How to effectively co-create innovative solutions to city climate challenges with the private sector

Audience: For city practitioners who want to find innovative solutions to their city’s priority climate challenges.

Overview:

Public-private innovation is rapidly developing in many global economies and the objective of new and improved solutions for climate challenges is vital considering the urgent and ambitious target that cities face. Just 16% of Cities are able to self-fund sustainable infrastructure projects (1) and many cities are looking for ways to tap into private sector expertise and investment. By involving the private sector at an early-stage, cities can gain new ideas, build working relationships and achieve their climate goals faster.

This document outlines a methodology for engaging “climate solution providers” from the private sector, NGOs, civil society and academia in a pre-procurement co-creation process to design innovative solutions for urgent climate challenges. The C40 City Solutions Platform has successfully trialled this methodology with over 10 city challenges between 2016-2020, ranging from reducing flood risk in Melbourne to sustainable waste management in São Paulo. Here we explore how city practitioners can use this methodology to establish good relationships with local and international solution providers and co-create tangible, scalable solutions to complex climate challenges.

Why is pre-procurement engagement important?

Pre-procurement city-business engagement, mediated by an independent or non-discriminatory body, allows all stakeholders to have a say on the best ways to tackle a city challenge and define the requirements of the solutions (2). Often, cities and public sector buyers are more removed from the end users of city services than the suppliers (3). Business and academic insights into the needs and wants of the consumer can help the city to understand citizen requirements and direct discussions towards outcomes rather than inputs (3).

Furthermore, immediately initiating a competitive dialogue with the private sector often limits the willingness of stakeholders to collaborate on ideas with their potential competitors (3). At this stage in the city-business dialogue, it is important to emphasise the non-commercial process, to highlight the collaborative environment and manage expectations of businesses expecting to pitch their individual ideas. Cities can take this opportunity to learn from businesses about market pressure and drivers, technological developments and to expand their possibilities of solutions.

In return, businesses and other types of solution providers can learn directly from the city, access opportunities to design solutions which meet the needs of city residents and help to shape the city’s understanding of the market, thus improving the efficiency of project delivery. By providing a non-commercial platform, stakeholders are willing to share ideas in return for building valuable connections with like-minded innovators and city decision-makers. Early-stage engagement may also reveal barriers to effective private sector engagement in a city’s own policies and processes.

Know your city

Before designing your method of engagement with the private sector, it is important to examine what stage your city is at in terms of scoping the challenge (3). For example, do you need the market to design a solution for a broad environmental-social challenge? Or do you have a solution but want to find an innovative way to deliver it in your city?

Prior analysis helps to focus the challenge, ensuring that you attract the right players to the conversation, and it will help you to measure solution success in the future. For example, for an urban heat island challenge, it is good to map where the main heat spots are in the city so solution providers can identify the drivers of the challenge e.g. lots of concrete, few trees, and design solutions which serve the end-users of those areas.

Some questions you should consider are:

• • what are your city’s policy options and approaches?
  • What is the status of your city’s engagement with local/international organisations? Are there any lessons learned?
  • Does your city have the resources and capacity to manage an innovative project to implementation?
  • Which city departments do you need to involve?
  • Are there existing city initiatives on which to build a private sector co-creation challenge?
  • Are there any existing structural inefficiencies which may be a barrier to procuring innovation?

It is also good to know, before reaching out to solution providers, what other opportunities your city can offer the private sector. A rapid-intervention co-creation workshop is an opportunity to convene players around a specific challenge, but it is also an opportunity to spark longer-term friendships and to understand supplier’s motivations. Establishing long-term strategic alliances with interested private sector groups will help cities to tackle climate challenges holistically.

Know your climate challenge

Once you are clear on how your city can address the challenge and make the most of private-sector engagement, you should consider some of the following questions:

• • How is the challenge already being addressed with existing solutions?
  • Do other cities share the same challenge and how have they addressed it?
  • Who are the key players in this sector and who will it affect?
  • What are the existing barriers to implementation?
  • How do you measure the problem and the effect of the solution?
  • How will you fund the solution(s)?

Challenge scoping: what targets or commitments should your city set?

Setting well-defined and quantitative targets can help raise ambition and tighten the scope of solutions – after all, you can only manage what you can measure. The scope of the challenge should be specific, near-term and backed by scientific evidence. This also helps teams of solution providers to devise clear pathways to implementation which are compliant with the 1.5-degree Paris Agreement ambition and compatible with the city’s own climate targets. On the other hand, it is important not to constrain or overload solution providers with too many objectives; this is an opportunity to design and pioneer something innovative and creative (4).

