I have had a cracking few weeks. Mainly because of a fascinating series of conversations about the following question: What would it take to design an investment approach in cities where the primary purpose is system transformation?
And I’m not just saying that because it’s a real privilege to spend one’s working days talking to brilliant people about interesting stuff. But also because I am emerging from a phase of research on this topic, and these dialogues have completely shifted my hypothesis and assumptions about what needs to happen.
This is all happening as part of a collaboration between the Centre of Public Impact (CPI), the TransCap Initiative (TCI), and EIT Climate-KIC, focused on bringing systemic investing to cities in order to catalyze urban sustainability transitions.
Since we lifted our heads up from our desks, we have spoken to founders of community organisations, philanthropic funders working to transform the built environment in cities, municipal officials in cities trying to take a more systemic approach to tackling urban challenges, academic researchers looking at urban development in the Global South and the international organisations coordinating urban sustainability action — to name a few.
Here are a few interesting themes emerging from those dialogues.
Systems thinking as a core capability
In contrast to a lot of themes in literature, which focused on the lack of financial planning skills in municipalities, or the need for public servants to build investable project pipelines, the stakeholders we spoke to stressed that systems thinking was the key missing ingredient. Many spoke about the systematic defunding of municipalities under decades of neoliberal national policies which have meant that cities have a big job to do with ever shrinking resources, and there is less and less time to think big picture. City officials need time and space and skills to create theories of change, set their ‘missions’, and build portfolios of interventions around those missions. This is often in stark contrast to what one interviewee called the “incessant focus on singular projects”, year-on-year budgeting, and linear, technocratic solutions.
Empowering communities
Although there is a lot of discussion about handing power back to communities, many working on urban sustainability solutions say that it has often not felt like that in practice. Consultation can often be tokenistic, with municipal governments and private companies driving the agenda for change. This is a critical shift to make not just because it is morally the right thing to do, but also because the cutting edge of innovative practice is often happening in community-led initiatives such as housing cooperatives and community land trusts. Organisations like Sostre Civic in Spain, for instance, are not just a housing co-operative but also a construction company, creating sustainable innovation in the construction process, not just in land ownership models.
So, the question we should be asking ourselves is, what would happen if communities actually had a say in how we design, finance and deliver urban climate solutions?
Which leads me neatly onto my next point…
Building social fabric for climate resilience
Solutions that build community capital and social infrastructure are a vital part of our climate response. Yet climate action in cities is often reduced to financing emissions reductions, through large-scale infrastructure financing of transport and built environment solutions. This is a very reductionist and technocratic way of approaching urban climate solutions. A more systemic lens would consider both direct and indirect climate responses. For example, the experimental funding programme Big Local, sees its initiatives around community food growing, youth engagement on environmental issues, and green space management as examples of work helping to prepare urban communities for the climate transition. In a world disrupted by climate shocks, cities will need connected, resilient communities in which people work together towards the right solutions.
Infrastructure for nature
Urban infrastructure should be developed and retrofitted with nature at its heart. As one urban planner put it to me recently, “if we were to recognize more honestly the depth and the extent of the climate challenge in cities, it might well lead us to different kinds of solutions than we advocate today.” For example, instead of putting concrete and asphalt everywhere, we need to start thinking about creating infrastructure for nature which will ultimately benefit urban communities through the provision of the basic necessities of clean air and water. So, how can we center nature-based solutions in urban climate financing? A new initiative incubated by Dark Matter Labs called TreesAI, for instance, provides impact assessment and investment tools to fund, manage and maintain portfolios of nature-based solutions in cities, with the first pilot focused on creating urban forests in Glasgow.
Bridgebuilding and matchmaking
The art behind all of the above is not some kind of technical capability-building exercise for public officials, but rather coalition building amongst the many constituencies that have a stake in urban climate solutions. It is common knowledge, for example, that one of the key barriers to more systemic urban solutions is the fact that many municipal departments work in siloes. There are also stakeholder groups beyond municipalities that could benefit from being in dialogue with each other, but currently have no space to connect. As one grant funder we spoke to pointed out, “I speak to investors who say, we have the money but no investable projects to put it into. I speak to communities all the time who are looking for private capital. It would be great to create a meeting space between investors who talk a lot about ESG and communities that need financing.”
The challenge of driving alignment for change across large, complex value chains should not be underestimated. In the next blog in this series, we will explore just that: how might we catalyse systemic climate finance solutions in cities?
