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.

India is urbanising rapidly, and unless informal urban 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.

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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, 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.

To arrive at these bold bets, we surveyed more than 1,000 informal settlement-dwellers and informal workers across eight Indian cities, asking them whether and how climate change has affected their lives and livelihoods. We found that almost all survey respondents have acutely experienced the effects of climate change in the past decade. They most commonly reported heatwaves, excessive rainfall, and pollution deteriorating their living, working, and health conditions. We also asked respondents which solutions they think will work best to reduce the negative consequences of climate change on their lives. We used these responses as the starting point, corroborating them with insights from experts to develop our bold bets.

To make these opportunities as investment ready as possible, for each bold bet, we have identified its potential impact (that is, how many people this opportunity could help) for every Rs 100 crore (roughly $12 million) invested, showcased an example that demonstrates how the bet can play out on the ground, and estimated how much additional funding from government and commercial sources each bold bet can unlock. By our estimates, if all five bold bets were fully realised, it could unlock close to Rs 4 lakh crore of adaptation finance – nearly $47 billion.

The time for audacious climate action is now. The nation cannot afford to wait another 10 years to ramp up adaptation efforts. While the climate crisis can sometimes feel insurmountable, we hope our research demonstrates that transformative change is possible and provides you, as funders and investors, with a starting point to invest in building climate resilience. These efforts today can positively impact the lives of millions of urban informal workers and steer India’s cities towards a more equitable future.