Cities house more than half of the world’s population and without timely action from cities, achieving net-zero emissions and the goals of the Paris Agreement will be impossible.

While local governments from across the world are leading on climate ambition and have the potential to drive transformative change, limited access to finance remains a key barrier to cities taking climate action.

CDP’s report, Showcasing Cities’ Investment Needs for Aligned Multilevel Climate Action, reveals that despite urban finance flows more than doubling between 2017 and 2022, they still fall far short of the estimated $4.5tr needed annually through 2030 for climate mitigation and adaptation in cities.

Demand for climate finance in cities is increasing year-on-year. Total reported investment needs for projects surged by 23 per cent in 2024, reaching $86bn with investment needs remaining concentrated in developed economies, with Europe, North America and Latin America leading in numbers of reported projects.

In terms of investment need, water management leads as the top sector globally for projects seeking investment, seeking a total of $28bn and buildings and energy efficiency is the leading sector for reported projects, followed by transport, and nature-based solutions, biodiversity & urban green spaces. Building & energy efficiency is the leading sector in developed economies whereas waste management is the top sector for EMDEs.

Climate mitigation accounts for nearly half ($40.3bn) of total reported investment needs, a slight decrease from the $45bnreported in 2023. Over two-thirds of this demand comes from developed economies.

Adaptation is also a major area, with 29 per cent of all reported projects focusing on increasing urban adaptation and resilience to climate change, with a near-equal distribution between developed and emerging markets. While the number of projects remains largely the same as in 2023, the demand for adaptation finance has risen from $21bn to $35bn.

The report is based on an annual survey of thousands of cities across the world invited to participate in CDP-ICLEI Track, a comprehensive environmental questionnaire powered by CDP. The CDP-ICLEI Track questionnaire captures cities' climate action and resiliency plans, greenhouse gas reduction targets, and actions to mitigate and adapt to climate change.

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