Funding sources identified for the transition to smart sustainable cities

More than half of the global population lives in cities. The current world population is projected to reach more than 9 billion by 2050, with 70% to 80% living in cities by then. If cities are to ensure that the right infrastructure and service provision for a growing population is in place, new financing mechanisms are needed. Finding better and innovative solutions is urgent and crucial.

In order to bring attention to smart sustainable cities financing and as part of the activities of the United Smart Cities (USC) and the United for Smart Sustainable Cities (U4SSC) initiatives, UNECE, the Organization for International Economic Relations (OiER), and the Austrian Economic Center (AEC) organized the forum Financing Smart Sustainable Cities, on 7-8 November 2016 in Ruggell, Principality of Liechtenstein, at the kind invitation of the Government of the Principality of Liechtenstein. “Liechtenstein has put a lot of effort into preparing the UN's 2030 Agenda for Sustainable Development. This 2030 Agenda defines 17 goals for all UN Member States in regard to economic, social, and environmental development. I am convinced that our country is the ideal place to host an international forum on this existentially important topic” said Adrian Hasler, Prime Minister of the Principality of Liechtenstein.

The Forum identified sources of funding and opportunities for financing and implementing smart sustainable urban solutions; bridged the gap between investors and cities by determining practical solutions to facilitate the transition into smart sustainable cities; discussed business models and good practices for financing smart sustainable cities; determined the role of standards and key performance indicators (KPIs) to monitor economic growth and encourage governance and participation. UNECE Executive Secretary Christian Friis Bach, in his message to the Forum, said “UNECE will continue to strengthen the cooperation with cities and their networks and will further support the institutionalization of the cooperation between global, regional, national and local levels to implement the New Urban Agenda”.

The Forum concluded with the Vaduz Declaration, a document in ten points, which highlights the strategic role of the financial sector in the transition of cities into smart sustainable cities and as a key actor in the implementation of the New Urban Agenda. In particular, the Vaduz Declaration points out the importance of combating financial crime and corruption; improving active access to financial services and financial literacy; supporting economic growth and development of local communities; fostering innovation and entrepreneurship; supporting new financing mechanisms; and managing and mitigating social and environmental risks. The Declaration recognizes the importance of the use of KPIs and standards to monitor and report business’ impact, identify good projects and improve performances of cities. It finally identifies the crucial role of introducing ESG (environment, society and governance) issues into organizations’ decision making processes, policies, practices and investment analysis and of an open dialogue among all the relevant stakeholders to encourage participative governance, transparency and accountability. “Now it is time to stop talking and start doing, engaging all stakeholders to get concrete results”, said Kari Aina Eik, Secretary General of the Organization for International Economic Relations.

Sustainable urban planning and development, together with technology, sustainable transport and energy, natural resources conservation, education and other sectors and services contribute greatly to the quality of life and economic development of a city. Decision-makers in cities around the world currently face significant challenges and pressures (such as migration, urban renovation, increased inequalities, aging populations, social and ecological transitions, etc.) in delivering even the basic goods and services to people. These issues are challenging the state of public finances following the financial crisis as well as the financial sector's ability to channel funds towards long term investments undertaken, especially, by local authorities.

In response to sustainable development goal (SDG) 11: “Make cities and human settlements inclusive, safe, resilient and sustainable”, the United Nations Economic Commission for Europe (UNECE) and the International Telecommunication Union (ITU) launched the United for Smart Sustainable Cities (U4SSC) initiative. U4SSC primarily advocates for public policy to encourage the use of Information and Communication Technologies (ICTs) to facilitate and ease the transition to smart sustainable cities worldwide. In the framework of this initiative, UNECE and the Organization for International Economic Relations (OiER) set up the programme, United Smart Cities (USC), to support local authorities in addressing major urban issues and implement smarter and more sustainable urban solutions to improve the quality of life of their cities.