Page 13 - A U4SSC deliverable - Guidelines on tools and mechanisms to finance Smart Sustainable Cities projects

Introduction

Why is the topic relevant?

On 24 September 2018, during the High-Level Meeting on Financing the 2030 Agenda for
Sustainable Development, the United Nations Secretary General released a financing strategy which
emphasizes the critical role of the United Nations in supporting and accelerating the mobilization
of finance. It focused on three objectives to accelerate progress, from global to local levels:

(a) align global financial and economic policies with the 2030 Agenda;

(b) enhance sustainable financing strategies and investments, at country and regional levels; and

(c) seize the potential of financial innovations, new technologies and digitalization, to provide
equitable access to finance.

In his remarks to the participants in the High-Level Meeting, Secretary General Guterres stressed
the “need to step up our efforts in developing innovative financing and in mobilizing private
investment. Without the private sector and the business community, the goals are simply not
achievable”. He also underlined that “there is much to build upon. For example, investments that
take environmental, social and corporate governance factors into account, including green bonds”.
He also mentioned that the World Bank, “as a vanguard on innovative finance”, has brought new
products to the market, including sustainable development bonds. 3

These innovations in financing and approaches to investment are bringing about new opportunities
for governments and investors to form partnerships that could drive forward the 2030 Agenda
and for investors to make profits in a sustainable way. Thus, it becomes increasingly important to
understand and embrace these innovative methods and tools to attract money to projects where
it can make a difference.

The Addis Ababa Action Agenda on Financing Development, adopted by the United Nations in
4
July 2015, provides holistic and strategic guidance for financing the implementation of the 2030
Agenda and other relevant key United Nations agreements, such as the Paris Agreement on Climate,
the Sendai Framework for Disaster Risk Reduction, and others. In the Addis Ababa Action Agenda,
it is recognized that funds from all sources, public and private, bilateral and multilateral, domestic
and international, as well as alternative sources, will need to be accessed in order to benefit cities.
It stresses the importance of moving from funding (money provided directly by government for a
specific purpose, or simply taxpayers’ money) to financing (capital provided by financial institutions
or lending agencies, private, public or otherwise, usually requiring repayment). This, however,
requires an increase in the “bankability” of projects (the ability to attract investment from traditional
sources at reasonable interest rates). To achieve this requires the combining of the resources of
national authorities, local authorities and the private sector, to support priority actions for achieving
SDGs and to ensure that “no one is left behind”.

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