Cities Climate Action Summit 2024: unlocking climate finance 

One of the greatest barriers cities face in implementing effective climate action plans is securing the necessary financing. While there are a number of national and regional programmes around the world contributing to a greener future, from the EU Green Deal to the US’ Inflation Reduction Act and Bipartisan Infrastructure Law, it’s becoming obvious with the impacts of each new climate emergency in cities that public and state funding is no longer enough.

Climate financing is therefore one of the central themes of the 2024 Cities Climate Action Summit, being hosted 26 June (virtual) and 27 June (in-person, London’s County Hall). The summit serves as a platform for city leaders, policymakers, financial institutions, innovators, and stakeholders to explore innovative funding mechanisms and strategies that enables the mobilisation of private finance for urban climate initiatives. 

Beyond traditional funding models

At the heart of the discussions being had at this year’s summit lies the recognition that traditional sources of funding, such as government budgets and international aid, are increasingly insufficient to meet the scale of investment required for transformative climate action in cities. The summit is instead putting the focus on identifying and leveraging innovative financing mechanisms to bridge the gap between ambition and implementation.

The finance portion of this year’s summit has been shaped by the recognition that innovative funding mechanisms, tailored by the unique challenges and opportunities cities have, are now required – and required quickly. Traditional financing models can fail to adequately address the diverse and complex nature of urban climate projects, which range from renewable energy deployment to sustainable transportation infrastructure and climate-resilient urban planning – all themselves other critical parts of this year’s summit agenda.

To address this gap, cities and financial institutions will be present at the summit to explore a range of innovative financing instruments, including green bonds, climate funds, and impact investing. Green bonds, for example, are debt securities issued to finance projects with environmental benefits, such as renewable energy projects or energy-efficient buildings. By tapping into the growing market for sustainable finance, cities can attract capital from investors seeking both financial returns and positive environmental impact

Similarly, climate funds, whether at the national, regional, or international level, provide targeted financial support to cities for climate mitigation and adaptation projects. These funds often leverage public and private resources to maximise impact and address the financing needs of cities in developing countries, which may lack access to conventional sources of finance. 

Moreover, impact investing has emerged as a powerful mechanism to channel private capital towards climate solutions in cities. Impact investors seek to generate measurable social and environmental impact alongside financial returns, making them natural allies in the fight against climate change. By aligning financial incentives with sustainability goals, impact investing can unlock new sources of funding for innovative projects that deliver tangible benefits to urban communities. 

Unlocking private climate finance for cities

Another critical aspect of the summit’s discussions is the imperative to mobilise private finance for use by cities. While public funding remains essential, the scale of investment required to address climate change exceeds the capacity of governments alone. It’s becoming incumbent on cities to actively engage with the private sector to leverage its financial resources, expertise, and innovation capabilities.

The summit will bring into focus the methods cities are using to attract private finance, including the strategies they are adopting to create an enabling environment for investment. This includes providing policy certainty, regulatory incentives, and risk mitigation measures to mitigate investment risks and enhance investor confidence. Additionally, the summit focuses on how cities are enhancing transparency and accountability in their climate finance efforts to build trust with investors and demonstrate the impact of their investments.

 This year, the Cities Climate Action Summit will underscore the critical importance of financing in driving meaningful climate action at the urban level

Public-private partnerships (PPPs) are also gaining traction as a mechanism to catalyse private investment in climate projects. PPPs involve collaboration between governments and private sector entities to finance, develop, and operate infrastructure projects. By sharing risks and responsibilities, PPPs leverage the strengths of both sectors to deliver cost-effective and innovative solutions to urban climate challenges.

In addition to traditional financial institutions, emerging players such as green banks and climate-focused venture capital funds are playing a growing role in financing urban climate action. Green banks, typically public or quasi-public entities, specialise in financing clean energy and climate projects by providing loans, grants, and other financial products. Similarly, climate-focused venture capital funds invest in early-stage startups and innovative technologies that address climate change in urban areas.

This year, the Cities Climate Action Summit will underscore the critical importance of financing in driving meaningful climate action at the urban level. By embracing innovative funding mechanisms, mobilising private finance, and fostering collaboration between public and private stakeholders, cities can accelerate their transition to low-carbon, resilient, and sustainable futures. As the summit convenes leaders and changemakers from around the world, both online and in person, it reaffirms the collective commitment to unlocking finance as a catalyst for transformative change in cities’ fight against climate change.