{"id":22455,"date":"2024-11-20T16:40:32","date_gmt":"2024-11-20T15:40:32","guid":{"rendered":"https:\/\/globalcitieshub.org\/?p=22455"},"modified":"2024-11-20T16:44:22","modified_gmt":"2024-11-20T15:44:22","slug":"strengthening-investors-confidence-in-urban-climate-finance","status":"publish","type":"post","link":"https:\/\/globalcitieshub.org\/en\/strengthening-investors-confidence-in-urban-climate-finance\/","title":{"rendered":"Strengthening investors\u2019 confidence in urban climate finance"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\"><a>A multilevel multistakeholder approach is needed<\/a><\/h2>\n\n\n\n<p>The SDSN Global Commission for Urban SDG Finance and the Penn Institute for Urban Research have recently published their report \u201c<a href=\"https:\/\/urbansdgfinance.org\/static\/documents\/20241101-gcgf-paper.pdf\">The Green Cities Guarantee Fund: unlocking access to urban climate finance<\/a>\u201d. The Commission also presented the proposed Green Cities Guarantee Fund (GCGF) at U20 in Rio de Janeiro. Global Cities Hub co-director Kemileva is an SDSN commissioner and GCH considers climate financing as a key issue for LRGs.<\/p>\n\n\n\n<p>The Commission\u2019s activity aligns with important global efforts. The SDG Summit of 2023 made it clear that attaining the Sustainable Development Goals (SDGs) will require the unlocking of local solutions to address together global challenges. The Summit of the Future of 2024 adopted as its main outcome the \u2018Pact for the Future\u2019 where member States recognized that efforts must involve local and regional authorities to advance the 2030 Agenda, particularly the localization of the SDGs.<\/p>\n\n\n\n<p>To help improve the climate finance landscape for cities, the <a href=\"https:\/\/urbansdgfinance.org\/\">SDSN Global Commission<\/a> makes actionable recommendations for how cities can obtain more and better financing for projects that contribute to achieving the SDGs. It works to create avenues for bringing in private capital in local projects with public interest. The Green Cities Guarantee Fund aims to complement ongoing efforts in promoting urban SDG finance with a focus on climate change.<\/p>\n\n\n\n<p>Building trust is a key component of strengthening investor confidence in local climate-responsive projects, and several initiatives aim to advance this agenda. The work by the SDSN Global Commission is considered as a prime example of inclusive multilateralism in action. Led by the mayors of Paris and Rio de Janeiro, it tackles a challenge LRGs face systematically and offers a solution to be carried out by the State-led international financial system (IFIs or MDBs).<\/p>\n\n\n\n<figure class=\"wp-block-pullquote\"><blockquote><p><strong>To build an effective multilateral system \u2013 especially for SDG localization financing \u2013 <\/strong><br><strong>LRGs need to be involved in the process from the beginning.<\/strong><\/p><\/blockquote><\/figure>\n\n\n\n<p>Financing cannot be provided by states alone. A multistakeholder approach is needed \u2013 taking into consideration the specificities of the different institutional and private actors. \u201cPolicy coherence aligns governmental strategies, while finance serves as the lifeblood of SDG implementation, requiring targeted resources for sustained impact.\u201d &#8211; says <a href=\"https:\/\/sdgs.un.org\/events\/addressing-policy-coherence-and-finance-gaps-pursuit-sdg-localization-and-multilevel\">UNDESA<\/a>. However, it requires increased understanding of how to more efficiently leverage existing climate finance and attract additional finance at the local level.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><a>Cities are where the climate battle will largely be won or lost<\/a><\/h2>\n\n\n\n<p>The challenge is obviously not new. The World Bank Group\u2019s <a href=\"https:\/\/www.worldbank.org\/en\/events\/2017\/10\/03\/localizing-the-implementation-of-the-sustainable-development-goals\">book<\/a> \u2018<em>Municipal Finances: A Handbook for Local Governments<\/em>\u2019 already noted in 2017 that \u201cwhen responsibilities are transferred from central to local governments, it is often not accompanied with an adequate transfer of resources. Local government needs to improve its skills &#8212; and quickly &#8212; in areas such as expenditure control, increasing local revenue, raising external funds responsibly, achieving creditworthiness, and adopting good borrowing practices.\u201d<\/p>\n\n\n\n<p>Through inclusive multilateral cooperation the international community should be able \u201cto bridge the gap between SDG visioning and the reality of on-the-ground implementation. In doing so, it addresses the tensions between a global sustainability agenda and the unique local conditions in which the agenda must be implemented.\u201d \u2013 based on <a href=\"https:\/\/www.undp.org\/sites\/g\/files\/zskgke326\/files\/2024-03\/undp-dfs-institutionalizing-sdg-localizing-in-multi-level-governance-settings-lessons-from-india.pdf\">UNDP<\/a>.<\/p>\n\n\n\n<p>SDG13 \u2018Climate Action\u2019 is a good case in point very much linked to SDG11 \u2018Sustainable Cities and Communities\u2019. As UN Secretary-General Ant\u00f3nio Guterres put it: \u201cThe choices that will be made on urban infrastructure in the coming decades \u2013 on urban planning, energy efficiency, power generation and transport \u2013 will have a decisive influence on the emissions curve. Indeed, cities are where the climate battle will largely be won or lost.