Los Angeles pips London as economically strongest city for fourth consecutive year

Despite taking the no.1 spot, LA’s overall score slipped because of a mediocre Environmental Impact Score (EIS) which was introduced this year to quantify which cities have the lowest environmental impact.

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. The Index, developed by Schroders’ Global Cities team and now in its fifth year, ranks cities based on three proprietary impact scores; the Economic Impact Score (EcIS), the University Impact Score (UIS) and, for the first year, the Environmental Impact Score (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, as both are at the forefront of the knowledge economy and attract new jobs that pay well compared to other locations (reflected in their strong median income scores). This result is despite the fact that the two cities are not large compared to global peers.

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, explains:

“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.

“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.

“We weren’t surprised to see London maintain its second spot in the Index. Whilst there has been uncertainty generated by Brexit and the resulting political environment, the underlying fundamentals remain attractive to investors. 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.”

james.wallace@realassetmedia.com