THE GREEN TRANSITION INDEX 2024

We are five years away from reaching the first major Paris Agreement milepost in the battle to cut greenhouse gas emissions, and even the European Union — a leader in climate change policy and action — is not expected to reach its 2030 target. Currently, the EU is on a trajectory to cut 49% of its emissions by 2030 — six percentage points short of the 55% reduction it pledged.

Thanks to the EU’s new Corporate Sustainability Reporting Directive, companies will be more pressured than ever to transition away from a carbon-based business model. However, reducing emissions is just one facet of what’s necessary for Europe and the world to get on a sustainable path that will protect both the planet’s climate and nature.

In an effort to provide countries and companies with a benchmarking tool to assess progress, Oliver Wyman created the Green Transition Index (GTI) in 2022. This is the second edition of the GTI, which compares 29 European countries — the European Union’s 27, plus the United Kingdom and Norway — to see how well each does in the pursuit of sustainability.

Our methodology for ranking countries

We evaluate the group based on 28 key performance indicators in seven categories — the Overall Economy, Nature, Manufacturing, Utilities, Waste, Buildings, and Transport. For each KPI, the countries’ performance is indexed, with the best-performing country receiving a score of 100 and the worst-performing country getting zero. Values in between are scored in a linear manner. These KPI scores are then aggregated at the category level. All seven category scores are again aggregated, evenly weighted, to reach an overall GTI score.

The categories were chosen based on the main sources of emissions in the European economy, with an additional look at how countries in the region use and protect natural resources as well as their generation and treatment of waste. The Overall Economy is an umbrella category that looks at country-level performance in such measures as greenhouse gas emissions and energy consumption and assesses government support for the green transition through publicly funded research and development (R&D) and other policies.

Key findings of the 2024 Green Transition Index

This year, Denmark leads the ranks, overtaking the Netherlands who was the top performer in 2022, largely due to its standout performance in the Utilities category where the country ranks first, and in the Manufacturing category, where it ranks third. Denmark excels in three transition technologies: green hydrogen projects that promote energy transition, renewables and biofuels, and carbon capture and storage (CCS). The country also shows robust performance in emission control across different categories.

But it didn’t receive top grades across the board. When it comes to Waste, it ranks in the bottom 10, demonstrating a correlation between faster economic growth and high waste generation. As Denmark’s GDP per capita has increased, so has the amount of waste generated per capita. While Denmark has a relatively high recycling rate, certain materials still end up in the waste stream due to inadequate recycling systems. In the Buildings category, Denmark’s underperformance is due to having fewer certified green building projects based on GDP, where it ranks in the bottom four. Austria (No. 2), Sweden (No. 3), Netherlands (No. 4), and Estonia (No. 5) make the top five in this year’s rankings.

Scandinavia continues to outperform other European regions

Scandinavian countries continue to lead the ranks with Denmark topping the charts, followed by Sweden (No. 3), Norway (No. 6) and Finland (No. 8). Western Europe ranks second place, followed by the Baltic States, Eastern Europe, and Southern Europe, in last place. Upon closer examination, the following observations can be made:

In the Economy category, Scandinavian countries outperform most of their regional peers because of their relatively low GHG emissions intensity, public R&D spending toward the environment, and value-add in the environmental goods and services sector. Western European countries closely follow the Scandinavian countries.

In the Nature category, Scandinavian countries dominate, because of the better air quality in the region’s cities— and higher scores in the water usage KPI. In contrast, Southern European countries fall into the bottom half of the ranking due to lower scores in urban population exposure to air pollutants and the share of protected marine and terrestrial areas as a percent of total country area.

Performance in the Manufacturing category varied across all regions, both in overall category ranking and sub-category rankings. This was true for the overall category ranking as well as the three sub-category rankings. Overall, Western European countries tend to score higher with three of the top five countries from the region.

In the Utilities category, Western European and Scandinavian countries excel, occupying the top position in all four KPIs considered in this category. Eastern European countries are lagging their regional peers with seven out of eight countries in the bottom 10 ranks. They tend to have lower levels of renewables in electricity supply and are generally less engaged in transition technologies, hydrogen for energy transition purposes, battery storage, and carbon capture and storage.

In the Transport category, Scandinavia outperforms due to lower average CO2 emissions from new passenger cars and the use of alternative-fuel vehicles, especially in Norway and Sweden. Additionally, Eastern Europe achieved a high GTI result with strong scores in emissions intensity for passenger transport and public transport. This can be attributed to the fact that there are fewer cars prevalent in these countries due to lower income levels, while public transportation is simultaneously promoted by the government.

In the Buildings category, the Baltic region outperforms its regional peers with all three countries ranking in the top seven of this category thanks to strong scores across all KPIs considered in this section. Western European countries, on the other hand, are lagging, with six countries ranking in the bottom eight ranks, particularly driven by their low share of renewables in residential heating.

In the Waste category, Western European countries are ahead because of their well-developed circular economy and fewer municipal waste landfills per capita. Southern European countries, on the other hand, rank lower due to their higher number of municipal waste landfills per capita. Eastern European countries make up four of the top five highest scorers in household waste intensity.

Europe’s sustainability journey progress and challenges since 2022

Lithuania achieved the highest increase in the overall GTI score. Comparing Lithuania's GTI score from 2022 to today, it becomes evident that the country has made improvements in nearly all categories. In the Buildings category, Lithuania achieved a seventh-place ranking, primarily due to its performance in household electricity consumption per capita (around 36% below the average of countries in the GTI) and the share of renewables in residential space and water heating. Lithuania's new energy strategy aims to fully cover its electricity and heat energy needs through domestic production by 2050, with 100% of this energy coming from renewable sources.

Sweden achieved the highest increase in the overall GTI rank, jumping five spots to third place today. The country performs particularly well in Transport (No.1), Economy (No. 2), Nature (No. 3), and Utilities (No. 6). Sweden's rapid rise can be attributed to its multifaceted approach to environmental protection and sustainable development confirmed by public and private initiatives, such as the Climate Leap program, which supports companies, municipalities, and organizations in transitioning to a greener economy. Moreover, the Swedish government's budget proposal for 2024 includes significant additional funds for nature protection, combating invasive species, and fulfilling international commitments to biodiversity. In total, the proposed budget for environmental actions is 19.3 billion Swedish krona (approximately € 820 million), where in 2022 it was 20% lower.

Not all countries have made progress. Almost half of the countries saw their overall score fall, with 14 experiencing an average decrease of 1.4 index points in their GTI score. Comparing 2024 with 2022, France lost the most ground, dropping 2.7 points and six places. Looking across the various categories, it becomes clear that there was not one single driver but rather a reduced performance across (almost) all GTI categories, particularly in the Utilities category where the country dropped nine spots, driven by reduced scores in hydrogen and battery projects, as the focus has primarily been on hydrogen for mobility rather than its integration into energy networks, which remains in the R&D phase. Spain, Hungary and the Netherlands, also regressed, each 2.5 points down from 2022.

Exploring sustainability progress in relation to GDP per capita

While richer countries tend to score higher on the GTI when compared to countries with lower economic performance, this year’s index reveals five overperformers that have demonstrated growth in their GTI scores despite having a relatively lower GDP per capita: Lithuania, Bulgaria, Latvia, Cyprus, and Romania.

Their approaches, like focusing on energy efficiency and the use of renewable resources to meet near-zero energy building standards or subsidizing the procurement of electric buses and the associated charging infrastructure, highlight the power of targeted climate action over mere economic strength.