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As cities worldwide increasingly adopt commitments towards climate justice, questions remain about the ways that city governments will be able to fund more just climate efforts. While the use of novel debt financing schemes has been examined in the literature for its justice implications, scholars have rarely interrogated how the more mundane tools and practices of municipal finance can be applied to enable more just urban transitions. Here, we use the USA as a case study to analyse the impacts of climate change and climate action on municipal budgets and to examine how cities are adapting their financial tools and practices to advance climate action and climate justice efforts. We employ a mixed-methods research design that combines 34 expert interviews with a systematic content analysis of municipal budgets from 15 US cities of different sizes. We find that both climate change and climate action can contribute to cities’ fiscal vulnerability by imposing additional expenditures and/or reducing municipal revenues. While most cities lack transparency about their investments in climate action and climate justice, some city governments are implementingordinary innovationsthat embed climate and justice criteria into budgetary practices and funding tools. These ordinary innovations reveal that cities are beginning to reimagine municipal finance in the service of more just climate futures. 

Implementing climate policies and programs in cities requires significant investments that inevitably entangle climate action with urban climate finance – the mechanisms and practices city governments use to pay for climate efforts. Here, we use U.S. cities as a case study to examine how climate finance impacts, and is impacted by, the pursuit of urban climate action and climate justice. Drawing on 34 expert interviews, we show how municipal financial decisions and budgetary practices are shaping how, when, and for whom cities are responding to climate change. We demonstrate how public spending decisions are intertwined with the logics of debt financing and examine the impacts of these relationships on cities’ climate investments. We showcase the structuring impacts of finance on climate action and the built environment, and we introduce pathways through which climate and justice considerations are already being integrated into, and potentially transforming, municipal finance in the U.S.