Allan Larsson: A Visionary Leader in Sustainable Urban Development and Social Equity

Allan Larsson: Advocate for Green Finance in Cities

As national governments grapple with the complexities of sustaining long-term investments in urban environments, cities are stepping into the spotlight as key players in the quest for sustainability. The collaboration between cities and their diverse stakeholders is crucial for building resilience and capacity in the face of emerging challenges—especially for smaller cities struggling to access vital financial resources.

Recognizing the urgent need for a strategic and targeted approach to harnessing financial opportunities, I had the pleasure of sitting down for a lunch talk with Allan Larsson last week. Allan shared his insights on transforming urban areas into zero-emission cities and exploring innovative methods to attract both private and public investment. Our discussion illuminated the path forward for cities seeking to thrive in a greener future.

Kaj: Allan, how do green investments factor into the long-term vision for the Stockholm Green Innovation District? And how do you see these investments driving sustainability in the region?

Allan: Climate transition is absolutely critical to our future. Cities occupy just 3% of the Earth’s surface but are responsible for over 70% of global climate emissions. This makes cities the epicenter of both the problem and the solution. A long-term vision—like the climate investment plans we’re discussing—must encompass the entire built environment and span at least a decade or more. These investments aren’t solely about constructing new, climate-smart buildings; they’re about engaging entire communities, including housing companies, municipalities, and citizens, in a collective effort toward sustainability.

At the EU and national levels, it’s essential to coordinate financial support mechanisms to facilitate sustainable urban development. Through initiatives like Sweden’s Climate Contracts 2030 , municipalities can push for the government to replace fragmented funding structures with a cohesive financing system for investments in new neighborhoods, infrastructure, and energy upgrades. Additionally, the EU has introduced legislation supporting Local Energy Communities -, which allow for decentralized energy systems that enable local production, sharing, storage, and trading of electricity. This innovation has the potential to alleviate pressure on centralized energy grids while promoting renewable energy adoption. The EU taxonomy plays a pivotal role here, guiding investments toward sustainable solutions and ensuring that capital flows align with climate goals.

Kaj: In terms of innovation, what are some of the most forward-thinking solutions being tested within the district? And how do you assess their potential impact—not just locally, but on global urban development beyond Stockholm?

Allan: We’re seeing a range of exciting innovations, but it’s important to note that 99% of Stockholm’s urban fabric is already built. Each year, only about 1% of the city’s built environment is newly constructed. This means our innovations must be designed to retrofit and integrate with the existing cityscape. When evaluating their impact, we need to look at metrics that measure both local and global effects. For instance, how do these solutions influence energy systems managed by housing associations? How do they shape mobility choices and reduce environmental footprints? And how do they encourage shifts in consumer behavior toward more sustainable practices?

One example is the deployment of smart energy grids and localized renewable energy systems, which not only reduce carbon emissions but also empower residents to take an active role in energy management. These kinds of innovations have the potential to serve as scalable models for other cities worldwide, offering lessons in balancing urban growth with ecological responsibility.

Kaj: Collaboration between the public sector, businesses, and research institutions is central to this initiative. How do you ensure that these diverse stakeholders align on a shared vision for sustainable urban growth? And what are some of the biggest challenges in fostering this collaboration, particularly when scaling these solutions internationally?

Allan: Collaboration is key, and municipalities play a vital role since they oversee roughly 20% of the economy through their operations. To succeed, we need to engage all stakeholders—whether they’re responsible for housing, transportation, or energy systems. Organizations like ICLEI (Local Governments for Sustainability) should advocate for the EU and other international bodies to create more integrated systems for financing the climate transition. 

In the EU’s Mission Board on Climate Neutral Cities, we referred to this as coordinating “the whole value chain.” The idea is to provide cities and municipalities with access to a “one-stop shop” where they can discuss their financing needs with a competent counterpart. Ideally, institutions like the European Investment Bank (EIB) could host such “one-stop shops” in their offices across capital cities. 

The main challenge lies in aligning the ambitions and demands of different stakeholders, especially when creating cohesive financing mechanisms for large-scale investments. But if we can overcome these hurdles, the potential for transformative change—both locally and globally—is immense.