The Challenge

Cities need USD 4.3 trillion annually through 2030 for climate action, but current financing is only about USD 831 billion. While large pools of capital exist, much urban climate infrastructure—especially adaptation and resilience projects—does not generate the predictable returns private investors seek. Cities in emerging and developing economies also face barriers such as weak creditworthiness, restrictive borrowing rules, and limited technical capacity.

Purpose of the Study

The report examines why urban climate projects fail to move from preparation to financing. Based on interviews with project preparation facilities (PPFs), financiers, and related stakeholders, it explores how collaboration and coordination across the ecosystem can improve project delivery and financing outcomes.

The Urban Climate Project Preparation Ecosystem

The ecosystem includes cities seeking finance, financiers seeking investable projects, and intermediary organisations such as PPFs that help bridge the gap. Some institutions, like multilateral development banks, support projects across the full financing chain, while others only assist at specific stages. Coordination mechanisms such as CCFLA, LUCI, and the PPF Connector aim to improve alignment, but fragmentation remains widespread.

Diagnosing the Dysfunction

Three major problems emerge across the ecosystem:

Lack of financing flightpaths: Projects are often prepared without identifying likely financiers early enough, resulting in studies that do not match investor requirements.
Weak partnering culture: PPFs compete for funding and are rewarded for outputs (studies, workshops) rather than successful financing outcomes.
Poor transparency and inconsistent standards: Different PPFs use different templates, terminology, and requirements, creating duplication and confusion for cities.

These problems reinforce each other, producing stalled projects and wasted preparation resources.

Project-Level Coordination: Key Elements for Reform

The report proposes several reforms:

Shift funding incentives from activities to outcomes, such as projects reaching financing.
Engage financiers earlier so project preparation aligns with real investment criteria.
Develop clear financing “flightpaths” from the start of project preparation.
Encourage PPF specialisation and collaboration instead of competition.
Build stronger finance and partnering skills within PPFs and city administrations.

National platforms bringing together ministries, cities, development banks, and financiers are identified as especially important.

System-Level Coordination

Global coordination should focus on standards, tools, and knowledge-sharing, while implementation coordination should happen at the national or local level. The report recommends country-level platforms with pipeline forums, financing maps, and dedicated “navigator” teams to guide projects through the system.

Conclusion

The report argues that the ecosystem does not need more institutions, but better integration, clearer incentives, and stronger collaboration. Moving from fragmented project preparation to coordinated financing pathways is essential if cities are to secure climate investment at the scale required.