Sustainable Views: Sadiq Khan on sustainable cities, finance – and COP

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Hi, welcome to Sustainable Views, the podcast. I am Silvia Pavoni, your host. We released our last show as COP27, the UN climate conference, was about to kick off. And we're sharing this now, this new episode, as COP is about to wrap up. In what seems to be a tradition, it looks like negotiations this year taking place in Sharm el-Sheikh in Egypt will go into overtime. There is a lot to discuss: how to implement the commitments made a year ago, how to support the decarbonization of low-income countries, how to compensate them for the damage they are suffering because of climate change, when they played almost no part in causing it. As the need for practical, fast solutions becomes clearer, there are some who think that those solutions cannot materialise without the direct input of local administrations. In fact, Sadiq Khan, the Mayor of London, says that this will be the last COP where cities are not around the table. And you'll hear from him in this episode. So let's hear what he said exactly and why. Khan spoke to Philippa Nuttall, one of our correspondents, a few weeks before the UN climate conference started. He was on the other side of the world, actually, at the meeting of the C40 cities in Buenos Aires, Argentina. C40 brings together nearly 100 cities around the world to find climate solutions. Khan has been chairing it since 2021. So Philippa has also written a very interesting piece looking at why cities are struggling to go carbon neutral. I'll put the link to her article in the show notes. So this is the part of Philippa's interview with Khan where he talks about COP and about where climate financing should flow.

Firstly, what really needs to happen is, you know, COP27, the national governments are going to give far more money to Global South in relation to the $100 billion promised a number of COPs ago. Secondly, in relation to loss and damage, we can't wait for the national governments, the COP cavalry to arrive. We're getting on with doing stuff ourselves. So in relation to cities, it's the cities and mayors that come up with the ideas that we help unlock the funding. You know, I've got some examples of some of the ideas. It could be a city that wants to, you know, build a cable car. Freetown, it's got a cable car project which is environmentally friendly. It will help them in relation to, you know, create jobs. Help tourism, really, really important. Mumbai has got a project to have bus depots that are electric to power the electric buses, but they need the infrastructure in relation to energy infrastructure for 27 bus depots. Really, really important. Accra, a big source of methane gas emissions is their waste. So supporting them in relation to a municipal solid waste source separation and community compost project is a good example. And there are other examples here. The key thing is not, it's not C40 dictating to, you know, mayors what are the projects. It's the mayors who know their cities the best coming up with ideas. The key thing about the ideas is they've got to be ideas that, you know, obviously are green, that are sustainable, that help tackle the climate emergency. And different mayors will have different solutions in relation to adaptation, in relation to resilience. It could be greening, You know, Cape Town, for example, we're supporting them in relation to a solar farm. We're helping support Cape Town in relation to net zero carbon buildings. Same goes for other cities in the Global South. The key thing is, we will help them, you know, unlock the monies that they need and otherwise aren't getting from the national governments or from the UN through COP. So the Conference of the Parties system doesn't work. You know, if you look at the all those countries that signed the Paris Accord in 2015, I think only one country is on course to meet the promises made in Paris. You compare and contrast C40 cities, more than two-thirds of C40 cities, more than two-thirds are on course to meet the Paris Climate Accord. And bear in mind, we are responsible cities for more than 70% of emissions. Cities have got to play a bigger role. Now, Antonio Guterres, I met with him last year at COP in Glasgow, was— he understood the importance of cities, and Antonio Guterres sent us a video message for the C40 World Summit saying how much he supports what we are doing. I think the role of non-state actors has got to be amplified at COPs. I think Sharm el-Sheikh is going to be the last COP where cities aren't around the table. Cities and mayors have to be around the table. But also, I think national governments got to recognize that we are their allies, not their adversaries. Because we know from the response we've received from our citizens that citizens now see us as the doers doing stuff and national governments as the delayers.

Khan mentions Antonio Guterres there, the Secretary-General of the United Nations. So cities are the doers and national governments are the delayers. After the interview, I chatted to Philippa about what Khan himself has actually done for London since he became mayor in 2016.

So I think the big thing he's done for London, and perhaps just to say, I don't live in London, so this is It's repetition rather than necessarily learnt experience. But I think bringing in the Ultra Low Emission Zone and marrying the need to tackle air pollution with climate action. He's been very vocal about the fact that he was diagnosed with adult asthma and that that was probably through because of exposure to air pollution. And he was very keen last year to say how big the Ultra Low Emission Zone is now and how it's brought down air pollution levels. He's also very keen in terms of transport to, to talk about the amount of electrification. So I think about a third of taxis in London now are electric. The London's got one of the biggest electric bus fleets in the Western world. It's also got a fair number of EV charging points. So I think those are all things that have moved in the right direction. I mean, there has been some controversy around his plans. There's the Silver Town Tunnel, which is under construction at the moment. Which Sadiq Khan defends and says will reduce emissions. But there is a big campaign, including within parts of the Labour Party, to say that actually, you know, it will— it's a massive budget and it's £2.5 billion, and also that it will increase the number of car journeys. So everything he's done is not necessarily been received with full approval of everybody. But I think in terms of air pollution, he has definitely made that his mandate to reduce emissions.

