Top takeaway

Cities can unlock private finance for climate action by combining structured funding frameworks with strong partnerships and training to create investable, low-risk projects.1

The problem

The UK’s capital city has ambitious net zero targets but lacks the resources to fund them. Decarbonising buildings, energy systems and transport networks require significant investment beyond public sector budgets.

Why it matters

Given the size and density of its population and its infrastructure, London cannot reach its climate goals without mobilising private investment at scale. That said, it’s extremely challenging to fund climate action quickly without risking financial instability or running out of funding over time.

The solution

Decarbonising infrastructure takes money. The London Climate Finance Facility (LCFF), launched in 2023 by the Mayor of London, unlocks long-term, flexible private finance to drive this important transition.2

To ensure effective investments, the LCFF works closely with the UK Cities Climate Investment Commission (3Ci), drawing on their expertise to set clear investment criteria for the private sector. Each project is carefully assessed to determine the most suitable type of investment — whether it needs a single financial asset, like a bond or loan, or a mix of different assets to spread risk and improve financial stability.3

The result is a pipeline of investable projects that are clearly structured and ready for private investment. Because each project has been rigorously assessed, investors can quickly find opportunities that match their risk appetite at any given time, making it easier — and faster — for them to invest.4

What happened

The LCFF is like a matchmaker for climate projects and investors. It finds promising new projects, helps remove financial roadblocks, and gets them ready for private investment in a way that investors can trust. Each project is carefully assessed to make sure it has a strong financial case, with expert support available to refine and improve it if needed. Right now, the LCFF is helping fund projects like electrifying transport fleets and making buildings more energy efficient — real, practical changes that accelerate climate action.

Notes

1 C40 Cities 2 Mayor of London, London Climate Finance Facility 3 Joint Statement on Green Finance 4 Mayor of London's Green Finance Fund

Make sure to share your own thoughts with the author by leaving a comment below