How Cities Can Work With Businesses to Achieve Climate Goals

To truly drive impactful climate action, city governments must partner with businesses in meaningful, collaborative ways. While city authorities have limited control over overall urban emissions, businesses hold vast potential to help achieve climate goals. This potential is being increasingly unlocked, as companies face growing pressure—from climate risks, evolving consumer demands, employee activism, and investor scrutiny—to set ambitious climate targets of their own.

By working together, cities and businesses can create a future that not only reduces emissions but also fosters innovation, resilience, and sustainable economic growth. The path to this future is paved with strategic engagement, bold incentives, and a willingness to reshape markets, driven by a shared responsibility for the planet.

Building Bridges: Convene Businesses for Climate Dialogue and Action

Engagement must go beyond transactional relationships and dig into something deeper—creating spaces for genuine dialogue and mutual learning. Convening city leaders and business stakeholders around climate action, without a commercial agenda, can build the trust and transparency needed to tackle the complexities of urban climate challenges. The opportunity to hear diverse perspectives can spark ideas that might otherwise remain unexplored.

Cities should bring businesses into the fold early, inviting their insights into the design or revision of the city’s Climate Action Plan (CAP). Engaging businesses at this stage ensures that priorities are clear, and potential barriers to adoption are addressed, while highlighting the opportunities that climate action brings. Tailored engagements, targeting specific sectors, are particularly effective—more so than broad, one-size-fits-all approaches.

Building ongoing relationships is critical, and cities can institutionalize these by creating climate-focused business networks, forums, or alliances. Such platforms enable businesses to stay ahead of legislative changes, exchange knowledge with peers, and communicate directly with city decision-makers. These ongoing dialogues are key to fostering a sense of co-ownership of climate goals. In some cases, the convening power of the city’s mayor or high-level officials can demonstrate the seriousness of the city’s climate agenda, while technical working groups provide room for concrete, collaborative action.

Procurement as a Tool for Shaping Sustainable Markets

With trillions of dollars spent on goods and services by cities worldwide, public procurement holds immense power to steer the market toward sustainability. Cities can act as catalysts, using their purchasing power to demand greener, climate-friendly products, from food and building materials to electric vehicles and clean energy.

By setting time-bound commitments for sustainable procurement, cities can encourage businesses to innovate and adapt, driving demand for low-carbon products and services. Collaborating with other municipal governments or large institutions to consolidate purchasing power can amplify this effect, making it easier for businesses to make the shift.

Even where the market lags behind, the city’s commitment to sustainable procurement sends a clear signal to businesses—those who innovate will be rewarded. Whether it’s retrofitting buildings, installing renewable energy, or adopting green technology, procurement can spur progress toward climate goals.

Regulation: The Power of the Policy Pen

While incentives and voluntary programs are important, regulation often has the most immediate and wide-reaching impact. Cities can use their regulatory authority to mandate climate-friendly practices across sectors, from waste management to building standards. This approach, however, requires careful legal consideration, as businesses may challenge new regulations that push beyond the city’s traditional jurisdiction.

Engaging businesses early in the regulatory process is essential. A phased introduction of new rules gives industries time to prepare and allows markets to evolve to meet the demand for sustainable solutions. Voluntary measures can serve as a testing ground, helping to smooth the transition to more formal, mandatory regulations down the line.

Incentives for Innovation: Unlocking New Opportunities

Regulatory levers may be powerful, but incentives and support for voluntary climate measures can spark innovation and help businesses leap ahead. Barriers like lack of finance or technical expertise often hold companies back, but cities can take proactive steps to create an environment where green solutions thrive.

Cities should first remove any legal hurdles that prevent businesses from embracing climate-friendly measures. Outdated regulations on adaptive reuse, mixed-use development, or the use of sustainable materials like timber often stifle innovation. Reforming these regulations can unlock opportunities for businesses to contribute to a more sustainable urban fabric.

Cities can also provide financial incentives—whether through tax credits, grants, or subsidies—to help businesses make the transition. For example, Oslo’s Climate and Energy Fund offers support for businesses purchasing electric equipment, while cities like San Francisco provide grants for sustainable small businesses. These financial tools make it easier for businesses to make the leap to sustainability, while competitions and innovation hubs provide platforms to accelerate their efforts.

Cities can incubate new ideas, attract climate-friendly businesses, and provide spaces where innovation and collaboration can thrive. By investing in physical hubs or redeveloping districts with sustainability in mind, cities can create the ideal conditions for these businesses to flourish. BlueCity in Rotterdam and Mexico City’s Vellejo-i innovation zone are prime examples of how to attract sustainable industries through creative redevelopment.

Data and Accountability: Monitor and Encourage Climate Disclosures

A growing number of businesses are voluntarily disclosing their climate impacts, and mandatory disclosure requirements are increasingly taking root. Cities can tap into these reporting systems to gather critical data on emissions, climate-related risks, and corporate climate action.

Platforms like CDP (formerly known as the Carbon Disclosure Project) provide valuable insights into corporate emissions and vulnerability. Cities can encourage local businesses to participate in these disclosures or even establish data-sharing agreements to track progress. As these requirements become more widespread, businesses will need support, especially small and medium-sized enterprises (SMEs), to navigate these complex frameworks.

By embracing transparency and accountability, cities can not only track emissions more accurately but also push businesses to raise their ambitions and align with broader urban climate goals.

Mobilizing Private Capital: The Role of Public-Private Partnerships (PPPs)

Public-private partnerships (PPPs) offer cities a way to mobilize private capital and expertise to support large-scale climate projects. These partnerships can spread risk, tap into private-sector innovation, and speed up the delivery of vital infrastructure. However, the terms of such agreements need to be carefully crafted to ensure they align with the city’s long-term climate objectives.

Whether developing new PPPs or renegotiating existing ones, cities can work with private-sector partners to deliver projects that support climate resilience, green infrastructure, and clean energy. From shared bike schemes to water supply projects, PPPs offer a valuable model for cities looking to leverage private resources for public good.

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Achieving urban climate goals requires a blend of strategic regulation, innovative incentives, and robust partnerships. By working hand-in-hand with businesses, cities can unlock the full potential of the private sector, creating sustainable urban environments that benefit everyone. The future of our cities depends on this collaboration—one that builds resilient economies, reduces emissions, and secures a greener future for generations to come.

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How cities can work with businesses to achieve climate goals