Examples of targets:

• ‘improve air quality’ → reduce pm2.5 levels in the city by 30% by 2030,
• ‘clean energy to homes’ → ensure 50% of city homes are powered by solar or wind energy by 2030.

Commitments:

Before engaging with the private sector, it is vital to establish a clear route to solution implementation. Note this doesn’t necessarily have to be financial ring-fencing or a procurement process (although this attracts bigger players to the workshop), nor does the city have to commit to implementing the co-created solutions. However, the city must demonstrate how they will seriously consider the solution providers’ ideas and outline plan to source funding or design business models to implement the solution(s). Ultimately this incentivises the solution providers to contribute their best ideas, increasing the feasibility of the co-created solutions.

Public engagement:

Depending on the technical expertise required to solve a challenge, the extent of public engagement can vary significantly. The C40 City Solutions Platform programme has formed partnerships with cluster organisations, who have built trusting relationships with a network of cleantech businesses, academia and NGOs over a number of years. These cluster partners ensure that the relevant organisations in their network are involved in the co-creation process. The partners also alleviate the pressure on the city to exhaustively research and source experts on their challenge.

For complex or technical challenges, for example, Stockholm’s seasonal electricity storage challenge, communications should be targeted at relevant experts who can understand and analyse the details. Consultation with the public may be more appropriate at a later stage, once the solutions have been evaluated by the city. For broader citizen-focused challenges, for example, Milan’s urban forestation in schools challenge, then communications should be targeted at a broader stakeholder mix; from teachers to landscape engineers. It is not always necessary to involve citizen groups pre-procurement but involving key community leaders and giving them ownership over their ideas can ensure longevity of solution implementation and community maintenance.

Identifying and engaging the right stakeholder mix:

Identifying the stakeholder mix is arguably the most crucial factor in ensuring the success of the solution co-creation process. If your city only consults with existing suppliers, your city will probably only discover what it already knows. Your city should consider engaging with individuals, organisations and communities in different geographies and service sectors. Engaging all relevant stakeholders from the public sector, private sector, academia, NGOs and civil society at the pre-procurement stage will increase long-term buy-in from all relevant stakeholders. Including multi-sector stakeholders will help to address development in a holistic way but may not be appropriate if the challenge is too technical for all participants to contribute.

In-person discussions and workshops are usually more productive and attract senior employees looking to network. During a co-creation workshop, it is beneficial to mix up international and local solution providers, the former bringing new ideas and the latter bringing local, contextual experience. It is also beneficial to allow time for discussion and analysis across working groups at workshops, as participants gain a broader perspective from other ideas and are able to build upon them. With a room full of people with differing backgrounds and opinions, it is important to keep the atmosphere light and break up co-creation sessions with networking opportunities and talks from experts and key city players. In the past, City Solutions Platform workshop participants have emphasised that the opportunity to discuss and challenge the ideas of like-minded individuals at the workshop was incredibly valuable; ensure there is plenty of time for this.

Another thing to consider is involving other cities which share similar climate challenges. By sharing knowledge of the problem, barriers and stakeholders, cities can learn from each other and scale solutions across broader geographies. As a pioneer or lead city, you can pave the way to good practice in designing solutions to solve your climate challenge and raise your city’s profile. Solution providers will see involving additional cities as a benefit – offering a broader market to potentially scale-up their solutions in.

Financing considerations

As mentioned earlier, a minority of cities already have the funds available to implement sustainable projects. One way to address this is by including innovating sustainable finance models as part of the co-creation challenge. Many private-sector solution providers will bring the entrepreneurial experience of developing flexible funding models and may have contacts to support and advise on this. If the city does not have the budget to roll-out solutions immediately, be clear, and invite solution providers to think creatively about how to fund their ideas. Having said that, establishing a portion of money for solution implementation before the workshop attracts the biggest players and helps stakeholders to design realistic solutions which can match that funding.

Lead the way

Over 60% of cities already have voluntary public-private collaborations groups (1) and many more are seeking strategic ways to develop solutions to their climate challenges. Addressing a challenge that is a priority for your city as well as others can attract more solution providers seeking opportunities to expand and scale-up sustainable solution markets. With the urgency of climate action becoming ever clearer, cities are recognising the need to draw on private-sector expertise to innovate and accelerate the implementation of climate solutions. Pre-procurement engagement can offer cities and businesses alike, the opportunity to address cities’ most urgent climate challenges and ultimately improve the livelihoods of its citizens.