Thank you for the opportunity to speak at this critical juncture in the modern history of cities and nations.

In many respects, this Meeting of G7 Urban Ministers — the first ever — is the culmination of almost 50 years of research, thought, deliberation and discourse. Since the UN Habitat meeting in Montréal in 1976, networks of nations, cities and stakeholders have been working together to create a strong foundation for global action on sustainable urban development.

The Montréal gathering — and those that followed in Istanbul in 1996 and Quito in 2016 — explored the ample opportunities and wicked challenges facing a world in which urbanization is the common, unifying thread. With the passage of time, these gatherings evolved seamlessly from general agenda setting and knowledge sharing to specific actions through which cities, both individually and collectively, can be vehicles for solving global challenges.

The most recent gathering in Quito saw the development of the New Urban Agenda and the translation of the UN-backed Agenda for Sustainable Development and the 17 Sustainable Development Goals to the local scale.

A call for collective action

Today we have arrived at a critical step of the journey, a time that calls for collective action and common vision among leading nations and cities around the world, given that urban places house the majority of the world’s population, drive a disproportionate share of the world’s economy and consume the bulk of the world’s resources.

My task today is to scope out what multilateral action and initiative might look like if built from the bottom up — that is, by taking advantage of the special ways that cities innovate and urban innovations scale and spread.

If you feel uncomfortable and disoriented right now, you should. We are in new global territory that is uncharted and unforeseen. There will be no easy bounce back — The New Disorder will be with us for a while.

At the outset, let me point out the urgency and complexity of your remit. As a recent World Economic Report bluntly concluded, “the battle for climate change will be won or lost in cities.” This fight will require a new systems-oriented approach to city building alongside radical and rapid transformations in intersecting and interdependent sectors, including building, energy, transportation, and water infrastructure. Far-reaching innovations, fresh thinking and multi-sector action will be required to leverage the full power of cities as networks of stakeholders rather than just collections of individual actors.

All of this would be difficult if the world stood still, but it doesn’t. Cities and nations face a bewildering array of disruptive and destructive dynamics, some unleashed by the pandemic, some longstanding in nature, some catalyzed by policy decisions, some precipitated by the Russian invasion of Ukraine.

The systems change needed to combat climate change must happen while housing and energy prices are spiking, supply chains are localizing, remote work is surging, politics are destabilizing and profound advances in technology — the internet of things, robotics, artificial intelligence and machine learning — are redefining the very nature of work and fundamentally altering the skills our workers will need to succeed in the 21st-century economy.

Let’s all acknowledge the fact that we are living through a period that is better characterized by the disturbing moniker “The New Disorder” than the more soothing “The New Normal” that we so often hear. If you feel uncomfortable and disoriented right now, you should. We are in new global territory that is uncharted and unforeseen. There will be no easy bounce back—The New Disorder will be with us for a while.

I cannot underscore enough the importance of the opportunity you have to deliver on your national and global commitments by focusing on the common geography of settlement that unites the world — cities — where you will, as we say in the United States, get the biggest bang for your buck.

Why cities?

So, let me begin. The centrality of cities to a sustainable and resilient future is grounded in economic, environmental and social dynamics that are deeply rooted and incontestable.

Cities have become the organizing units of global trade and investment and the engines of national economies. That is because cities concentrate and co-locate the key drivers of prosperity — advanced industry clusters, mature companies, small and medium sized enterprises, educational and research institutions, investors, skilled workers, a cosmopolitan worldview, strong infrastructure — that together make cities such vibrant nodes of commerce and civic life.

When entrepreneurs, workers, investors and anchor institutions come together in small geographies that are rich with history and culture and amenities, magic happens. Ideas are generated. Innovation flourishes. Companies form. Enterprises grow. Quality jobs increase. Workers gain new skills. Paths out of poverty multiply. In this way, cities are the economic gift that keeps on giving.

