Cities must be at the forefront of efforts to reduce greenhouse gas emissions as close to zero. Still, lower-income cities face significant barriers in doing so, says Jorn Verbeeck, lead for the decarbonization innovation exchange at KPMG's Global Decarbonization Hub.
Cities currently contribute to 70% of the world's carbon emissions and consume more than 75% of the world's natural resources. They will need to make significant changes and investments to reach the United Nations' goal of achieving net-zero emissions by 2050.
“It's important we have those high-scale ambitions. Putting a point on the horizon makes it clear that there's no longer a discussion on whether it's relevant or feasible," Verbeeck said. He added that cities are where the effects of climate change become most tangible but that "they're also the places where the public and private sector meet, where policy hits the ground, where change happens."
To move from ideation to action, especially in cities in low-income countries, Verbeeck said more financing from the global north is needed, along with investment into building local capacity and an integrated approach. "We need to better understand what the value model is that will help us achieve net-zero in a just way, taking into account the different needs of world regions but also the interrelated character of the climate challenge with other societal challenges, and the cost of lock-ins and non action." he said.
This is where KPMG's new Net Zero Urban Program — which Verbeeck is leading with KPMG colleague Stine Lise Hattestad Bratsberg — comes in via alliances and innovation to unlock digital solutions for reducing greenhouse gasses as well as the financial capital that cities require.
In a conversation with Devex, Verbeeck shared more about the program, its lessons, and how to reduce emissions in cities.
This conversation has been edited for length and clarity.
Why is it important for cities to be at the forefront of net-zero efforts?
Cities are a good test case because they're responsible for almost three-quarters of energy consumption worldwide and almost three-quarters of global emissions. Therefore, if we can start by solving the challenge in cities, we will be well on our way to discussing — especially alongside COP 27 — national commitments. Cities are creative and innovative powerhouses.
If they are not there to bring in their expertise [and] best practices, the Nationally Determined Contributions will not be reached by 2030 and 2050. But more public-private partnerships and unprecedented levels of leadership, investments, and implementation are needed to keep us on the 1.5° or 2° Celsius path.
When reaching those net-zero targets, are there specific challenges that cities in low-income countries might face?
A lot of the urban environment still needs to be built in the global south, and we need to avoid addressing only one challenge [at a time], for example, heating or flooding control, investments in a new mobility system, or managing the fast-growing housing need. We need to take a systemic approach and learn from the lessons in the global north. The global south can leapfrog to the best solutions that not only achieve net-zero in a just way but also improve resilience. How do we design more resilient cities but at the same time also offer better health, well-being, and mobility? How can we better use urban planning to meet people's needs?
But apart from channeling funding, it is also about capacity building. Lower-income cities only sometimes have the means or financial system, knowledge, and skills to make it happen today. Therefore global-local partnerships are essential as they help standardize and drive down costs and make approaches more efficient, but customizable where needed to tailor to the local DNA and culture.
How does KPMG's new Net Zero Urban Program help to accelerate the urban transition to net-zero?
By focusing on sectors with the biggest climate impact. KPMG professionals will initially focus on the built environment, the mobility system, industry and energy infrastructure, waste, and water — because we believe that if we can make a change there, insights can help to solve other societal challenges in their wake. That's where the systemic approach comes in: It's not just about addressing mobility or the built environment but seeing if we start pulling a lever in, e.g., mobility [or] can it create benefits in other sectors?
Suppose KPMG firms can bring together the right coalition of public and private actors, financiers, and innovators linked to those priority sectors. In that case, we can start building solutions portfolios that allow us to scale to other regions.
We hope to be a matchmaker between actors that don't naturally find one another and to say, "how do we team up and design and implement that common journey?"
How does the program work in practice?
KPMG developed a Net Zero Readiness Index, which analyzes progress toward net-zero in 32 countries using 102 indicators at a national level. We now developed that framework also at the local level. That helps KPMG professionals benchmark and assess whether the decisions being made are the right ones in the short and long term.
Leveraging our relationship with United Cities, we then want to use digital technologies like a "digital twin," [a virtual replication of a system updated with real-time data] to test out several possible policies and investment scenarios in a city and the outcomes they would deliver. Digital twins will only be able to solve some things. Still, they can provide a common visual language showing the best scenarios and the interrelatedness between them.
The last part is to take all that insight into the KPMG innovation exchange — where we connect businesses, innovators, financiers, and public authorities. Together we design a portfolio of challenges and investable solutions that help us reach the speed and scale we need to deliver net-zero societies.
Finally, we take lessons learned from each implementation case and feed them back into the system, so it also becomes a self-learning platform.
Based on the work, are there any practical steps you recommend for cities to start reducing carbon emissions?
The first step is to see the minimum data quality needed to make better decisions. We've seen with COVID-19 and the energy crisis that you only need some data to decide whether to go left or right. You want to know the first step to take in the right direction. Using data and facts to design the blueprint for that 2050 journey will help.
KPMG professionals [recommend to] have a top 10 no-regret measures per impact sector in the short term. That can save urban actors time in planning and organizing and help shift capacity to implementation.
What about advice specifically for lower-income cities?
It's trying to understand the business and societal ecosystem and how it functions.
Therefore, the idea of finding that shared language — how does it resonate in different parts of the world, how do we better understand one another and get the right people around the table to make sure that we have the heads, hearts, and hands to make it all possible — that's important. That's where KPMG firms are working to find a coalition of the willing to make sure that implementation is happening and integrated into the social and industrial fabric.
What is your call to action around achieving net-zero at the city level?
We don't need a perfect approach. We already have a lot of future-proofed solutions, but we need to connect the dots in terms of capital investments, partnership models, and value cases to speed and scale. We should start doing and learning by doing to achieve the decade of implementation we need. It's about teaming up and acknowledging that we can accomplish this together, even if we sometimes have different agendas or values. It's about how we come together with the right ambition, leadership, and responsibility to make it happen.
To learn more about the Net Zero Urban program, KPMG has recently published a blog and a podcast with Stine Lise Hattestad Bratsberg, head of strategy and transformation in EMA ESG Hub.
Visit the Tech for Tomorrow series for more coverage on how technology plays a key role in delivering solutions to a broad number of global development challenges. The time to bridge the gap is now. Join the conversation by using the hashtag #TechForTomorrow.
About the author
Devex Partnerships
Thanks for reading and for your interest in Devex. In collaboration with our partners, Devex’s partnerships editorial team produces content to promote a partner’s work or perspectives on a particular issue. It gives actors across the global development sector — including nongovernmental organizations, private sector stakeholders, aid agencies and government institutions — the opportunity to go beyond traditional advertising and tell their stories in an impactful way. If you’d like to learn more about how you can shine a spotlight on a particular issue with Devex, please email partnerships@devex.com. We look forward to hearing from you.
