Why Partnering with Cities on Climate Goals Makes Good Business Sense

by | Oct 4, 2016

cdp-cities-reportCities and corporations are increasingly working together to address climate change — and finding these partnerships present “huge economic opportunities” for both the public and private sectors, according to a CDP report released today.

The report, It takes a city: The case for collaborative climate action, was published by CDP and AECOM, and sponsored by Bloomberg Philanthropies.

“Cities have a clear appetite for collaborating with the private sector and this is a huge economic opportunity for the private sector,” said Maia Kutner, head of cities at CDP, in an interview with Environmental Leader. “We see that almost three-fourths of cities are already collaborating with the private sector to some extent and in North America, this percentage is even higher.”

Cities — along with more than 5,000 companies — disclose their climate-related data through CDP, formerly the Carbon Disclosure Project. This year 533 cities responded to the annual questionnaire and identified more than 1,000 economic opportunities linked to climate change, such as developing new business industries and infrastructure upgrades.

This year’s disclosures also show that many cities are actively looking to partner with the private sector on climate change. Cities highlighted a total of 720 climate change-related projects, worth a combined $26 billion, that they want to work with business on, according to the report.

Cities in Africa, North America and Latin America show the greatest appetite for private sector collaboration, where 72 percent, 62 percent and 54 percent of cities respectively report seeking partnerships. The top three climate-related project areas that cities are seeking private sector collaboration on are energy efficiency/retrofits, renewable energy and transport, the report says.

New York City, for example, has set a goal to reduce citywide greenhouse gas emissions to 80 percent below 2005 levels by 2050 and is working with the private sector to achieve this. Since 2007, 17 New York City universities, 11 global companies, its 11 largest hospital organizations, and 18 residential management firms have accepted the NYC Carbon Challenge, pledging to reduce their building-based emissions by 30 percent or more within 10 years. Six have already met the 30 percent goal, and 12 universities, hospitals and commercial offices have expanded their commitment to a 50 percent reduction by 2025.

“The other area where we see a huge opportunity for the private sector is in the area of financing,” Kutner said. “Globally a huge amount of money — $57 trillion between now and 2030 — is needed in urban infrastructure to reduce emissions in line with the Paris climate agreement but also to make cities more resilient against the affects of climate change. And cities are looking for private-sector collaboration on these projects.”

Cities benefit from partnering with corporations on infrastructure projects because investment from private and public sources can improve their access to financing. These projects are also attractive to businesses because they are typically large — energy-efficiency retrofits or water and wastewater management efforts, for example — with long-term contracts.

“In the US alone, the figure was $8 billion in projects reported by the cities,” Kutner said. “The cities said this is what these projects are worth and we want to collaborate with the private sector to accomplish these.” And these are essentially shovel-ready projects, Kurtner added, which means that “over the next 20 years, the needed investment in cities will be much bigger.”

Santa Monica, California is one of the hundreds of cities that disclose climate data through CDP. It also recently announced it beat its climate target. Santa Monica’s three-year effort to reduce emissions 15 percent below 1990 levels by the end of 2015 resulted in a 20 percent reduction. The city now has its sights set on carbon neutrality. It expects to implement a plan for this by 2017, with the goal to achieve carbon neutrality by 2050.

Santa Monica businesses implemented energy efficiency projects that have saved more than 15M kWh — equal to about 4,169 metric tons of emissions saved — over the three years of the city’s Climate Action Plan, according to Garrett Wong, the city’s Sustainability Analyst. In an interview with Environmental Leader, Wong said the city’s green business certification program helps businesses achieve their environmental sustainability goals while also helping the city reach its own climate targets.

“We verify their energy efficiency, water conservation practices, how do they provide employee training, how do they handle their purchasing in terms of hazardous chemicals,” Wong said. “It’s also a great way to let them know what city programs are utility rebates are available to them. It gives them ways to continue advancing sustainability in their operations.”

The Solar Santa Monica program, for example, is a free service that provides technical assistance to property owners that want to install solar panels. City officials provide them with solar and financial feasibility assessment of the property, as well as recommendations on financing models and bid comparisons.

Additionally, the city works with large commercial water users — primarily hotels — to reduce water use, which also saved them money on utility bills. “Santa Monica has a goal to be water self-sufficient by 2020, so no longer importing water from Northern California or the Colorado River,” Wong explained. “So we work with large commercial water users to help them navigate commercial rebates that are available for toilet retrofits and other innovative projects like recycling their laundry water so it is used multiple times.”

Santa Monica Chamber of Commerce director of government affairs Carl Hansen says the city and business community in Santa Monica shows how the public and private sectors can work together to make communities more economically and environmentally sustainable.

“Local businesses are benefiting from cost-saving, environmentally friendly technologies like LED lighting, green building construction, and drought tolerant landscaping,” Hansen said. “Santa Monica’s sustainable businesses also have the opportunity to benefit from recognition as Sustainable Quality Award winners and through green business certification. Going forward, our city’s commitment to alternative and active transportation and the development of new workforce housing near transit, can help us further reduce our greenhouse gas emissions.”

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