A Strategic Partnership to Advance Urban SDG Financing

Unlocking New Financial Mechanisms for Sustainable Cities in the Global South

The Penn Institute for Urban Research (Penn IUR) is teaming up with the Corporación Andina de Fomento (CAF)—the Development Bank of Latin America and the Caribbean—for a strategic partnership to advance sustainable urban development financing. This collaboration will bolster efforts to unlock new financial mechanisms for cities in the Global South, particularly in Latin America, as part of the Sustainable Development Solutions Network (SDSN) Global Commission for Urban SDG Finance.

As the Technical Secretariat of the Commission, Penn IUR will receive up to $190,000 in technical cooperation funding from CAF. These resources will enhance Penn IUR’s research and operational capabilities, driving innovative solutions to bridge the significant financing gap for sustainable urban development—estimated at $4.5 to $5.4 trillion annually.

Rethinking Global Financial Structures for Urban Development

With rapid urbanization reshaping cities worldwide, experts emphasize the urgent need for new financial instruments and governance systems to support sustainable infrastructure, climate action, and territorial development.

"With more than 60% of the urban environment yet to be built, ensuring that cities have robust territorial development finance agendas—prioritizing climate action and sustainable infrastructure—is essential," said Eugénie L. Birch, Co-director of Penn IUR.

Despite significant investments in subnational projects, Latin America still faces an infrastructure funding shortfall of 5-6.5% of annual GDP, according to the Economic Commission for Latin America and the Caribbean (Comisión Económica para América Latina (CEPAL). Approximately 40% of this gap is tied to subnational governments, making CAF’s role in expanding urban finance crucial.

A Global Commission to Mobilize Urban Finance

The Urban SDG Finance Commission, co-chaired by Anne Hidalgo, Mayor of Paris, Eduardo Paes, Mayor of Rio de Janeiro, and Jeffrey Sachs, President and Founder of SDSN, brings together top mayors, finance and climate experts, and global development leaders. The Commission is structured into six task forces, with CAF playing a pivotal role in Working Group 2, which focuses on expanding financial instruments for cities.

Mauricio Rodas, Former Mayor of Quito and Visiting Fellow at Penn IUR, described the partnership as a significant step forward in equipping cities with financial tools to meet global climate and development goals.

"The partnership between Penn IUR and CAF represents a critical opportunity to strengthen our research, advocacy, and policy efforts to ensure cities have access to the financial resources necessary to drive sustainable urban transformation," Rodas stated.

A Coordinated Global Advocacy Effort

Through this partnership, Penn IUR and CAF will support policy research, advocacy, and multi-stakeholder engagement to elevate urban SDG financing on major international platforms, including the G20, G7, COP climate summits, UN agencies, and international financial institutions.

CAF, with its extensive experience in subnational financing across Latin America, will contribute expertise and resources to explore new strategies for improving cities’ access to sustainable finance. By leveraging its past work with 42 subnational clients across five Latin American countries—financing $4.63 billion in urban projects between 2018 and 2023—CAF aims to help develop and strengthen financial instruments that empower cities to address climate and economic challenges effectively.

Looking Ahead: A Vision for Resilient Cities

This strategic alliance will drive a comprehensive work plan involving research, policy analysis, and participation in key global forums. The ultimate goal is to amplify the voice of cities in financial discussions, ensuring urban areas—home to the majority of the world’s population—secure the funding needed to thrive in the face of climate change and economic challenges.

For more information on the SDSN Global Commission for Urban SDG Finance, visit urbansdgfinance.org.