The SDSN Global Commission for Urban SDG Finance Statement

DUBAI — As the Secretariat of the SDSN Global Commission for Urban SDG Finance, Penn Institute for Urban Research (Penn IUR) announces today a statement on Subnational Governments’ Role in the Negotiation of the Loss and Damage Fund Operational Guidelines:

The Commission is pleased to note that the Loss and Damage Fund (LDF) has been operationalized at COP 28 (as per Draft decision -/CP.28 -/CMA.5), with the mandate to directly engage with subnational entities in a manner that “allows all developing countries to directly access resources from the Fund, including through subnational, national and regional entities and through small grants funding for communities...”

This decision is strengthened by the following facts:

The majority of the world’s population live in cities, where three-fourths of global economic output, most of its incremental employment and over 70% of CO2 emissions come from.

Cities concentrate economic opportunity, wealth, and institutional capacity. They also concentrate climate risk to people, economic activity, buildings and infrastructure.

The climate-induced average annual losses to infrastructure and buildings in urban areas are estimated at USD 500 billion (CDRI, 2023), or more than five times the USD 100 billion committed to climate adaptation and mitigation in developing countries. These losses are expected to grow dramatically as the 1.5C threshold is reached (IPCC, 2023, 2022).

If unaddressed this decade, this could have potentially catastrophic impacts on city, national, and global economies, societies, ecosystems and biodiversity.

It is therefore imperative that a significant share of both mitigation and adaptation finance is directly channeled to local and regional governments to implement climate resilient development, in a way that considers the heterogeneity of subnational governments’ systems and contexts across countries. This is especially necessary in rapidly growing urban areas of Africa, Asia, and Latin America, where 90 percent of incremental urbanization is happening.

This could eventually limit the flow of loss and damage funds to address mounting residual climate risk in urban areas, which will further stress the insurance industry.

However, the current global financial architecture and institutional arrangements in most countries are not fit-for-purpose to respond to this rapidly emerging challenge.

The recognition of the importance of subnational governments and their need to directly receive an appropriate share of the Loss and Damage Fund resources will put in place critical safeguards for a Just Transition at global, national, and sub-national levels.

To operationalize the mandate of the Draft Decision-/CP.28 -/CMA.5, the Commission urges the inclusion of local and regional governments in the negotiation of the Loss and Damage Fund Operational Guidelines, in consonance with the spirit of deliberations of the UN Secretary-General’s Advisory Group on Local and Regional Governments.

The Commission is willing to partner with all relevant Loss and Damage Fund members and stakeholders, including the World Bank, the soon-to-be-created Loss and Damage Fund Board, and other technical bodies to ensure that cities’ needs and contributions are duly considered.

The Commission acknowledges and welcomes the work of the LGMA Constituency to the UNFCCC, on behalf of the Global Task Force of Local and Regional Governments, including their inputs provided to previous negotiations on the Loss and Damage Fund.

The Commission sees a critical role for cities in facilitating data underpinning where the biggest climate risks and vulnerable communities intersect, as well as accessing scientific evidence to determine the thresholds of appropriate adaptation limits for human and natural systems, the intensity of local residual climate risks, and the quantum of Loss and Damage as per the Warsaw International Mechanism for Loss and Damage and the proceedings of the Santiago Network.

The SDSN Global Commission for Urban SDG Finance is comprised of mayors from different regions of the world, city networks leaders, climate and finance experts, practitioners, and scholars to develop and champion innovative ideas and solutions for increasing urban SDG finance. The Commission met during COP 28 in Dubai and agreed to issue the statement on December 6, 2023, on the occasion of the COP 28 Multilevel Action, Urbanization, and Built Environment Thematic Day.

"The Global Commission for Urban SDG Finance is working to promote reforms to the international financial system that allow a better financial landscape for cities in a way that considers geography and context. In this task we will address the needs of cities in the Global South that in the past have had no access to finance, to receive direct concessional credits and other facilities to effectively face the growing challenges that a changing climate poses for our population," said Yvonne Aki-Sawyerr, Mayor, City of Freetown, Sierra Leone, and Co-Chair, C40.

“I am pleased to see the deep commitment of financial institutions, mayors, city organizations and other partners to the Global Commission for Urban Finance at COP28 in Dubai. The Commission can be very effective in supporting the development of new solutions to expand access to climate finance for cities, states and regions such as mentioned in the Loss and Damage Fund announcement," said Rogier van den Berg, Global Director, WRI Ross Center for Sustainable Cities.

"Cities are where climate and nature battles are taking place around the world. Some of us fight biodiversity loss while others fight rising emissions. Yet we currently lack the financial tools to address this challenge successfully: low interest, long-term, and direct financing for cities. We’re not asking for handouts, just proper financing where it’s needed most," said Jaime Pumarejo, Mayor, City of Barranquilla, Colombia.

"The SDSN Global Commission for SDG Finance is pleased that the Loss and Damage Fund (LDF) has been operationalized in COP 28 with the mandate of providing subnational governments with direct access to resources from the Fund. This is an important milestone. Now we need to make sure cities participate in the negotiation of the Loss and Damage Fund Operational Guidelines to ensure urban needs are duly considered," said Mauricio Rodas, Former Mayor of Quito, Ecuador, and Fellow, Penn IUR.

Learn more about the SDSN Global Commission for Urban SDG Finance at https://urbansdgfinance.org/.