Localisation of climate finance – Empowering Indian cities to combat climate change

Bio : Lekhani is a development sector professional working at the intersection of ESG, public policy, sustainable finance, and strategy. She holds a Master’s in Public Policy from the Kautilya School of Public Policy and a Bachelor’s in Commerce from Mithibai College, Mumbai. With hands-on experience through fellowships in rural education with XLRI Jamshedpur and urban governance with Praja Foundation, she brings a grounded understanding of policy implementation and system-level change. Her work bridges public policy with corporate ESG and sustainable finance, and she is particularly interested in how urban challenges interact with climate finance, governance, and inclusive development in emerging economies.

Project outline : This report explores the localisation of climate finance as a pathway to empower Indian cities in addressing climate change. While Indian cities are central to economic growth, they are also highly vulnerable to climate risks and major contributors to CO2 emissions. Despite increased global and national attention to climate finance, urban local bodies (ULBs) face significant barriers—limited fiscal autonomy, fragmented governance, and misaligned priorities—that hinder their ability to access and implement climate solutions. The report identifies systemic challenges within the municipal finance ecosystem and advocates for a decentralised approach to climate financing. It offers actionable recommendations including enhancing ULBs’ fiscal capacity, developing robust municipal bond markets (including green bonds), formula-based fiscal transfers, innovative revenue tools such as congestion pricing, and integrating climate goals into city budgets via an Urban Climate Dashboard. Strengthening institutional accountability and political autonomy is also crucial. Overall, the report argues that empowering city governments with direct access to climate finance is essential for building resilience and enabling targeted, context-specific climate action at the local level.