European Cities Plan Major Investments in Climate Action and Social Infrastructure

The EIB’s “2025 Municipalities Survey,” published today, highlights ambitious plans from local authorities to improve sustainability and social services over the next three years, demonstrating the critical role cities play in tackling global challenges.

A recent survey by the European Investment Bank (EIB) has revealed that most municipalities across Europe are planning significant increases in spending to address climate change and enhance public infrastructure, such as housing, schools, and hospitals. The EIB’s “2025 Municipalities Survey,” published today, highlights ambitious plans from local authorities to improve sustainability and social services over the next three years, demonstrating the critical role cities play in tackling global challenges.

Focus on Green Investments and Social Infrastructure

The survey, which covered 1,002 EU municipalities of varying sizes—representing around 26 million people (approximately 6% of the total EU-27 population)—found that over half of the municipalities are planning to allocate more funds toward cutting greenhouse gas emissions. Specifically, 56% of cities have committed to increasing investments in climate action initiatives, while 53% plan to expand budgets for vital social infrastructure, including public housing, education, and healthcare.

In response to growing urban investment needs, the EIB’s findings come at a time when European leaders are convening in Brussels for a conference organized by the European Committee of the Regions. This event is aimed at aligning urban development priorities with the EU's broader policy agenda for sustainable cities.

The report reveals that while national and EU grants remain the primary funding sources for municipal projects, a growing number of local governments are exploring innovative financing options. In fact, 61% of surveyed municipalities expressed an interest in exploring alternative funding mechanisms. One such approach involves converting grants into guarantees, which would help attract higher levels of investment from financial institutions like banks, thereby enhancing cities' ability to fund essential climate and infrastructure projects.

Tackling the Climate Crisis and Urban Adaptation

In the area of climate action, the survey underscores the critical role municipalities play, as they account for about 60% of the EU's total investments in this sector. Alongside reducing emissions, many cities are also focusing on adapting to the impacts of climate change. This includes investing in resilience measures to protect against natural disasters, such as flooding and wildfires. Around half of the cities surveyed indicated plans to increase spending in this area, aiming to build stronger, more resilient urban environments.

EIB Chief Economist Debora Revoltella emphasized that Europe’s municipalities are demonstrating a strong commitment to the green transition. However, she stressed that turning these intentions into concrete outcomes will require sustained political will and continued support from both local and national governments.

"Municipalities across Europe are showing strong commitments to the green transition,” Revoltella said. “Turning these commitments into tangible results will require continued political and policy support at all levels.”

Addressing the Talent Gap

One of the key challenges identified in the survey is the shortage of skilled professionals in crucial sectors. Nearly 30% of municipalities reported facing difficulties in sourcing the necessary technical expertise, particularly in areas such as environmental assessments and engineering. This talent gap is hindering progress in delivering effective climate action and infrastructure projects.

To help address these challenges, the EIB is offering a range of support services, including technical, financial, and strategic expertise. EIB engineers and economists evaluate every project financed by the bank, ensuring that cities have access to the necessary knowledge and guidance. Additionally, the EIB provides advisory support to project promoters, municipalities, national and regional authorities, and financial intermediaries, helping them to overcome the hurdles associated with complex projects.

Bridging the Gap Between Ambition and Action

Kata Tüttő, President of the European Committee of the Regions, highlighted the importance of collaboration between local leaders and financial institutions like the EIB in addressing the challenges of climate change and social inequality. She emphasized that cities and towns are at the heart of Europe’s greatest challenges—from the climate crisis to the housing emergency.

“Local leaders across Europe have long known that our towns and cities are at the heart of Europe’s greatest challenges,” Tüttő said. “The partnership between the European Committee of the Regions and the European Investment Bank is vital to unlocking the full potential of our cities—by empowering local ambition, fostering innovation, delivering high-quality public investment, and ensuring that no community is left behind.”

The Role of Municipalities in Shaping Europe's Future

The EIB’s survey sheds light on the evolving role of municipalities in shaping Europe’s future. By investing in climate action and social infrastructure, local authorities are helping to lay the groundwork for a more sustainable and inclusive society. With the EU facing unprecedented challenges, from the climate emergency to an ongoing housing crisis, municipalities are proving to be at the forefront of driving change.

The survey also reveals a shift in how cities view infrastructure funding, with an increasing willingness to explore new financial tools that can leverage public funds more effectively. These trends highlight the need for innovative financing strategies to support Europe’s green transition and social infrastructure needs.

As Europe looks to the future, the commitments made by municipalities in the EIB survey represent a step toward achieving the EU’s broader sustainability goals, creating greener, more resilient cities, and improving the quality of life for millions of people across the continent.