Stockholm is also attempting to use energy waste, such as the heat produced by the city’s many data centres, to heat homes and businesses. This has been made possible by a heat pump facility financed as part of the GrowSmarter project. The initiative, which also uses energy waste from supermarkets and crematoriums, was used by the city’s district heating network to heat 30,000 apartments in 2019.

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 policymakers, residents and investors.

The Schroders Global Cities Index ranks more than 900 cities around the world. From an environmental perspective Stockholm has one of the strongest scores within this database. This is as a result of both strong policies and good fortune. 

The EIS analyses a city from three perspectives. Firstly, what is the ‘physical’ risk to a building from earthquakes, landslides etc. Secondly, what is the ‘well being’ risk to humans from polluted air or water. Thirdly, what is the ‘policy’ response of that national or city government. 

Stockholm is fortunate in that there is a low probability of ‘physical’ and ‘well being’ risks.  In addition, it is clear from the various national goals set by the Swedish government that there will be a strong score for ‘policy’.

Any reference to countries/cities are for illustrative purposes only and not an offer, solicitation or recommendation to buy or sell any financial instrument or to adopt any investment strategy.