The pace of urbanization, of course, has had its share of negative externalities. Throughout the world, most cities have exacerbated greenhouse gas emissions through dirty energy sources, excessive dependence on automobiles and energy-inefficient buildings. Increasingly, these places also bear the brunt of climate change, as extreme weather pummels urban populations and infrastructure with growing frequency.

Cities, in short, provide the platform for economic growth, the possibility of social mobility and the imperative to continue growing sustainably.

The true magic of cities, however, is not their effect on growth or poverty or even the environment. It is their unusual propensity to problem solve.

As Jeremy Nowak and I wrote several years back in The New Localism,

Power belongs to the problem solvers. And these problem solvers now congregate disproportionately at the local level, in cities and metropolitan areas across the globe.

New Localism embodies this new reality of power. It is the 21st century’s means of solving the problems characteristic of modern life: global economic competition, poverty, the challenges of social diversity, and the imperatives of environmental sustainability.

In the 20th century, problem solving was top down, driven vertically by national governments and bureaucratic agencies — a Department of Transportation or a Ministry of Housing — with high levels of technocratic expertise. Solutions, in the form of new programs, reforms and rules, flowed down from technical experts at the top and were applied wholesale across entire countries.

The net result is today’s modern state: a set of specialized national agencies that have clear organizational structures and deep compartmentalized expertise but do not always play well together, have limited local knowledge and are often slow to move at scale.

In many sectors, capital is not the problem; there is often an abundance in public, private and civic capital. The real challenge is how capital is organized. As Della Clark, the President of The Enterprise Center in Philadelphia, says, “capital flows where it knows”.

Today, problem solving is co-created, powered horizontally by multi-sector networks of individuals and entities with knowledge and capacity that cut across disciplines. Cities are integrated ecosystems rather than separate legislative committees and executive bureaucracies. Problems are solved holistically through networks rather than exclusively through governments.

• Advancing innovation requires close collaboration among industry, universities, entrepreneurs, investors and intermediaries.
• Reducing greenhouse gas emissions requires simultaneous and connected moves in the energy, building, transportation, water and other sectors.
• Decarbonizing the logistics sector require actions between manufacturers, utilities, shippers, truckers, warehouses and technologists.
• Upgrading the skills of workers requires close coordination between firms, community colleges, skills providers, philanthropies and others.
• And so on.

In the words of Matthew Taylor, the former head of the Royal Society of the Arts in the UK, cities have the unique capacity to “think like systems and act like entrepreneurs.” Regardless of size, no one organization is able to bring about economic and energy transformations on its own. Radical collaboration is the order of the day.

Cities, in short, use a networked approach that cuts across sectors, disciplines, and institutions. This enables them to recognize and respond to complex challenges with flexibility and creativity. It also shields them from the partisan rancor and ideological polarization that too often paralyze higher levels of governments.

The new circuitry of innovation

Cities thus possess a unique and distinctive approach to problem solving. What’s more, in today’s world solutions can spread quickly across cities, countries and continents, amplifying impact and triggering further innovation.

Copenhagen shows how this can work. The Danish capital has emerged as the world’s poster child for climate solutions, as it strives to become the first global city to achieve zero carbon emissions by 2025. Copenhagen’s plan is an intricate mix of concrete goals and initiatives that together aim to drive change across four key areas: energy consumption, energy production, green mobility and city administration.

Given the complexity of the climate challenge, it is not surprising that Copenhagen’s strategies are multi-layered.

In the words of Matthew Taylor, the former head of the Royal Society of the Arts in the UK, cities have the unique capacity to “think like systems and act like entrepreneurs.”

On one level, the city (in close concert with the national government) is pursuing policy innovations around governmental investments, regulations and commitments. Significantly, Copenhagen has established a series of sub-goals that, if achieved together, will enable the city to get to carbon-zero.

For example, the city has established the following energy production targets for 2025:

• District heating in Copenhagen is carbon neutral;
• Electricity production is based on wind and sustainable biomass and exceeds total electricity consumption in the city;
• Plastic waste from households and businesses is separated; and
• Bio-gasification of organic waste is scaled.

