How cities are leading with green investment for economic growth

Something counterintuitive is happening. As political headwinds around sustainability intensify in some capitals, a different conversation is under way in other cities – not whether to invest in resilience, but how to move faster. The reason is simple: the economic benefits have become too hard to ignore.

For global leaders navigating uncertainty and risk, cities are sending a clear signal: place-based collaboration between governments, businesses and innovators can unlock growth while embedding resilience into the core of the economy.

San Francisco, Bengaluru and Tokyo offer three distinct examples of how this plays out in practice. Each uses different levers but they converge on the same outcome: turning green investment in climate action into an engine of economic growth.

In the US city of San Francisco, that means turning climate ambition into a citywide investment strategy – formalized in the newly updated San Francisco Climate Action Plan, while in Bengaluru, India, it involves backing local startups through the Yes/Bengaluru Urban Innovation Challenge. Meanwhile, in Japan's capital Tokyo, it takes the form of connecting startups, investors and city systems to accelerate growth – through the Startup 2.0 strategy showcased at SusHi Tech Tokyo.

Together, these examples point to a broader shift – one powered by climate innovation driving new solutions and new ways of working, artificial intelligence (AI) fuelling new urban innovation, and private sector leadership in climate action and resilience. Increasingly, cities are adopting new public-private collaboration models with innovators, helping ideas move faster from pilot to scale.

For much of the past decade, resilience and sustainability were framed as compliance exercises – a response to regulation or stakeholder pressure that, if anything, hindered growth. That framing is rapidly becoming obsolete.

Climate volatility is no longer a future risk; it is a present cost – disrupting supply chains, damaging assets and widening insurance gaps. Extreme weather alone has imposed trillions in global losses over the past decade, while rising insurance costs and coverage gaps are already reshaping investment decisions. In this context, climate resilience and sustainability are not constraints on growth, but preconditions for it.

Cities – responsible for over 80% of global gross domestic product, as reported by the World Bank — sit at the forefront of this shift. After all, these population centres are where risks concentrate and also where solutions scale. Increasingly, the cities that succeed are those where the public and private sector collaborate to coordinate policy, capital and innovation to build the next generation of infrastructure.

This “new growth infrastructure” is not just physical – it includes policy frameworks, financing models and innovation ecosystems that determine how quickly solutions scale.

One model is emerging in San Francisco, where climate policy is being reframed as economic strategy. The city’s updated Climate Action Plan, launching during Climate Week, reflects this shift in real time.

Rather than treating climate goals as a standalone agenda, the city is embedding them into its economic strategy – linking emissions reduction with innovation, workforce development and private sector engagement. For example, the plan links emissions reduction with economic opportunity by expanding curbside EV charging infrastructure—unlocking private-sector investment and new workforce opportunities while making clean transportation more accessible to residents who lack at-home charging.

"For decades, San Francisco has been a global and national climate leader," San Francisco Mayor Daniel Lurie said in the plan's foreword. "This plan lays out how we will continue to invest in what makes San Francisco work: fostering innovative climate technologies, expanding reliable and affordable clean energy while ending our reliance on fossil fuels, strengthening the City’s world-class transit system, and delivering more green homes in neighbourhoods where families can thrive."

This is a critical evolution. The most effective climate plans today are not regulatory roadmaps alone; they are investment frameworks. They create clarity for businesses, signal long-term priorities and crowd in private capital.

San Francisco’s approach recognizes that resilience is not delivered by government alone. It depends on a holistic, inclusive approach – from startups developing climate technologies to large firms reconfiguring supply chains.

Through Yes SF, innovators are already deploying solutions on the ground—from curbside electric vehicle charging by companies like It’s Electric and Chargewheel to compostable packaging and energy-efficient building technologies—demonstrating how climate-focused innovation can simultaneously cut emissions and reinvigorate San Francisco’s local economy.

A different model is taking shape in Bengaluru, driven by the realities of rapid urban growth. As the city expands, it faces mounting pressures on infrastructure, resources and service delivery. But this growth is also being reframed as an economic opportunity: to align innovation and investment with the city’s own urban challenges.

The Yes/Bengaluru Urban Innovation Challenge reflects this shift. It supports startups tackling issues such as water, waste and mobility—areas where population growth is placing the greatest strain. In doing so, it helps redirect entrepreneurial energy towards solving for the city itself, while creating solutions with broader market potential.

By turning the city into a testbed, the programme enables solutions to be developed and validated in real-world conditions, accelerating both adoption and scalability.

The selected cohort announced this spring reflects this dual focus. Their work spans climate resilience, circular economy solutions and digital urban services—addressing immediate urban needs while building commercially viable models. Many are leveraging human-centred innovation to accelerate urban solutions, showing how technology is reshaping city systems.

This approach signals a broader reorientation: economic development that not only responds to the challenges of rapid population growth, but actively leverages them to build new industries, strengthen resilience and position the city as a source of scalable urban solutions.

"As a Yes Bengaluru winning start‑up, Zerocircle is working to take microplastics off the menu by addressing a growing public health and environmental crisis,” says Neha Jain, CEO and founder of Zerocircle. “In Bengaluru—India’s food‑delivery capital—the hidden impacts of plastic‑lined packaging on our bodies and ecosystems can no longer be ignored. By innovating materials that integrate seamlessly into existing paper‑based packaging supply chains, we can scale change without disruption and demonstrate solutions with global potential.”

Tokyo takes a longer view, shaped by decades of resilience investment. What distinguishes its current approach is how fully sustainability is embedded into its growth strategy – not as a parallel agenda, but as the same agenda.

The city’s Startup 2.0 strategy, showcased at SusHi Tech Tokyo, frames sustainable urban development as the central arena for innovation—positioning challenges like climate, energy, and mobility not as obstacles, but as the market itself.

That logic is reinforced by Tokyo's track record on adapting infrastructure to climate risks. The newly published Resilient Economies: Flood Adaptation Infrastructure Innovations from Japan briefing paper on flood adaptation in Japan highlights how large-scale infrastructure, traditional agricultural practices, and multi-use products can collectively enable resilience by building economic confidence, protecting supply chains and attracting investments.

These examples illustrate a consistent pattern: places that invest in sustainability and resilience are better positioned to attract capital, retain talent and create new markets. Those that wait face mounting exposure to volatility and cost.

Whether cities or companies, those that move early to invest in sustainability and resilience are gaining advantage while those that wait face increasing exposure to volatility and cost.

The practical implication is straightforward: treat the next infrastructure decision – in a city, a supply chain or a built environment – as a resilience investment, not a cost centre. The tools, partnerships and models to do this exist. What is needed now is the will to deploy them at scale.

San Francisco, Bengaluru and Tokyo show different paths, but a shared conclusion: Sustainability and resilience are no longer side agendas, but the foundation for growth and prosperity.

In a period of uncertainty, the question is no longer whether to act, but who will move fast enough to shape the next phase of growth – and who will be left adapting to it.