A new report by C40 Cities examines how cities can mobilise private finance for climate adaptation, develop investable project pipelines, and reduce associated risk.
The report, Building the Financial Case for Urban Adaptation: Guidance and Case Studies, draws on real-world case studies where urban adaptation projects have successfully mobilised private finance, highlighting the importance of clear revenue models, well-prepared project pipelines, and strong enabling conditions in attracting investments.
Structured approach
As the report notes, urban adaptation projects can become more viable for private finance when cities take a ‘structured approach’ to project design, engaging potential investors early and positioning said projects in a way that aligns with investor expectations.
The report seeks to ‘shift the perception of adaptation from a purely public expense to a credible investment opportunity’, and accelerate finance flows towards urban resilience projects, particularly in cities and regions most exposed to climate risks.
Accessible finance
“Cities are the front lines of the climate crisis, yet the lack of accessible finance remains the single greatest barrier to action,” commented Andrea Fernández, managing director for Climate Finance at C40 Cities.
“With the launch of C40’s new report on urban climate finance adaptation, we are providing a roadmap to shift the narrative: adaptation is no longer just a public cost, it is a viable investment opportunity. By equipping cities with the tools to structure bankable projects and engage private investors early, we can unlock the private capital essential to meeting our global goals and ensuring a safer, more resilient future for urban residents.”
Key recommendations
C40 Cities report outlines five key recommendations for cities looking to mobilise private finance for climate adaptation projects:
- Align climate planning and finance functions and develop clear adaptation strategies and investment pipelines to create strong demand signals;
- Engage private investors early in project design to ensure bankability and scale;
- Build partnerships with private stakeholders to align on risks, returns and shared benefits;
- Develop viable monetisation pathways, including tariffs, land value capture and blended finance structures;
- Invest in project preparation capacity and strengthen transparency and reporting frameworks to bring projects to market and maintain investor confidence.
The report references case studies from cities including São Paulo (pictured), Dakar, Bilbao, Kuala Lumpur and Ho Chi Minh City, among others, to demonstrate how different financing models can be applied in practice.
“Climate adaptation finance is falling dangerously short of what cities need, even as climate impacts accelerate,” added Yvonne Aki-Sawyerr, mayor of Freetown, Sierra Leone, and C40 Cities’ co-chair. “With strained public budgets and shrinking grants, cities must unlock new sources of finance to meet growing climate challenges. […] This report helps cities speak the language of investors, turning adaptation projects into credible, investable opportunities.” Read more here.
