You’re a city climate strategist and it’s hard to get financing for your projects. And more than ever, you need money. The problem is that you’re mostly on your own. There’s no history of collaboration between you and the finance team to the extent that is needed to fund the transition you’re tasked with.
How do you make your city finance team the champion of the transition? Grab a pen and write down the takeaways from this article. Then keep them in you pocket for the next time you run into the finance team.
Climate teams are not typically tasked with figuring out how to finance their planned initiatives. Yet, they're well aware that the average city in Europe is EUR 400 million short per year in climate financing. Equally, finance teams have had little to no involvement in climate plans. Both are needed to realise great cities.
If you are a climate strategist planning to approach your finance colleagues for a first coffee, here are 3 things to keep in mind:
Could it be that simple? Not really, but we gathered the arguments to make it work. Let’s take a closer look.
1. The why: communicate climate action
Look, the climate arguments might seem obvious for a climate strategist. But for the colleagues around the finance administration, it's not necessarily as clear. And vice versa. As ClimateView Founder Tomer Shalit points out: “The climate people don’t know about finance, the finance people don’t know much about climate, and they don’t speak very well to each other”.
This is both true between governments and financial organizations, as well as among a city’s own departments. The challenge is to get these two worlds to communicate.
Are you still keeping a note in your pocket? Good. Now add these talking points. Climate strategists need to advocate for their projects, and the importance of getting climate action in motion.
Many create cross-functional working groups and importantly, visualizing their emissions and planned actions. Sometimes it has started with sitting down over a coffee. And making history by creating their first Climate Investment Plan - like the city of Helsingborg did.
Niklas Bäckström, Financial Controller, City of Helsingborg explains: "When I first heard of Climate Investment Planning my first reaction was, 'Wow, this is not going to be easy. Where do we even start, right?'"But then I got to talking with Elin and Milou who introduced me to ClimateOS - it visualised the data in a way that amazed me. Then I thought, 'Well maybe this isn’t impossible after all.'"
This communication and advocacy work can in turn lead to mainstreaming climate into the city’s various investment decisions and its budget. Just like Helsingborg did by linking its emission goals to its financial instruments and their sustainability-linked bonds. Short term, Niklas explains that "if we don't reach our emission targets we will pay higher interest rates on our issued bonds. And this will send a signal to investors that we will take our emission targets seriously and create incentives for us to contribute to emission reduction".
2. The where: brainstorm how to grow the budget together
Currently, the climate finance gap per city in Europe is estimated to be on average EUR 400 million annually. So city climate teams make do with what they have. But we know we need much more. As Tomer Shalit explains, “the entire way of thinking about climate transition in cities has to change. We have civil servants working on climate strategy who are thinking ‘the city budget was 20 million last year, but the things we’re trying to do will need 25’. They’re trying to work within the confines of what’s available, and what they really need to do is say ‘to make this happen, we need a billion‘.”
A city finance team is unlikely to give a climate team a bigger slice of the budget, when there are so many competing priorities. But the climate challenge involves thinking bigger and acting faster.
Ever heard of a fixed vs. a growth mindset? What if we approached it funding differently, with a growth mindset this time around and suggested other sources of funding? Here's how cities apply this mindset to diversify their budgets:
It’s a good time to be creative. Discuss your possibilities with your finance team.3. The how: develop capacity to build climate projects
While the finance team will be there to help climate teams in their pursuit of new investments, climate teams will be in the driver’s seat – and tasked with creating attractive projects in the eyes of investors.
Today, city climate teams lack financial literacy and are only beginning to tiptoe into financing the transition. As C40 rightly points out, “to improve access to loans and investment opportunities, cities need to build trust among donors, ratings agencies, investors and lenders by strengthening institutions and fiscal management and improving their technical capacity for investment planning and project preparation.”
There are many examples of failed projects entirely derailing a city’s goal, because the project involved risks that were not considered. Just take a look at Copenhagen’s 2025 carbon neutral target which went up in flames after the city’s plan for Carbon Capture Storage (CCS) was refused funding due to technological risk.
Investors want credible projects that are bankable. And you want your projects to be funded. If your colleagues are up for the challenge, it's a good idea to build capacities together.
Time for the final talking point to scribble down on your note: the whole city will benefit from an approach that maximizes co-benefits and increases investors' confidence. It's a chance to rely less on external consultants and instead, scale decisions over the long-term.
Ready, set, action!
You've got the talking points. From helping with understanding cost and co-benefits of projects, identifying stakeholders affected and clearly identifying the emissions targeted to the right tools to build attractive projects. (Projects that are clear enough get finance teams’ support and in turn, investors’ buy-in.)
Feeling equipped to approach your colleague? If not, let us know which points we missed.