As biodiversity loss and climate change accelerate, cities are emerging as key players. When it comes to investing in nature-based solutions and climate action, both for mitigation and adaptation, one question consistently arises: Where will the funding come from? ICLEI Europe explored this topic with NetZeroCities, NetworkNature, and Bankers without Boundaries at the Cities Mission Conference in Vilnius, Lithuania this month.

To understand the innovative nature of NbS, it is important to grasp how these interventions differ from ecosystem services and ecosystem based approaches: Nature-based solutions are not only defined by their co-benefits for human well-being, but also by their contributions to ecological resilience and biodiversity.

EU policies such as the Green Deal and Nature Restoration Regulation have identified NbS as pragmatic and beautiful tools for climate and biodiversity action. In particular, Article 8 of the Nature Restoration Regulation mandates no net loss of urban green areas and tree canopy by 2030.

To support cross policy, sectoral and departmental alignment (and funding!) at the city level, Urban Nature Plans - a planning framework co-developed by ICLEI and Eurocities with dozens of European cities for the European Commission - help mainstream nature as a key priority across city planning and investments. The EU Biodiversity Strategy for 2030 calls on cities with over 20,000 inhabitants to develop such plans which are being piloted and tested within the EU Horizon project UrbanNaturePlansPLUS (UNP+). Projects like UNP+ are important, but private sector involvement is also crucial If we are to upscale NbS. Currently, only 4% of EU projects include private finance in their funding schemes.

ICLEI Member and Mission City Paris is pioneering innovative financing by applying their national carbon credit scheme based on Article 6.4 of the Paris Agreement. The city has created a high-integrity carbon label for local carbon removal projects to spur local impact and initiative blended finance to scale such efforts. A public-private company was formed that enables local corporate investments in NbS. The city is also developing metrics to capture co-benefits like biodiversity conservation.

“We cannot do everything with the budget of the city.” – Cécile Bordier, City of Paris

Our conversations at the conference left us convinced: financing NbS is a crucial first step in bridging the Cities Mission and the Adaptation Mission. By generating clear, measurable co-benefits, these solutions can empower local and regional governments to accelerate their transition toward climate neutrality and resilience, ensuring funds allocated are an investment for future development.