As climate change becomes increasingly apparent in India’s cities, urban informal communities – those living in slums and other informal settlements and employed in construction, domestic work, and other informal jobs – are bearing the brunt of its impact, showing the urgency of reducing the climate vulnerability of urban informal communities in India. This report identifies five ambitious funding opportunities for philanthropy and impact investors to help these communities adapt more effectively to climate change, while also attracting additional funding for the sector.

From scorching heatwaves to record-breaking monsoons, rising air pollution to unseasonal cyclones, climate change is manifesting in increasingly dire ways in India’s growing cities. But its effects are not evenly distributed. Those most affected are India’s vast “informal sector”: the approximately 200 million people who live in urban informal settlements, such as slums, and are typically engaged in informal jobs – street vending, construction, waste picking, and domestic work – that form the backbone of every city’s economy. They account for roughly 40 percent of India’s urban population but have little to no access to formal infrastructure and services, and limited financial resources, making them the most vulnerable to the escalating effects of climate change, demonstrating how vital it is to reduce the climate vulnerability of these urban informal communities.

India is urbanising rapidly, and unless the climate vulnerability of urban informal communities is addressed and these communities are supported in adapting to climate change, millions more lives will be put at risk over the next two decades. To achieve this effectively, India requires substantial urban adaptation finance. However, estimates of what is available versus what is needed suggest that the annual funding gap for urban climate adaptation remains staggeringly large.

This is where philanthropic funders and impact investors can step up with “catalytic capital”: private capital from philanthropy, corporate social responsibility, or impact investment funds that take on risk to drive positive change and enable more capital flow. Invested strategically, catalytic capital can address the most urgent climate adaptation needs of urban informal communities and attract additional investments – both from the government and private players – to help bridge the finance gap. Our research on reducing the climate vulnerability of urban informal communities, developed with support from HSBC India and building on our work on bold bets for rural climate adaptation, highlights five such strategic funding opportunities – or bold bets – for urban climate adaptation. If realised, they can drive transformative change towards making urban informal communities more climate resilient.

Read the full article about reducing the climate vulnerability of informal communities in India by Anant Bhagwati, Rishabh Tomar, Rohan Agarwalla, Kanika Tomar, and Sohini Pal at The Bridgespan Group.