MDBs Commit To Scaling Urban Climate Finance By 2030

In a major step to strengthen urban climate finance, C40 Cities, Bloomberg Philanthropies, and the Global Covenant of Mayors for Climate and Energy (GCoM) organized a high-level roundtable to mobilize multilateral development banks (MDBs) into expanding sustainable investment in cities. "Scaling Sustainable Investment in Cities: The Role of MDBs" assembled the most important city and MDB leaders to tackle the imperative for more climate finance at the city level.

The call to action is urgent because it's rooted in the staggering financial gap that cities face in being on the frontlines of the climate crisis. The world's urban climate finance has been estimated to have to be $4.5 trillion every year by 2030. The current levels of public investment only cover around 23% of the needed $800 billion every year. This deficit highlights the urgency for concerted and prompt actions by MDBs, governments at the national level, and private capital to fill the funding gap and spur city-level climate innovation.

The roundtable came against the backdrop of increasing pressure from global city leaders. In March 2024, more than 40 mayors from over 30 countries signed an open letter urging MDBs to put cities at the forefront of their financing strategies. The letter stressed the need for direct funding of local initiatives, climate programs focused on cities, and greater technical assistance for cities, asserting that effective climate action needs to be based on the needs of urban citizens.

Andy Deacon, Co-Managing Director of GCoM, described the gathering as a “compelling demonstration” of MDBs’ commitment to urban climate initiatives. He noted that the discussions marked a critical step forward in mobilizing both public and private investments for cities. According to Deacon, the emphasis must now shift from pledges to practical implementation that delivers impact on the ground.

Heeding the appeal, MDBs reaffirmed their commitment to scaling up concessional finance, increasing subnational lending, and employing risk mitigation instruments to mobilize private capital into urban climate investments. These tools are viewed as critical to de-risking investments in cities, notably in the Global South, where financing obstacles to climate adaptation and infrastructure remain significant.

Tshwane, South Africa's Executive Mayor Dr. Nasiphi Moya underscored the need to shift beyond rhetoric. "It is not only about money. It is about delivering a tangible difference," she asserted, calling attention to the urgent need for tangible outcomes enhancing urban resilience and living standards. Governor Anyang' Nyong'o of Kisumu, Kenya, who co-facilitated the dialogue, echoed her sentiments. He emphasized that municipal governments should no longer be considered second-tier players in the global climate discourse. "When MDBs invest in cities, they're not just investing in infrastructure—they're investing in more resilient, inclusive, and empowered communities," he said.

Juan Pablo Bonilla from the Inter-American Development Bank reaffirmed this viewpoint, pointing out the IDB's commitment to boosting financial support for urban infrastructure projects throughout Latin America and the Caribbean. Bonilla stressed that closing the climate finance gap in cities is critical in order to ensure improved, sustainable urban futures.

MDBs' entry is also aligned with the CHAMP coalition—a coalition of 75 countries introduced during COP28 aimed at boosting subnational collaboration within climate policy and implementation. Its objective is to institutionalize cities' and regions' contribution in developing and implementing climate strategy as well as fully integrating them within national and global finance channels.

Andrea Fernández, Managing Director of Climate Finance at C40, emphasized the catalytic effect of MDB investments. "Huge investment is required in clean energy, sustainable transport and waste, and building resilience," she stated. She reaffirmed that MDBs need to set the pace to mobilize public and private funding sources to move climate action forward in cities.

In spite of these developments, the funding gap is still one of the biggest challenges to successful urban climate action. Development finance institutions and city leaders have already asserted that the $800 billion per year target by 2030 is not negotiable if cities are to take their share in reducing emissions and responding to climate impacts. The gap, now at more than 75%, is a reminder of what needs to be done.

Ambroise Fayolle, the European Investment Bank (EIB) Vice President, reassured city officials that the EIB would remain alongside them. "We are dedicated to cooperating with cities and mayors across the globe to fund climate action and strengthen stability and prosperity for our communities," he stated.

With COP30 looming, the world's climate finance architecture is at a crossroads. The capacity of MDBs, together with cities and national governments, to convert high-level promises into quantifiable, on-the-ground impacts will decide whether the world's urban climate agenda succeeds or fails. The moment is urgent, and the stakes are high.