By Claire Ferguson, Head, C40 Financing Sustainable Cities Initiative
In October, mayors and other city leaders from around the world gathered in Buenos Aires, Argentina for the first Urban 20 Mayors Summit. They came together to deliver a unified message to Argentine President Mauricio Macri on behalf of cities, ensuring that cities remain front and center at the recent G20 Summit. These key priorities include issues like climate action, the future of work, social integration, women’s empowerment, and access to finance.
Panel for Financing Urban Climate Action: Partnerships and Approaches for Transformative Impact. From left to right: Mayor Mike Rawlings of Dallas; Mayor Jan Vapaavuori of Helsinki; Mark Watts, Executive Director of C40 Cities; Brandee McHale, President of the Citi Foundation and Head of Corporate Citizenship at Citi; Ede Ijjasz-Vasquez, Senior Director for the World Bank Group’s Social, Urban, Rural and Resilience Global Practice; Mayor Mauricio Rodas of Quito.
To elevate the discussions around both climate change and access to finance, C40 Cities and the Citi Foundation co-hosted a breakfast roundtable discussion to open the second day of the Summit. The session focused on how cross-sector partnerships can enable cities to unlock new sources of capital for sustainable urban projects.
President of the Citi Foundation and Head of Corporate Citizenship at Citi, Brandee McHale, was joined on stage by Mayor Mike Rawlings of Dallas, Mayor Mauricio Rodas of Quito, Mayor Jan Vapaavuori of Helsinki, and Ede Ijjasz-Vasquez of the World Bank for a discussion moderated by C40’s Executive Director, Mark Watts.
Watts opened the session by reminding the audience of the stakes of the question at hand. In fact, an acute sense of urgency pervaded the Summit’s discussions of climate action, thanks in large part to the recent publication of the IPPC Special Report on Global Warming of 1.5°C. The science is irrefutable and the alarm bells are ringing. During the previous day’s sessions, two authors of the report reiterated to attendees that we have two years to peak global emissions and only twelve years to reduce these emissions by half if we intend to meet our 1.5 degree temperature rise target. Missing this target by even half a degree will have massively negative consequences for our ecosystems and our economies.
Limited access to finance is one of the most frequently cited barriers to progress on national and local climate targets – cities and national governments do not have the budgets to implement strategies to meet these urgent goals. Still, the mayors and senior leaders from these cities also came to Buenos Aires to discuss solutions. And Mark Watts reminded the audience that this moment presents a tremendous opportunity for transforming our cities.
Brandee McHale, President of the Citi Foundation and Head of Corporate Citizenship at Citi
The conversation highlighted some clear achievements in the green infrastructure finance space. Brandee McHale noted that banks like Citi are competing to be seen as “the greenest” –– this is moving the needle on green and sustainable finance. In 2015, Citi launched a commitment to finance and facilitate $100 billion in environmental finance and climate positive activities over ten years. Citi is less than half way through that commitment, and they’ve already achieved 75% of their goal.
Mayor Vapaavuori of Helsinki spoke to the progress of European standards on sustainable infrastructure finance, saying that, in Scandinavia, “more or less everything needs to be sustainable. So, you could even say that if you have a project which is not sustainable, then you don’t get a financing product.”
Speaking to the United States context, Mayor Rawlings of Dallas pointed to the recent private financing of a high-speed rail line between Dallas and Houston, set to begin construction in 2019, as evidence that private investment for low carbon projects is viable. The mayor said that this project is expected to take one in ten cars traveling between these cities off the road, reducing carbon emissions and improving local air quality.
There is also an increasing array of resources available to cities to support them in developing bankable projects and accessing new sources of capital. For example, Mayor Rodas cited the support that Quito has received as host of the C40 Clean Bus Finance Academy in May, funded by the Citi Foundation, and as a C40 Cities Finance Facility (CFF) participant city. Quito is receiving technical support from both of these C40 programs to help them move forward with purchasing electric buses to meet their climate goals and improve the quality of life for residents.
Panelists identified opportunities for shifting capital to sustainable urban projects that cities and the private sector should continue to pursue. For one, Mayor Rawlings underscored the value in cities clarifying what is on their balance sheet with regard to assets. Most mayors don’t know the true value of the assets owned by their cities because they haven’t been recently assessed. According to the Mayor, the ability to put the real value of assets behind projects will allow cities to more readily access private capital.
Brandee McHale pointed to the role of the Task Force on Climate-related Financial Disclosures (TCFD) in creating new incentives for sustainable investment. From the capital provider perspective, the TCFD’s recommendations help to quantify the risks and opportunities that climate change poses to financial institutions, which will help make the case for driving capital toward resilient and low-carbon investments.
While the panelists were able to point to these successes and future opportunities, they also highlighted significant barriers and invited their fellow leaders in the room to work collaboratively to tackle them. Across the globe, clearer regulatory frameworks and more predictable regulation will reduce uncertainty for investors and allow more private capital to flow into critical green projects. In the Global South context, it is important that multilateral banks and other capital providers are able to lend directly to city governments so that political barriers don’t block projects from receiving financing. And globally, cities need support in building the internal capacity to develop bankable projects and in determining appropriate and affordable sources of finance.
National-level political shifts in numerous countries have placed even greater responsibility on the shoulders of global mayors to tackle environmental issues. Urban and rural populations alike are relying on mayoral action to slow global climate change and adapt to warming temperatures, and without access to finance these tasks will be impossible.
C40 is supporting its member cities on overcoming barriers to building viable business models and accessing finance for sustainable urban projects. The Financing Sustainable Cities Initiative (FSCI), funded by the Citi Foundation, helps cities accelerate and scale-up investments in sustainable urban solutions through the development of innovative business models. Complementing the FSCI, the C40 Finance Facility (CFF) supports C40 and non-C40 cities in developing and emerging countries to prepare and deliver low carbon and climate resilient projects. The CFF facilitates access to finance for climate change mitigation and resilience projects in urban areas by providing technical assistance to develop cities’ sustainability priorities into bankable investment proposals.