On another level, Copenhagen is either inventing or deploying product innovations that leverage concrete design, technological and financial advances. These product solutions include using architectural and land use norms to build sheltered and secure bike lanes and technology to monitor the energy use of buildings and accelerate traffic flow and reduce congestion. These and other actions are advanced by innovative financial products and mechanisms that can be standardized, such as green bonds and value capture.

Finally, Copenhagen is perfecting a series of process innovations by creating new approaches to governance. On one hand, this means endowing public/private institutions with the capacity and capital to drive solutions at scale. Since the 1990s, for example, the Copenhagen City & Port Development Corporation has driven the regeneration of the core of the city by using revenues generated by land sales and leases to finance the construction of a 21st-century subway system for the entire city.

But process innovations also often require new forms of networked governance, particularly multi-sector collaborations between public agencies, private corporations, universities and nonprofit philanthropies and intermediaries. For example, Project AirView, a collaboration between Google, the City of Copenhagen and multiple universities, enables hyperlocal, block by block, air quality mapping.

To adapt Copenhagen’s ambitious plan to other cities around the world will require a keen understanding of these three very different kinds of innovations and the speed and ease with which they can be adopted and adapted by other cities with different starting points on political power, delivery capacity, administrative responsibility and societal culture.

Product innovations tend to have the least friction associated with adaptation and the greatest potential for export because elements such as building codes, engineering protocols and financial underwriting can be routinized. Product innovations move fast primarily because market players — production companies like Vestas, financial institutions like PensionDanmark, architectural firms like BIG, consultancies like Ramboll, COWI and Gehl and matchmaking intermediaries like BLOXHUB — can literally capture, carry and apply the same intervention from place to place.

Certain policy innovations — like the public procurement of clean vehicles or energy efficient goals for publicly owned buildings — also travel easily from city to city. Other policy innovations such as transit infrastructure and ridership can be more difficult to replicate because city governments in different countries do not have the same levels of powers and responsibilities. Furthermore, the spatial landscapes of different cities vary widely and the political process of driving policy change requires the mobilization of urban constituencies which often have radically different priorities for the allocation of scarce public resources.

Focus on a few high-profile breakthroughs in the energy, building and transportation sectors, which are tailor-made for global scaling. These sectors produce the bulk of greenhouse gas emissions and will determine how the battle for climate change is decided.

Process innovations, like policy innovations, often require substantial public sector actions and reforms which, in turn, require high levels of political capital to be expended. Copenhagen’s City & Port Development Corporation, for example, was able to drive the regeneration of a transit-connected urban core partly due to the unified public ownership of vast amounts of land located along the harbor and between the airport and the central business district. In many cities, public ownership of land and buildings is fragmented across separate layers of government and multiple public authorities, which often do not share a common view on goals and objectives.

Copenhagen, of course, is exceptional but not unique. Every nation in this room has cities which are exemplary in a particular domain and already innovating in ways that can be nationally and globally scaled. What we need to understand is how these innovations can move more easily from city to city.

What this means for multilateral solutions

Now we get to the central question: How do nation states and networks of nations accelerate not only the invention and deployment of policy, product and process innovations by a handful of vanguard cities but also the adoption and adaptation of these innovations by scores of other cities?

As national leaders, there is urgency to your charge. But you are not starting from scratch. There already are multiple efforts underway at the multi-national level that your engagement can leverage and amplify.

Five moves are most critical as you deliberate. Each of these can build on and relate to special initiatives around sustainable urban development already underway including the European Bank for Reconstruction and Development’s Green Cities program and the European Union’s Cities Mission. Lessons from these efforts and those undertaken by intermediaries like C40 and ICLEI -Local Governments for Sustainability could be invaluable.

1. Catalyze innovations around common geographies and shared challenges.

In her recent book, Mission Economy: A Moonshot Guide to Changing Capitalism, economist Mariana Mazzucato called for mission-oriented solutions that “catalyze investment and innovation in many different sectors and inspire new collaboration at the project level.”