\u201d \u2013 reported by <a href=\"https:\/\/unfccc.int\/news\/guterres-cities-are-where-the-climate-battle-will-largely-be-won-or-lost\">UNFCCC<\/a>. LRGs are natural and increasingly inescapable allies in this battle. Without their will climate change effects cannot be mitigated and without their capacity to do so local development will not be climate resilient and therefore sustainable \u2013 hence global efforts will be in vain.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><a>De-risk the capital flow for urban climate-responsive projects<\/a><\/h2>\n\n\n\n<p>Building trust is a key component of strengthening investor confidence in local climate-responsive projects, and several initiatives involving LRGs aim to advance this agenda. Some aim at providing seed or catalytic finance, others are offering guarantees for lenders.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Public-Private Partnerships (PPPs), especially in financing infrastructure development, are central in implementing the SDGs. Governments are increasingly turning to the private sector as an alternative additional source of funding to meet the funding gap, but also for gaining know-how and innovation. However, private firms and investors remain cautious about accepting major risks beyond their control.<\/li>\n\n\n\n<li>Given the significant gap between the need for developing sustainable infrastructure and the risks investors are willing to take, funds enable project financing where the public and private sectors come together as the catalysts of change. For example, the Catalytic Finance Foundation in Geneva is dedicated to developing solutions to enable sustainable infrastructure investments.<\/li>\n\n\n\n<li>Guarantees are important tools to increase the flow of capital in climate-responsive projects, with a capital-mobilization ratio 5 times higher than loans. The SDSN Global Commission for Urban SDG Finance proposes the Green Cities Guarantee Fund dedicated to de-risk and increase the flow of public and private capital for subnational climate-responsive projects.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Green Cities Guarantee Fund<\/h2>\n\n\n\n<p>The Green Cities Guarantee Fundaims to alleviate the funding gap by strengthening investor confidence in financing climate-responsive projects undertaken by LRGs and affiliated entities that capture local conditions and citizens\u2019 needs. It would be situated between lenders and LRGs to increase capital flows into local climate-related projects. For lenders, guarantees provide an incentive to work with local and regional governments that lack a history of creditworthiness or have limited administrative capacity. For LRGs, guarantees contribute to raising their credit ratings, and lowering the cost of borrowing, therefore providing access to a broader pool of investments.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img fetchpriority=\"high\" decoding=\"async\" width=\"915\" height=\"542\" src=\"https:\/\/globalcitieshub.org\/wp-content\/uploads\/2024\/11\/gcgf-illustration-4-1.png\" alt=\"\" class=\"wp-image-22464\"\/><\/figure>\n\n\n\n<p>Financing the activities of climate-responsive sustainable development is a challenge states cannot face alone. A multistakeholder approach is needed \u2013 with local and regional governments and private actors in its center. The GCGF could provide an alternative to sovereign guarantees, and address risk perceptions that limit city borrowing. It could help expand the base of investors for cities through increasing access to the global bond market. The Fund could also partner with a project preparation facility and strengthen mutual trust to launch an urban infrastructure project, such as water management systems, waste collection and recycling, and transit line development. <\/p>\n\n\n\n<p>Supporting climate-responsive sustainable development at the local level is key to achieving the sustainable development goals, especially SDG11 and SDG13. It is also necessary to advise mayors and city leaders how to access additional financial resources through the fund. The Green Cities Guarantee Fund serves as a specialized instrument that considers the unique opportunities and challenges for cities to borrow and build climate-resilient infrastructure.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The SDSN Global Commission for Urban SDG Finance and the Penn Institute for Urban Research have recently published their report \u201cThe Green Cities Guarantee Fund: unlocking access to urban climate finance\u201d. The Commission also presented the proposed Green Cities Guarantee Fund (GCGF) at U20 in Rio de Janeiro. Global Cities Hub co-director Kemileva is an SDSN commissioner and GCH considers climate financing as a key issue for LRGs. <\/p>\n","protected":false},"author":1,"featured_media":22462,"comment_status":"closed","ping_status":"0","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[199,198,261,197,196,201,260,203,202],"class_list":["post-22455","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-cities","tag-environment","tag-gcgf","tag-lrg","tag-multilateralism","tag-sdgs","tag-sdsn","tag-un","tag-unep"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Strengthening investors\u2019 confidence in urban climate finance - Global Cities Hub<\/title>\n<meta name=\"description\" content=\"The SDSN Global Commission for Urban SDG Finance and the Penn Institute for Urban Research have recently published their report \u201cThe Green Cities Guarantee Fund: unlocking access to urban climate finance\u201d. 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