Smart Cities: from City Performance Evaluation to Innovative Financing

Assisting UNECE member States in transitioning towards smart and sustainable cities by applying key performance indicators and preparing action-oriented plans and bankable projects for financing

The ‘Sustainable Smart Cities’ project, implemented by the United Nations Economic Commission for Europe (UNECE) and United Nations Human Settlements Programme (UN-Habitat), aims to support target countries in transitioning towards smart and sustainable cities, with a view to achieving Sustainable Development Goal (SDG) 11 and other urban-related SDGs. The project’s objective is to improve the capacities of local and national government officials in Belarus, Georgia, Kazakhstan, Kyrgyzstan and Montenegro to develop and implement sustainable urban policies. The project evaluates a city’s performance using the United for Smart Sustainable Cities (U4SSC) Collection Methodology for Key Performance Indicators for Smart Sustainable Cities, and helps find innovative financing solutions for smart sustainable city projects. It provides capacity-building activities to promote evidence-based policies and vertical and horizontal coordination between various government agencies, with the participation of the cities’ residents. As a result, cities are better equipped to address city-specific problems, such as environmental pollution and a lack of affordable, energy-efficient housing.  

The project deploys a comprehensive framework on collecting data from the KPIs1` to be used by policymakers at the national and local levels. The KPIs are a self-assessment tool to help cities identify strengths and weaknesses in order to improve performance. They were developed to establish the criteria for evaluating the contributions made by information and communications technologies in making cities smarter and more sustainable. There are 91 comprehensive indicators that cover economic, social and environmental aspects of city life. The UNECE approach takes a city through the entire process, from evaluation to recommendations on legislation and concrete projects ideas. It also supports cities in organising seminars with potential investors, who could be interested to provide the necessary financing and investments. Cities use the data and evidence from the KPI evaluation to set priorities for sustainable urban development and provide a foundation for making investment decisions when implementing recommendations. Policymakers at the national and local levels are further encouraged to use the KPI framework as a monitoring tool to evaluate the city’s progress. Under the leadership of the UNECE Secretariat, cities undergoing the KPI evaluation establish a valuable South-South cooperation platform for knowledge-sharing and peer learning, which also contributes to the transfer of relevant knowledge and experience across cities and countries. 

The methodology includes four steps: 

• Preparing the Sustainable Smart City Profile based on the KPIs 
• Facilitating the development of the city action plan 
• Supporting the preparation of at least two priority project concepts from the list to pitch to investors 
• Supporting the organization of national and local seminars to identify interested investors to further explore innovative financing options for projects 

The project involved the following national stakeholders, with the following roles:  

• City and/or national governments, which establish a working group in the city to collect data that will inform the 91 KPIs and help to create the list of project ideas 
• National and local statistics offices, which are part of the working group and provide data to inform the KPIs 
• The Ministry of Economy and/or the city department working with investors, which supports the city’s work on developing investment proposals and attracting potential investors from international financial institutions, venture capital firms, etc.

This project is innovative in that the KPIs are aligned with SDG indicators. As a result, their application allows cities to localize the SDGs and assess progress on their achievement at the local level. Furthermore, the city performance evaluation identifies priority projects and links them to innovative financing. Public Private Partnerships, in this context, are suggested as one of the tools to foster sustainable urban development (along with legislation improvement, etc.). Lastly, the programme encourages the participation and active involvement of residents and key stakeholders in the evaluation process. 

Local governments are able to assess their strengths and weaknesses by strengthening local authorities’ capacities to evaluate the city’s performance. By measuring it against the KPIs, it is easier to recognize which areas are most critical or performing well. The results are incorporated into city action plans and planning documents, which ensures the long-term sustainability of the process. 

The application of a standardized approach based on the KPI evaluation for smart sustainable cities creates opportunities for further comparisons and benchmarking within the UNECE region. Hence, it can serve as a blueprint for conducting comparative evaluations for projects in other regions. The approach was initially tested in two towns, Goris, Armenia2 and Voznesensk, Ukraine3. In Voznesensk, the KPI evaluation was used to develop and adopt a city development strategy through 2027 and implement investment projects on public health, urban transport, energy efficiency and other areas. 

[1] Convention on Biological Diversity and others, Collection Methodology for Key Performance Indicators for Smart Sustainable Cities (2017)

[2] Economic Commission for Europe, Smart Sustainable City Profile: Goris, Armenia, ECE/HBP/192

[3] Economic Commission for Europe, Smart Sustainable City Profile: Voznesensk, Ukraine, ECE/HBP/199