The report ‘Financing the Transition: Sustainable Infrastructure in Cities‘ was commissioned by CCFLA members the World Wildlife Fund (WWF) and published in March 2015. The report reviewed financing instruments commonly used to finance infrastructure and assessed their potential to finance the transition towards sustainable infrastructure, with a focus on energy efficiency and renewable energy. The report presented a number of significant key findings:
- The lack of investable projects seems to be the main issue preventing sustainable infrastructure investment at scale rather than the lack of finance. Quantifying anticipated savings and project aggregation can help. We can already finance the transition with the tools available to us today.
- Certain financial instruments – such as tax incentives, green bonds and asset-¬backed securities – have higher potential to support investment in sustainable infrastructure.
- To attract finance for sustainable infrastructure, cities are advised to primarily focus on project preparation to develop a pipeline of investable projects; tools that can help to leverage finance while meeting sustainability objectives and targets; and sound governance to boost investor and stakeholder confidence. The research also found that while the growth in infrastructure needs and urbanization is the highest in developing countries, financing infrastructure there is most challenging.
- Collaboration amongst key stakeholders such as internally between cities’ treasury and sustainability departments, and externally between cities, financial institutions and government entities is key to unlocking investments in sustainable infrastructure.
- Cities that are providing inspiring examples of creatively using incentives and financial instruments are, for example, the cities of Vancouver, a global Earth Hour City Challenge capital, and Pune, in India, which have both tied low-carbon requirements to planning application processes and tax incentives. Meanwhile the cities of Gothenburg, in Sweden, and Johannesburg, South Africa, have worked to improve transparency and accountability of how they raise investment through green city bonds.