As Mazzucato summarizes:

The targets under the [Sustainable Development Goals] — 169 of them! — require specific innovations and hence experimentation by different actors. They fit very nicely into a mission-oriented approach, where the challenge is only solved through experimentation around many projects that together complete the mission.

Many cities are beginning to experiment with this kind of approach, particularly in urban innovation districts, which co-locate research institutions, mature companies, startup enterprises, workforce training, incubators, accelerators and amenities in physically compact environments.

Increasingly, a subset of these districts is focusing on cracking the climate code in specific ways, usually by focusing on a discrete geography or a shared challenge.

• In Toronto, the MaRS Discovery District is working with the Toronto Region’s Board of Trade, the University of Toronto and Pearson International Airport to advance solutions that result in net-zero emissions.
• The Port of Los Angeles is cultivating innovation among firms and researchers to decarbonize the logistics supply chain, including the shipping industry.
• Outside the G7, the Be’er Sheva Innovation District in Israel, led by Ben Gurion University, is creating a new sector around desert tech that aims to both mitigate and adapt to climate change.

These districts are tapping cross sectoral expertise to generate holistic, mission-oriented solutions. For the most part, however, each innovation district operates separately. A special G7 effort could bring these geographies together into a Global Network of Innovation Excellence as a means to accelerate innovation and scale impact around common geographies like university campuses, ports and airports and similar challenges such as drought and extreme heat.

2. Accelerate the scaling of urban innovations across cities and countries.

The rise of urbanization has brought an explosion of best practice manuals and handbooks. The solutions in these compendia only work when they have been stress tested by their intended audiences — the urban practitioners and policy makers who are ultimately responsible for adapting innovations to their own communities. In essence, the world needs Sustainable Urban Development in a Box, a packaged suite of promising innovations that can plug into different systems seamlessly and with minimal effort.

The scaling of an urban innovation starts with the sharp distillation of its core features and components. Repetition requires codification, which is best accomplished using a common template that is flexible enough to accommodate places with very different governance structures, market conditions and institutional capacities.

This is a time that demands bold, ambitious, well-resourced innovations that have been designed in the image of cities and reflect the actual way that cities solve problems and urban solutions are scaled.

The G7 could play an important role in this arena as well. Your contribution must go beyond the mere compilation of best practices in order to distill how scaling and replication can actually occur on the ground. In short, you must help create Delivery Units for the most promising and transformative innovations so that the time from innovation to codification to diffusion and adoption is radically shortened.

My recommendation: Focus on a few high-profile breakthroughs in the energy, building and transportation sectors, which are tailor-made for global scaling. These sectors produce the bulk of greenhouse gas emissions and will determine how the battle for climate change is decided.

Perhaps each year every nation could nominate one transformative innovation within each of these three sectors with the necessary DNA for scaling and replication. Perhaps a network of emblematic cities and knowledgeable practitioners, working with the intermediaries identified below, could play an advisory function by taking each nominee and breaking down not just innovation design and implementation but also what’s needed to accelerate replication and adaptation. Perhaps several Delivery Prizes could be awarded to ensure that cities are amply motivated and the hard work of repetition is achieved.

3. Routinize the financing of urban innovations.

The financing of climate solutions is complex and composed of multiple investment sectors as diverse as renewable energies, transportation and building construction, water and waste management and resilient development. Each of these investment sectors advances the common goal of mitigating (or adapting to) the impact of climate change.

Yet each differs in how it is governed, regulated, owned and operated within and across countries. And, with regard to finance, each has a different capital stack (i.e., debt, equity, subsidy, and concessionary capital) composed of different types of capital (i.e., public, private and civic) with different levels of project risk, revenue and return expectations.

In many sectors, capital is not the problem; there is often an abundance in public, private and civic capital. The real challenge is how capital is organized. As Della Clark, the president of The Enterprise Center in Philadelphia, says, “capital flows where it knows”.

There is a disconnect between the simplicity of climate goals and the complexity of climate finance. In most cities and countries, this disconnect is exacerbated by a mismatch in the knowledge and expertise of different stakeholders in the system, particularly with regard to national, state and city governments on one hand and asset managers and financial institutions on the other.

