From grand challenges to bold solutions: Investor perspectives on financing urban climate change adaptation

Cities around the world are becoming increasingly vulnerable to climate change, but their ability to attract private finance for urban climate change adaptation (UCCA) has been limited. Based on a comprehensive mapping of current finance regimes in Copenhagen, London and Singapore, the article explores how private investors perceive the challenges and opportunities for financing city-level innovations in UCCA. Our research question involves examining the perspectives of investors regarding UCCA opportunities and challenges, specifically focusing on the prospects for transforming the current finance regime. Theoretically, the study draws on the rich literature on sustainability transitions and strategic niche management to develop a new conceptual framework for categorising ‘conforming’ and ‘stretching’ interventions for financing UCCA. The analysis is based on 51 semi-structured interviews as well as secondary information on UCCA policies and finance documents. The interview respondents indicate that market imperfections, including incomplete and asymmetric information, positive and negative externalities and imperfect finance markets, as well as path-dependent practices and views, hinder investment. Overall, the study contributes to an emerging body of scholarship that seeks to understand the conditions under which public and private actors may collaborate in generating enabling conditions for financing UCCA. • Underinvestment in climate change adaptation lacking behind mitigation, nature and biodiversity. • Insights from the finance sector, identifies challenges and opportunities to invest in urban climate change adaptation. • Climate change will impact all major cities both in the short-term and long-term,hing activities are required now. • Lack of investment connected to the lack of formulation of an adaptation need - a crucial first step in mobilising investment. • For investors, market imperfections, lack of a stable policy landscape and investor hesitancy are salient barriers.