Over 200 delegates participated in discussions about how cities and investors can come together to fund a just transition to net zero.
Two major new initiatives to help accelerate the net zero transition were announced on 29 June as 3Ci – the Cities Commission for Climate Investment – hosted a London Regional Investor Event at the headquarters of Connected Places Catapult.
First was the launch of a 3Ci publication advocating the case for a National Net Zero Neighbourhoods Programme and a Call for Proposals from local authorities to submit projects looking for investment into the programme.
A second initiative unveiled to delegates was the launch of a Green Finance Fund from the Mayor of London, where up to £500 million will be lent to projects that focus on energy efficiency, renewable energy and clean transport.
Eligible organisations offered favourable borrowing will include local authorities and social housing providers, and grants are available for small size projects up to £75 million. The Fund was announced by Greater London Authority’s Assistant Director for Environment and Energy, Catherine Barber.
Professor Greg Clark CBE, Chair of 3Ci and Connected Places Catapult welcomed London’s Deputy Mayor for Environment & Energy, Shirley Rodrigues to the stage to speak about The Mayor’s vision for achieving net zero in London.
“Cities have to move fast with this agenda, but they are delivering,” she said.
The event took place in London Climate Action Week, during which a large countdown clock was placed in Piccadilly Circus to remind people there are just over six years left in order to balance greenhouse gas emissions, and prevent global heating exceeding 1.5C above pre-industrial levels.
Shirley Rodrigues added there is a “huge challenge” ahead for professionals involved in promoting net zero initiatives, adding that it was “great to be here” at the London Regional Investor Event to discuss opportunities with interested parties.
The Deputy Mayor was joined on stage by Cllr Georgia Gould, the Leader of Camden Council and Chair of London Councils which represents 33 boroughs including the City of London. “One area where we have come together incredibly strongly is in our shared commitment to taking action on the climate crisis,” she said.
“The work we have done with 3Ci shows huge investment is required to get us to net zero. But there is also a massive opportunity around jobs; ensuring there are the skills required around green finance, retrofit and new ways of working.”
Georgia added that many boroughs have large housing stocks and a “massive ambition” to make them more sustainable, but that capacity and finance are often lacking. “The job of bringing those two together is a challenge, but is also a massive opportunity and that is why the work of 3Ci is so exciting: building and deepening the relationship between private finance and projects on the ground.
“The prize is enormous and there has never a better moment to do this. Residents are facing a cost of living crisis and there is a huge desire from citizens to see change.”
Financers give their thoughts
In a ‘Dragon’s Den’ style, local authorities pitched their net zero projects and identified opportunities for investment during a series of breakout sessions. Investors then gave their responses on how to make the projects more investible and advice on financing models.
Later at the event, Greg Clark was in conversation with HSBC’s UK Head of Climate Change, Tim Lord. Greg asked Tim why investors and financiers should consider local government, cities and the public sector as great places to invest if they want to achieve net zero outcomes.
“There is a huge willingness to invest,” replied Tim, who added that “the lens has changed from ‘we should do this to hit targets’ or ‘it is the right thing to do’, to something that is much more existential about the future of an organisation and how you drive growth.”
Cities are where the transition to net zero is likely to progress most quickly, he added, but in some cases, there can be quite high levels of risk for consumers or financial organisations. There is a need, therefore, to work with public sector organisations to help de-risk some of those investments to get them moving.
Tim said another challenge is around scale. “We need to be confident the scale is coming, so that we can invest in the people and skills and types of financial investment models that we need.” But the backing of the public sector and the coming together of national, regional and local governments “is really important to give the financial services industry the confidence to do that”.
Greg Clark turned to KPMG’s Director of ESG for Financial Services, Graham Smith and asked for his views on the public sector’s role in the net zero transition.
Graham replied that city projects often have “a political push” but also need “people at different levels to make it happen”. Organisations need champions, he explained. “Every project has bumps in the road and so you need local government to remove those bumps. Getting all levels of a city working together to tackle this is really important.”
Greg then asked for thoughts on the potential of sustainable financial returns for capital in net zero projects, and how they compare to other investment opportunities or asset classes.
“Green money is just like brown money,” replied Graham. “It has to be repaid and give a return on capital, and it has to have a project behind it that works. A sustainable project that fails within the first six months or a year because it cannot generate return or cash flow; that project has no sustainable value.
“Returns are important, but most important of all is for cities and local authorities to understand that lenders and investors look at the world in a different way,” he added.
Wrapping up proceedings, the Mayor of Hackney, Philip Glanville remarked that there was a “palpable sense of buzz” at the event among participants “in trying to meet climate challenges”.
Good work has been achieved by 3Ci in delivering a net zero pipeline, he added. “This is a unique UK wide partnership with London helping to lead the way.
“Now it is about taking reflections from today and having the courage to start to experiment with the pipeline and talk to investors to see how we can move from a pipeline to a deliverable programme of work.”
Catherine Barber remarked: “The 3Ci / Catapult model offers the chance to get together, learn and solve problems; that is what I really enjoyed today.”
Following the event, Greg Clark said that the day “enabled us to have a conversation that is not otherwise possible almost anywhere in the world.
“We focused on combining the value of the place with the logic of capital so that local government and city-wide government with pension funds, insurance companies, bankers and financial advisors can grasp the important task of investing in a liveable planet.”