Page 25 - A U4SSC deliverable - Guidelines on tools and mechanisms to finance Smart Sustainable Cities projects

Chapter II: Who are investors and what are they looking for?

An investor is a person or entity that provides capital for an asset in order to make a profit or gain an
advantage (financial or non-financial). Investors look to maximize possible returns, while minimizing
risk, in the least possible time. They make investment decisions based on their financing criteria
and according to their management capacity, market size, geography, industry, type of company
and the market share of their ventures.

This definition is appropriate in most cases; however, it is not sufficient for certain asset types
and locations. An investor in a SSC project can be public (a government, an inter-governmental
organization, or a non-governmental organization) or private. Moreover, profits or financial
advantages are not the only way for investors to benefit from investments. Environmental, Social,
and Corporate Governance (later – ESG) impacts, as indirect added value, or improved living
conditions – either realized or potential – can also be sought as a return by investors.

Box 5: UNECE People-First PPP model

The UNECE PPPP model can be used to attract investors from the private sector who
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are looking for “impact investing” opportunities. PPPPs are a type of public-private
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partnership (PPP) designed to implement the SDGs. The “people-first” approach to PPPs
helps to overcome weaknesses in the way the traditional PPP model is often implemented,
particularly the lack of an explicit focus on generating public value, when private-sector
partners prioritize profit. Traditional PPPs are contract delivery tools for public infrastructure
provision, drawing on initial private financing. They fall into two categories: “government-
pay PPPs”, which are primarily funded by taxpayers, and “concessions”, primarily funded
by direct charges on the users of the infrastructure.

People-first PPPs, however, aim to make PPPs “fit for purpose” by orienting them towards
meeting the needs of people first, and achieving the SDGs. The concept is critically
important to ensure that PPPs focus on delivering desirable and necessary outcomes from
infrastructure investment that provide “value for people”. 3

U4SSC: Guidelines on tools and mechanisms to finance Smart Sustainable Cities projects 7