In her article on sustainable cities, Philippa also talked to Greg Clark, who is the chair of the Cities Commission for Climate Investment (3Ci). This is a UK government-backed initiative that connects local authorities across the country. Just like Khan, Clark touches on cities' power, or lack of. He says that more power should be given to them from national governments. UK cities are, and I quote, "among the least empowered in the developed world," says Clark. They have low levels of control over infrastructure, over transport, over utility providers, all areas with high levels of carbon emissions. He says, and I quote again, "The unique combination of high levels of centralisation, high levels of privatisation and weak regulation make it more difficult for UK cities and local authorities to act on carbon emissions. UK cities have a low share of control over public finance. Their ability to raise revenues is constrained." And their powers of borrowing or entering into joint ventures and investment partnerships are controlled by national governments. So let's back this up with some data. According to the OECD, the Organisation for Economic Cooperation and Development, UK cities typically control around 7% of all taxes raised within them. The average for OECD countries is close to 25%. While in Germany, this is close to 35% and it is as high as 50% in some North American cities. For UK mayors, things must be frustrating. I asked Philippa what she made of the comments about COP, whether this could actually be the right forum to empower cities and regional administrations.

I think it's really difficult. I mean, if you look at the EU, for example, we have the European Parliament, the European Council and the European— the EU Committee of the Regions. The Committee of the Regions, which is made up of mayors from around Europe, has never managed to sort of impose itself in the same way that the Parliament or the Council has. It's more of an advisory body. COP is a very fixed process, and I find it very difficult to see how they would actually bring mayors into that process. Having said that, on the 17th of November, the head of UN-Habitat will hold a meeting with ministers, city ministers, urban ministers to try and discuss this issue and to see a) how they can work better together and b) what sort of maneuver, room for maneuver there is for them to be included more in the COP process. But I see, I think, I find it very difficult to see how they would be included in the negotiations. At the same time, it makes sense in the sense that I mean, Egypt has said this is the COP of, COP27 is the COP of implementation. And climate action has to be implemented at a local level. If you want to renovate buildings, more public transport, more cycle lanes, that all has to be implemented at a local level, either through the national or local budget. So it would definitely make sense to have more input from local actors like mayors.

In the interview, Khan also talked about two agreements that would help mobilize $1.5 billion for cities in the Global South. Now, I have to admit, I don't particularly like using this term. It isn't necessarily correct from a geographic political point of view, but that's what Khan used, Global South, and it is what many use too. Essentially, greater focus and financing should go to cities in poorer countries as opposed to London or Copenhagen or Los Angeles. By the way, in the recording, when you'll hear Khan say yesterday, he's referring to October 20th, right in the middle of the C40 meeting.

When I became chair this time last year, I was quite clear our priorities have got to be the Global South. We represent almost 100 cities across the globe, more than 700 million people, more than almost half of the world's GDP we help grow. But the problem is we're responsible as cities for 70% of carbon emissions, and those in the Global South least responsible for climate change suffer the worst consequences. So I agreed last year that at least two-thirds of our budget must go to Global South cities. And monies we get in, you know, through leveraging in public money from development banks or from the private sector, we will make sure we prioritize the Global South. So there's been two big announcements already at this summit, the biggest gathering of mayors ever, by the way. Yesterday we announced that the C40 cities, 97 of us, over the next 7 years by 2030, would create 50 million good green jobs across C40 cities. So those are jobs in retrofitting, in insulation, making electric vehicles, renewables and so forth. So 50 million good green jobs going forward, which is really important. Why? Because there are some parts of the world where people work in fossil fuel industries or old-fashioned manufacturing and they're worried about losing their jobs. So we need to give them a path what's called just transition to, you know, good jobs. And those are the good green jobs we're going to help create over the next 8 years. So 50 million good green jobs at 2030. And the second big announcement today is C40. We're going to use our expertise, which is, you know, world-leading, to leverage in monies in excess of $1.5 billion over the next couple of years to support Global South cities. And what we've realized is you've got cities and mayors with great ideas. You've separately got potential sources of money. There could be development banks, there could be other banks, there could be pension institutions, they could be private sector. But the cities haven't done the work required to give confidence to the financial institutions to loan them the money to spend the money. And our technical assistance can unlock, we think, a huge amount of money. So the two big announcements today is the Cities Finance Facility that will unlock, we think, in excess of $1 billion, and the International Finance Corporation, we think that could unlock $500 million. And the key thing though is we've got to prioritize the Global South. It can't just be about the London, Paris, Barcelona, Madrid, LA getting the support. It's got to be the Global South getting the support.

And here is Philippa again.

What's most interesting about his comments is the need, especially in developing countries, to make sure that the finance is there so that they can decarbonize. And it's not just the richer nations that can afford to do this. But I think it's also clear for from speaking to him previously, I interviewed him at COP26 as well, is that similar challenges are also facing richer nations, especially post-COVID, whereby lots of local authorities, lots of cities and regions just don't have the money anymore to even deal with the day-to-day running of their cities, regions. And then they've also got the climate challenge that comes on the top of that.

So it makes sense. The majority of the world lives in cities. Cities account for over two-thirds of global emissions. It makes sense they should be granted more power and financing. But what do you think? Let us know. And let us know if you think cities should sit at the COP table too. That's it for today's show. Thanks to Philippa for joining me. And of course, thanks to Sadiq Khan for talking to Sustainable Views. As always, Sustainable Views, the podcast, is produced by John Rogers. Thank you, John. And we'll find each other again in 2 weeks.

This podcast is supported by Federated Hermes Limited, a global leader in active responsible investment. We follow 3 pathways: active ESG, sustainability, and impact. 3 routes to 1 destination: sustainable wealth creation. Capital at risk. Professional investors only.