In collaboration with Climate-KIC, South Pole Group and ICLEI – Local Governments for Sustainability, Gold Standard — a global benchmark for climate and development initiatives — has announced a new framework designed to unlock billions of dollars needed to scale-up clean technology and sustainable development in cities around the globe.
Much like the circular economy and clean energy sector, transforming cities will play a critical role in combatting climate change. Cities currently consume around 75% of global energy and emit around 75% of global carbon dioxide emissions, yet less than 15% of global climate finance has reached cities. According to the World Bank, only 4% of the largest 500 cities in the developing world are credit worthy international markets, making it almost impossible to secure the finances needed for transformational change. These shortfalls have been attributed to lack of bankable projects and a lack of urban-specific project packaging frameworks to make them investment-ready.
The new framework aims to change this. Under the holistic certification standard “Gold Standard for the Global Goals,” the module for Sustainable Urban Development is designed to ensure appropriate safeguards, governance systems and stakeholder engagement to allow urban development projects to deliver impact at the city-level scale and enable project sponsors to fully assess the social and environmental impact of their climate initiatives. Cities will be able to certify multi-sector programs on sustainable urban development.
Importantly, it is expected to unlock funding for interventions that go beyond strictly reducing GHG emissions, allowing funding agencies and developers to include activities with significant social benefits. For example, improving wastewater treatment processes and clean local transport can significantly lower GHG emissions but also helps to better manage water resources, improve local air quality and transform the quality of life for the city’s residents. All of these impacts can now be quantified and verified under the new standard.
“This framework greatly broadens the potential sources of financing for sustainable urban development because the quantification and verification of results by an independent third party, provides the credibility and assurance that investors and funders increasingly demand, said Gold Standard CEO Marion Verles. As well as traditional carbon finance, project developers can now pursue a mix of other alternatives such as grants, green bonds, and preferential loans from local and multilateral agencies in addition to other results-based financing schemes — both public and private.”
The new urban module has already been tested successfully by South Pole Group on the urban transport project “The Green Corridor” in Cali, Colombia, and waste treatment projects in Nairobi, Kenya and Rajkot, India.
“By using standards to quantify development and climate outcomes, cities can show investors they are serious about low-carbon urban development,” says Martin Stadelmann, Practice Leader Cities & Climate Finance at South Pole Group.
This year, in partnership with a working group consisting of experts from the World Bank, R20, WWF, IHS and others, Gold Standard has been working on developing the tools necessary for a city-wide ‘green growth’ program like the ones in Ammam, Jordan. These approaches and tools can then be used to support replicable, sustainable urban development programs worldwide.
“Climate-KIC supports the Gold Standard for the Global Goals as part of our Low Carbon City Lab program, as it provides cities, authorities and developers with a pragmatic tool to take action at city level. The Standard also helps to quantify numerous social and environmental co-benefits. This framework will not only contribute to facilitating investments in low carbon action within cities, but also ensure that subnational authorities’ contributions to the global fight against climate change are duly recognized and quantified,” says Victor Gancel, Low Carbon City Lab Program Manager, Climate-KIC.