Yet, these urban centers also grapple with unprecedented challenges like climate change, environmental risks, and growing inequality. The ASEAN region bears significant responsibility to mitigate these challenges, especially as almost 56 percent of its population is projected to reside in cities by 2030, compared to 47 percent in 2015 (ASEAN Secretariat, 2021).

In Indonesia – ranked 14^th out of 181 countries for climate risk (Germanwatch, 2021) – cities face unique challenges due to the impacts of rapid urbanization. These include increased urban heat island effects due to high-density built environments and flooding worsened by urban development.

However, within these challenges lie opportunities to accelerate sustainable development. As drivers of growth, pioneers of innovative solutions, and members of the communities in which they operate, businesses must step up and lead the transformation.

As we celebrate World Cities Day 2023 on Oct. 31 under the theme of "Financing sustainable urban future for all", it is imperative that we recognize the three pivotal ways in which businesses can contribute to sustainable urban transition: Innovative financing, insightful knowledge and expertise, and wider social responsibility.

One of the most significant contributions businesses can make to urban sustainability is through innovative financing.

The development and maintenance of critical urban infrastructure and services, such as water supply, energy, and waste management, demand substantial investments. Additionally, developing new technological innovations that can accelerate the sustainability of these systems might be unaffordable, or seen as an expense rather than an investment.

The World Bank estimates that more than US$4.5 trillion per year will be needed to fund climate-resilient urban infrastructure (World Bank, 2018), yet climate finance flows for cities have only reached approximately $384 billion annually (Climate Policy Initiative, 2021). With their financial resources and expertise, businesses are ideally positioned to provide this capital, not just through traditional forms of financing but also via forward-looking business models, new funding strategies, and collaborative partnerships.

Public-Private Partnerships (PPPs) have been a successful model where public, private or even non-profit partners agree to share risks, resources and decisions in building and implementing certain projects.

Initiatives such as Partnering for Green Growth and Global Goals 2030 (P4G) bring together governments, civil society and private sector organizations to collaborate on solutions to accelerate the United Nations Sustainable Development Goals (SDGs) in countries including Indonesia. Projects that have been undertaken in Indonesia include efforts to promote plastics circularity, the energy transition, and food security, among others.

Another approach that encourages the adoption of new technology is exploring new business models. Under these models, solutions providers can play a role in reducing the investments risks associated with sustainable projects. They may also offer flexibility by accepting payments in instalments or incorporating efficiency savings achieved by customers into the payment scheme.

Moreover, strategic partnerships can open doors for businesses facing budget constraints. To help private commercial and public customers with limited funds realize their ambitions to improve water efficiency and access, Grundfos and EKF Denmark’s Export Credit Agency signed a unique financing partnership in 2022 to support customers in purchasing new pump and water solutions designed to reduce CO₂ emissions and provide access to clean water to vulnerable areas.

Beyond financing, businesses – as drivers of innovation – bring valuable knowledge and expertise across various industries to the table. Whether it's adopting sustainable building practices, optimizing waste management, or enhancing public transportation systems, businesses can provide critical insights and solutions for urban sustainability.

By sharing their best practices and collaborating with governments, research institutions, fellow industry players, and communities, businesses can drive innovative solutions to tackle urban challenges. Industry leaders can also work alongside other organizations and businesses to further industries’ green transition by sharing the necessary resources and opportunities to co-develop innovative sustainable solutions.

Such partnerships can also help businesses better understand the complexity of the green transition. Recognizing the advantages of this approach, we have formed partnerships with Singapore Polytechnic and Ngee Ann Polytechnic. The latter specifically targets the advancement of sustainability in the regional built environment, addressing urbanization challenges.

Finally, businesses possess the potential to be forces for good. By aligning their operations with the well-being of the cities they operate in, businesses contribute not only to economic growth but also to the social fabric and overall resilience of cities.

Some tech giants, for example, have committed to using 100 percent renewable electricity to power their operations, in recognition of their huge role in tackling the climate challenge. Their efforts have not only influenced their peers but also led to positive changes in energy policies (International Energy Agency, 2021) and increased the adoption of renewable energy sources.

Businesses can also have an outsized impact on uplifting the livelihoods of community members, including marginalized groups such as women, through both internal and external practices. For instance, inclusive workplace cultures and fair and diverse hiring practices can support a local community and its members.

Meanwhile, integrating sustainability and social impact considerations into wider supply chain and sourcing decisions, such as supporting local suppliers or those owned by diverse individuals or groups, further extend the positive impact of businesses on communities.

Businesses are indispensable catalysts for sustainable urban transformation. Through innovative and accessible financing, knowledge sharing, and broader social responsibility, they have the power to shape the future of our cities.

However, the work is far from over. Scaling this multi-pronged approach is crucial to ensure that our cities thrive and lead the way toward a more inclusive and sustainable urban future for all.

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The writer is CEO of commercial building services at Grundfos.