As with urban innovations generally, the G7 can help mobilize large amounts of private, public and philanthropic capital by working with pension funds, sovereign wealth funds, and global financial institutions to demystify and ultimately routinize the financing of climate solutions.

The centrality of cities to a sustainable and resilient future is grounded in economic, environmental and social dynamics that are deeply rooted and incontestable.

Routines matter. They reduce risk and simplify replication. Common term sheets. Common capital stacks. Common metrics. Common analytics. Common technologies.

Which is not to say that routines are some sort of unalloyed good. In many respects, routines helped produce the climate crisis. That’s clearly true in the United States where routinized mortgage products, zoning ordinances and federally subsidized highway construction gave us sprawling suburbs, long fossil-fuel-dependent commutes and energy inefficient homes.

But the right routines can drive the opposite results.

To facilitate the routinization of project finance, a new financing entity should be created. This new entity — call it City Climate Invest — could be supported by higher level governments but governed by cities to serve their interests. It would, at a minimum, give individual cities and their public pension funds access to objective expertise around investment options, precedent projects, and likely risks and returns. It could allow cities to join together to create new norms around project finance, and even new investment vehicles for similarly designed projects.

4. Boost the capacity of global intermediaries.

Scaling and spreading climate innovations will depend on strong intermediaries that can move solutions across countries, cities and industry clusters. These entities are the conduits by which proven innovations move through the urban world.

Some of these intermediaries already exist. Groups like C40, ICLEI — Local Governments for Sustainability, the World Economic Forum and the Urban7 are already spurring innovation, advancing codification and sharing knowledge. But if climate innovations are going to be replicated and scaled — and adapted to local circumstances — these organizations will need predictable, scaled funding and ongoing support.

Philanthropies and corporate foundations can play an enormous role in this regard. They can provide consistent funding for critical intermediaries, providing stability across the terms of elected officials and government ministers. Make no mistake: the climate challenge will not be solved without significant increases in platform funding for the key national and transnational organizations that work across cities.

5. Imbue all G7 climate and resource efforts with an urban focus.

To its credit, the G7 already has multiple efforts underway focused on sustainability and the environment. In 2015, for example, the G7 established the Alliance for Resource Efficiency to connect policymakers, businesses and relevant stakeholders to advance regional and global resource efficiency. More recently, the G7 summit held in this past June led to the creation of the Climate Club to support implementation of the Paris Agreement. And all members of the G7 are involved in international efforts like the Zero Emission Vehicles Council, which aims to accelerate the global transition to electric vehicles.

These and other efforts underway at the G7 would benefit from an explicit urban focus and the direct engagement of urban stakeholders. An urban dimension would ground these disparate efforts in the geographies where change ultimately must happen while ensuring that policy and practice recommendations align with the realities of different cities. The involvement of urban stakeholders would also provide an organic feedback loop, enabling effective and quick responses to delivery and financing challenges as they emerge.

We have reached a point where sustainable urban development should cut across multiple G7 initiatives while also existing as an initiative in its own right.

Let me conclude with this thought.

This gathering represents a watershed moment for cities working to advance sustainable development. The G7 has proven itself, time and time again, as a platform for bringing multilateral focus and coordination to bear on some of the most pressing issues facing the global community.

Perhaps the most important signal this gathering can send is that this is the beginning, not the end, of G7 engagement on sustainable urban development in general and urban climate resilience in particular. Transformative change requires predictable, consistent and persistent commitment by cities and the higher-level governments that are critical to their success.

You, collectively, have one of the largest megaphones in the world. You, collectively, have built one of the most important platforms for change. Together you have the ability to mobilize armies of data scientists, technology and finance experts and public, private and civic innovators.

This is a time that demands bold, ambitious, well-resourced innovations that have been designed in the image of cities and reflect the actual way that cities solve problems and urban solutions are scaled.

Bruce Katz is the Founding Director of the Nowak Metro Finance Lab at Drexel University.

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