Author: Amana Abdurrezak

In June, the Cities Climate Finance Leadership Alliance (CCFLA) actively participated in several events during London Climate Action Week (LCAW). This year’s forum brought together a diverse group of individuals, organizations, and communities to engage in critical discussions on global climate action, with a particular focus on accelerating climate finance and mobilizing all sectors of society to address the climate crisis. After careful reflection, the CCFLA team is excited to share our key insights and takeaways on the prominent themes that emerged, particularly concerning cities and climate finance.

From underscoring the growing role cities have in successfully combating the effect of climate change to their position in connecting local communities to international ambitions, LCAW offered a range of perspectives on how climate finance can support more sustainable, resilient, and equitable development. The week’s focus on the quality of climate finance, heightened attention to adaptation, the necessity of scaling private sector investment, and a strong commitment to equity were particularly encouraging. As these critical themes continue to develop, CCFLA eagerly anticipates further discussions at New York Climate Week and COP29 in Baku later this fall.

1 | Cities are a Key Pathway to Addressing Climate Change Impacts

With nearly 70% of the world’s population expected to live in urban areas by 2050, cities are uniquely positioned to feel the impacts of climate change but experience significant underinvestment. Several LCAW events, including Smart Cities World’s Cities Climate Action Summit, spoke to this gap, calling attention to the fact that cities are underutilized players needed for mitigation, adaptation, and resilience efforts.

Given cities’ close proximity to climate change effects and growing public interest in local authorities leading climate initiatives, investments that help ease cities’ financial and administrative burdens will have widespread benefits for the climate agenda. Greater financial support will allow city leaders to fully pursue adaptation plans and climate budgeting initiatives, provide technical and administrative assistance for project planning and design, enable the scale of quality climate projects, and facilitate the sharing of best practices across cities and regions.

2 | Climate Finance Requires Quantity and Quality

LCAW also explored current issues in the composition of climate finance in anticipation of the UNFCCC’s upcoming discussions on the New Collective Quantified Goal on Climate Finance (NCQG) at COP29. Participants underscored that the NCQG must be ambitious in its finance target and boost the quality of climate finance.

At the Development Initiatives’ panel titled, “Climate Finance: A Credibility Gap?” panelists highlighted that although there have long been calls to increase the quantity of climate finance, equal effort needs to be made to improve climate finance’s quality, especially for emerging and developing countries. Experts noted that investment options that have more favorable financing terms need to be offered to meaningfully support developing countries’ progress towards their NDC targets. Key stakeholders like multinational development banks can further their support to developing countries by providing more blended finance mechanisms and facilitating greater access to climate finance for subnational governments. Importantly, these mechanisms should be readily available, accessible, and support strengthening national and subnational financial capacities without exacerbating debt levels.

3 | Financial Flows in Adaptation Must Grow Faster

Climate mitigation investments have received more attention and finance than adaptation. However, filling the investment gap for adaptation is just as critical to achieving the goals of the Paris Climate Agreement. An event on climate adaptation and resilience in Africa and Asia, hosted by the Private Infrastructure Development Group and Climate Policy Initiative, discussed this shortfall. Experts emphasized that further action is needed to make investors aware of the urgency of adaptation, change their perceptions of adaptation from a cost to a critical investment in climate planning, and encourage greater support of entrepreneurs working on adaptation projects.

Furthering adaptation will also require developing clearer guidance that supports different levels of government as they look to develop and scale adaptation initiatives. For cities, this includes guidance that helps standardize reported data, supports the transition of adaptation plans to investment plans, and describes resources available to municipalities seeking financial instruments for adaptation projects.

4 | Insurance and Policymakers Can Galvanize Private Investment

Events at LCAW called attention to the increasing need to mobilize private investment in climate finance. Panelists at the State of Climate Politics Forum hosted by E3G underscored ways in which the private sector’s current preference for risk aversion hinders progress toward necessary investments (e.g., retrofitting infrastructure).

The role of the insurance sector in providing an important private financing stream, particularly for infrastructure projects that support adaptation and resilience was also highlighted.

At the same time, the private sector also needs national and subnational governments to facilitate a stable policy environment that establishes a permanent course of action on climate investment via clear policy signals and regulations. Citywide initiatives like the £100M London EDGE Fund, which aims to unlock additional private sector investment to support the decarbonization of London’s capital infrastructure by 2030, can act as a critical blueprint for mobilizing private investment in cities across the world.

5 | Cities are Best Positioned to Help Protect the Most Disadvantaged Populations

Low-income, disadvantaged, and vulnerable communities face the greatest risks to climate change’s effects and have fewer resources to cope with its impacts. Climate finance, especially when financing urban climate infrastructure projects, must address these inequalities and protect vulnerable populations.

Several LCAW events hosted by CCFLA members including the Adrienne Arsht-Rockefeller Foundation Resilience Center’s event on building resilient and equitable communities and C40 Cities’ co-hosted event on green finance identified city and local governments as vital actors in ensuring projects are protecting vulnerable communities. Local governments are attuned to the needs of their populations and, through deep engagement with these communities during the project preparation process, can ensure that climate infrastructure projects address inequalities.

Through this community-based approach, and by addressing multiple social and environmental injustices through their projects, cities can attract greater investment from financiers that must meet social and environmental metrics and support greater community resilience in the process.

LCAW highlighted the crucial role cities play in bridging global climate goals with local action, stressing the importance of enhancing climate finance quality, boosting adaptation efforts, scaling private investment, and uplifting vulnerable communities to more effectively address the climate crisis. As these themes continue to evolve, CCFLA looks forward to advancing these discussions to ensure a more sustainable and equitable future.