SDSN Global Commission for Urban SDG Finance Looks Ahead to COP28

COP28, the United Nations’ annual conference on climate change to be held next month in Dubai, UAE, will feature for several important events related to cities:

• December 1-2, 2023: The first-ever Local Action Summit, hosted by the COP 28 presidency and Bloomberg Philanthropies, co-chaired by U.S. Climate Special Envoy, John Kerry, and his Chinese counterpart, Xie Zhenhua.
• December 6, 2023: A city-focused day of events, Urbanization, Urban Environment and Urban Transportation, inaugurated with the second Ministerial Meeting on Urbanization and Climate Change, to be sponsored by the COP 28 presidency and UN-Habitat.
• The fifth meeting of the SDSN Global Commission for Urban SDG Finance to be held on the sidelines of the conference, hosted by commission-member Hazem Galal at PwC offices in Dubai.

These events will take place against UNFCC’s the first Global Stocktake, an assessment of progress made since the 2015 Paris Agreement, offering opportunities for urban leaders to begin to advance the role of cities in delivering the Paris Agreement Goals. As the results of the stocktake[1] are already known -- the world is not on course -- the COP28 declaration will offer suggestions on how to redirect their efforts. To date, few NDCs account for urban-based programs even though global cities generate 78% of the world’s greenhouse gas emissions that can be subject to mitigation while producing 80% of the world’s GDP that will be threatened in the absence of urban adaptation and even though a high percentage of world cities already have climate action plans.

Several reasons account for the absence of urban climate change programs in the NDCs. First, standardized procedures for collecting data are yet to be agreed despite the work of such city networks as C40, ICLEI, UCLG, and GCoM, and such expert groups as the World Resources Institute, the Coalition for Urban Transition, and others in developing them. Second, while the level of overall climate change funding is not meeting targets, urban programs face severe underfunding. Third, the widespread existence of poor enabling environments distinguished by a lack of political alignment between national and local government often prevents the development of needed multilevel government climate change policy and programs, especially in the emerging economies. Fourth, nations control the global financial architecture whose makeup is largely driven by mid-twentieth century values neglects cities. Fifth, many cities, especially those experiencing rapid urbanization, lack the technical abilities, administrative structure, and credit ratings to execute climate change programs.

To develop actional recommendations, evidence, and pilot programs, last June, Paris Mayor, Anne Hidalgo; Rio de Janeiro Mayor, Eduardo Paes; and Sustainable Development Solutions (SDSN) Founder, Jeffrey Sachs, launched the SDSN Global Commission for Urban SDG Finance. Supported by its secretariat, the University of Pennsylvania Institute for Urban Research, the commission’s 50+ members and observers have created six task forces, three focusing on sources of finance (multilateral development bank [MDB] reform, enhanced or new institutions, and private sector activation) assisted by three cross-cutting task forces (geography and context, balance of mitigation and adaptation, and advocacy), the commission and the task forces have been meeting regularly to discuss ideas on how greater access for subnational governments to climate change finance.

Preliminary results reveal that the commission is exploring

1. Reforming the global financial architecture to increase funding to cities through such risk reducing mechanisms as guarantees, blended finance including concessional loans, lending in local currencies, and temporary relief from loan payments in the face of disaster.
2. Creating enhanced or new funds offering direct loans to cities through such vehicles as special purpose vehicles, public private partnerships, city-owned public utilities.
3. Increased use of the Green Climate Fund (GCF) to achieve the first two items.
4. Considering ways to remove fossil fuel performing and or otherwise private sector financeable loans from MDB’s and others’ balance sheets to free-up climate change facing financing without jeopardizing their respective credit ratings.
5. Increasing cities’ share of the private sector’s $133 trillion bond markets through the purchase of green, social, and sustainability bonds by philanthropies, pension funds, insurance companies or special coalitions that focus on bringing in the private sector to repo markets of sovereign wealth funds and other devices.
6. Developing city platforms similar to existing country platforms that consolidate needed projects for financing by a spectrum of public and private grants and loans or for aggregation among various cities to craft financeable projects at scale.
7. Reorienting existing diagnostic tools to recognize and accommodate different multilevel governance systems and capacities on which to base funding and financing programs.
8. Building on the wealth of knowledge among MDBs, city networks, and other expert groups to provide technical assistance to increase subnational creditworthiness and capacity to develop, execute, and manage critical climate change investments.

As the commission solidifies their recommendations, members will be discussing them at various convenings, including COP28, G-20, World Urban Forum and others. They will be seeking feedback to refine them, supporting research and pilot studies to advance them and developing advocacy strategies to promote them.

Learn more about the Commission’s work at www.urbansdgfinance.org.