Sustainable investment is vital to city marketing

Belfius Bank has brought together local municipalities, midcorp entities and leading experts to finance sustainable investments and so help develop the smart cities of the future

Cities, big or small, often densely populated, all face huge challenges in urban regeneration, energy efficiency and mobility. Nearly half of Belgian municipalities have signed the Convention of Mayors, committing themselves to realising the EU2020 CO2 emission reduction objectives. Moreover, investing in smart and sustainable projects is no longer just an environmental necessity: it has also become a major tool in city marketing, and engaging cities with their actual and future inhabitants and enterprises.

But where and how to start? While 98 percent of Belgians live in an urban environment, most Belgian cities and municipalities operate on a small scale (only the Brussels-Capital Region and six cities out of 589 cities and municipalities have more than 100,000 inhabitants). They often lack the financial means to realise important projects, especially when they should be combined and integrated into a larger urban development plan. There is no shortage of ideas, but the concrete implementation of projects on the ground can still come up against the problem of funding. And that’s where Belfius Bank decided to fill the gap and offer a unique range of financial solutions. It was specifically to encourage the realisation of countless smart projects that were still at the planning or design stage that the bank, together with the European Investment Bank (EIB), came up with the Smart Cities and Sustainable Development programme.

Belgian cities and municipalities often lack the financial means to realise important projects

Co-financing with the EIB
Over the last few years, it has become clear the European Commission will strengthen its support for projects that enhance the environment and increase the quality of life in urban zones. Belfius approached the EIB in 2013 with a proposal to work out a co-financing programme based on tangible criteria around urban regeneration, energy efficiency and mobility. This collaboration led to a €400m credit line specifically for projects that match those criteria. In one year, over 100 projects have been or are being analysed. Of course, a wide variety of other financing solutions are available: in some cases a solution such as straight loans, self-liquidating lines, PPPs or bonds may be best. At the same time, partnerships were set up with independent consultancy agencies that advise clients on subsidies, which may result in less credit volume for the client or an increased budget for the projects.

One of the major criteria to call a project a ‘smart city’ one is the proof of a long-term sustainable strategy that supports the EU2020 objectives. One example is the sustainable energy action plans that will be introduced by the municipalities one year after the signing of the Convention of Mayors.

Designing and organising the cities of the future requires cross-domain expertise and the combination of all relevant and available information. That’s why collaboration is so important. Belfius combined its long experience of the public market and its need for the realisation of sustainable projects, with specific financial solutions for SMEs that want to do business with local authorities: that is the bank’s Business-to-Government strategy and offering.

In order to broaden the horizon and involve as many stakeholders as possible, Belfius participates in many projects and platforms, including the European Innovation Partnership, which promotes new business models and alternative financing solutions for smart cities. The topic is also being brought to an academic level: Belfius is one of the founding members of the recently launched Smart City Institute in Liège that aims to stimulate scientific research in the field of smart and sustainable development. In this way, the bank shows its commitment by not only providing the financial solutions you would expect, but also by facilitating the exchange of knowledge and bringing its clients together around the subject: the local authorities that want to realise sustainable and smart projects, and the local enterprises that can actually implement them.

Smart projects
One year after the launch of the programme, smart projects are being realised throughout the country. The Town of Gembloux, in the Walloon region, for example, submitted a financing application for its new town hall. Since the project was based on an integrated, innovative and sustainable approach, with a strong focus on energy performance and accessibility for persons with reduced mobility, it became eligible to receive funds through the Smart Cities and Sustainable Development programme. The new town hall was inaugurated in September.

Earlier in 2015, a compressed natural gas (CNG) project by IMOG, an inter-municipal utility based in Harelbeke in the Flemish region, was selected for funding under the same programme. The installation of the plant has been welcomed by CNG car owners as there was no CNG station in any of the 11 participating municipalities. To encourage people and businesses to use this cleaner means of transport, IMOG has adopted a participatory approach in the project, which is already bearing fruit as several companies have expressed a strong interest in CNG.

In 2015, Belfius was entered into the World Finance 100 in recognition of its smart city approach. The judging panel made particular note of the bankís integration of sustainability into its core businesses, the integration of sustainable criteria into its lending and investment strategy, and its development of new products that provide sustainable, technological and social businesses with easier access to capital. This was a great honour, and a recognition that confirms the bank is answering a need: that sustainable development will be one of the worldwide challenges for decades to come. Belfius joins its clients from the public sector and its SME clients in taking up that challenge, and will continue to find the best financial solutions.

Belfius’ approach is highly appreciated by its clients: according to a recent satisfaction survey, a dazzling 96 percent of clients from the public sector said they were satisfied to highly satisfied with the bank’s approach towards them. As one corporate client put it: “Banks do have a huge network and are well connected with the authorities. Belfius stands out head and shoulders when it comes to matching the worlds of public investors and potential suppliers. I advise everyone to make use of that network. The red carpet’s there: just walk it.”

Banks do have the network, tools and knowledge to stimulate and finance the smart and sustainable projects that need to be implemented in order to make our cities future proof. Belfius Bank clearly wants to play its role in society and make this happen by bringing together local authorities and local suppliers, and facilitating the exchange of knowledge around the subject.

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