Rising populations, exploding costs and limited supply made housing availability a key voter issue in the recent US elections. And it’s not just in the US – a housing crisis is engulfing cities across the world.

Because cities are the hubs of economic opportunity, they need to house more people and at the same time need to adapt rapidly to the realities of climate breakdown – flooding, heat, and migration to name a few. Equitable climate action – the practice of designing climate policies and actions that respond to the needs of those most impacted by global heating and social inequities – is therefore an important topic of discussion at COP29.

Cities sit at the very centre of these discussions as the places where competitiveness and climate action must come together, with next-generation housing, jobs and infrastructure at the heart of the work. We have a strong playbook now of how to do this with strategic urban planning. What is needed is coupling this with a similarly clear playbook for urban investment and finance. Here we will argue that there is strong interest from both investors and cities to unlock financing for the urban transition and that we – C40 Cities and Urban Partners – have embarked on a common journey to make this happen.

COP29 gives us the opportunity to take stock of progress – and we know already much more to tackle the climate crisis is needed. The creation of the Coalition for High Ambition Multilevel Partnerships (CHAMP) launched at COP28 and signed by 74 countries is increasing collaboration and embedding cities in national climate plans. The voice of cities has never rung louder and clearer.

Striking the right balance between size and agility, cities can set ambitious climate goals and develop a roadmap towards achieving them aligned with economic competitiveness agendas, such as the regeneration of city districts, pioneering new policies and technologies and trial innovative public-private partnerships and new financial arrangements.

This opens the way for the private sector to play a much larger and more productive role in the transition of cities and to demonstrate that the green transition of our cities is a major, untapped business opportunity.

Since 2022, C40 Cities and Urban Partner’s ‘Green and Thriving Neighbourhoods’ (GTN) programme has been promoting a better urban development approach and delivering 22 neighbourhood-scale projects across the world that reduce emissions and create more equitable, resilient and vibrant communities. In just two years, the GTN programme’s neighbourhood-scale approach has attracted high-level partners including Novo Nordisk, Arup, Ramboll, and Gehl. It has led to real, transformative action on the ground.

That said, if the urban transition is to be successful, many more of these projects will be required, at an unprecedented pace and scale, and through the GTN programme. We have discovered that whilst there is no shortage of political will, there is a lack of required finance.

To respond to this need, C40 Cities and Urban Partners recently launched the Sustainable Financing Research Project, part of the next phase of the GTN Programme. Focusing on European cities at the outset, this initiative will explore leading sustainable neighbourhood regeneration case studies in Copenhagen, London and Milan to identify the success factors across three key pillars – governance, policy & programming and finance.

This will form the basis of a new urban investment playbook, with guidance on scaling up models of investment and finance that can support future competitiveness, integrating climate action with innovation, energy transition and economic security.

Good governance is essential to driving market transition and building stakeholder confidence, especially where projects are considered high risk and require large upfront investment or involve public behavioural change. The Sustainable Financing Research Project will look at key governance areas such as procurement processes, city development review processes, institutional arrangements, the legal framework, community and stakeholder participation.

The policy and programming pillar will explore how cities are adjusting policies and processes to improve the attractiveness and strengthen the business case of projects, and how private investors and cities can creatively work together. A core part of this will be exploring how to accelerate delivery of the diverse housing we need in new and existing neighbourhoods in a way that is aligned with cities’ ambitious climate goals. Areas for improvements within public-private partnerships might include land-use policy incentives, administrative process changes and continuous joint assessment of financial outcomes.

Like any investment thesis, the case must also be made to investors that neighbourhood-scale regeneration projects, with strong environmental and social aims, can be financially viable, and that a long-term, holistic approach is more attractive as an investment strategy than more conventional models.

We will capture and promote what makes climate projects ‘bankable’ – whether that is structuring deals or financial models that are attractive to investors. This means offering adequate ticket sizes, acceptable returns on investment and low-risk vehicles through which investors can channel their capital.

While many climate actions ultimately pay for themselves, directly (e.g. through lower energy costs) or indirectly (e.g. a reduced public health burden), securing upfront capital and developing the financial structures needed to deliver climate projects are hurdles for cities in every context.

COP has traditionally been an arena for national governments but, through initiatives like CHAMP, city leaders’ actions become even more meaningful, and mayors are well-placed to push for increased urban investment and finance. Cities have an essential role to play as part of future competitiveness and the key to unlocking cities’ strengths will be new models of investment and finance for an urban green transition at scale.