1.1 Context

The European Union is one of the most urbanised areas in the world. Out of 447 million European Union inhabitants it is estimated that 75% live in urban areas – cities, towns and suburbs. Predictions show that the share of urban population in Europe will continue to grow, and it is likely to reach more than 80% by 2050[1]. The way how we develop urban areas has a major impact on the sustainable development of the entire European Union and its citizens.

Cities are the places where the public services, business, science, culture and education are concentrated, and where the economic development is stimulated. Cities are the hubs of company networks, employees, knowledge and skills, which translates into better productivity and better growth dynamics of these areas. Urban areas of all sizes are also places of innovation, engines of new ideas and solutions and drivers for local and global economy. At the same time urban areas are places where multiple social, economic, environmental and spatial problems emerge. The density of people, economic activities and built environment amplifies problems. At the same time, when population and economic activities are more limited or decline, urban investments are less viable, and the sustainability of public services is endangered. Both as enablers and/or as producers of innovation, cities must constantly reinvent themselves to adapt and respond to evolving spatial, demographic, economic, environmental, social and technological challenges. While certain development opportunities and challenges remain similar across all towns and cities, it is important to remember about the diversity of urban areas. Metropolises versus peripheries, shrinking cities versus those rapidly growing, cities localized in different geographical conditions or having different places in the country’s settlement network – success of their sustainable development depends also on well diagnosed local situation and properly chosen solutions. 

Urban areas are where both threats and opportunities for sustainable development come together and where any change can happen on a larger scale and at a more rapid pace. Over recent decades, a large consensus has emerged that, to successfully address complex challenges and ensure sustainable development, urban authorities need to design and implement answers that address the issues in a comprehensive and integrated manner.

The European Union recognises the key role of urban authorities and supports them, mainly through the tools and mechanisms of Cohesion policy, to develop and implement integrated strategies for sustainable urban development. For the 2021-2027 period, the European Commission strongly supports an increased focus on integrated sustainable urban development. The five Policy Objectives of Cohesion policy focused on Smarter, Greener, More Connected and More Social Europe as well as a Europe closer to Citizens, will mobilise substantial investments in urban areas. A minimum 8% of the European Regional Development Fund (hereinafter: ERDF) resources in each Member State must be invested in priorities and projects selected by cities themselves and based on their own sustainable urban development strategies. The new Policy Objective ‘a Europe closer to Citizens’ has been introduced to the main policy framework as an enhanced commitment to integrated territorial development and includes a specific objective to foster sustainable urban development. It provides local actors with opportunities to take the lead in identifying and addressing their diverse challenges, and above all, to tap into their local development potentials. The reinforced sustainable urban development dimension of Cohesion policy shows the conviction of the European Union that cities have to be involved in the design and implementation of policy responses to their local challenges.

At a wider strategic level, the Pact of Amsterdam, signed in 2016, launched the Urban Agenda for the European Union in the frame of intergovernmental cooperation on urban matters. The Urban Agenda is a new working method to ensure maximum utilisation of the growth potential of cities and to successfully tackle social challenges. It aims to promote cooperation between Member States, cities, the European Commission and other stakeholders, in order to stimulate growth, liveability and innovation in the cities of Europe. It provided concrete results for all levels (European Union/national/local) in terms of better regulation, better funding and better knowledge base and exchange[2]. The New Leipzig Charter, adopted in November 2020, put forward a revised vision for sustainable urban development in Europe with the emphasis on the transformative power of cities for the common good. This is to be achieved through actions taken within the three thematic dimensions of the Charter – ‘Just, Green and Productive Cities’ – as well as through one cross-sectoral dimension of the Charter ‘Digitalisation’ – that are implemented in a format of multi-level governance. The European Urban Agenda is considered as a key vehicle for the implementation of the New Leipzig Charter.

Complex challenges and transitions cannot be solved without strong capacities and innovative thinking at all levels of policy and action, and in particular, at local level. Moreover, there is strong evidence suggesting that the nature and scale of the challenges facing urban authorities demand much more than traditional policies and services. Urban authorities need to be bold and innovative in designing and testing new services and products to respond to increasingly complex challenges.

It is in this context that the Cohesion policy legislative package for 2021-2027 includes the establishment of the European Urban Initiative (hereinafter: EUI) – successor of the Urban Innovative Actions Initiative implemented during the 2014-2020 programming period. This novel Initiative is an essential tool to support cities of all sizes, to build capacity and knowledge, to support innovation and develop transferable and scalable innovative solutions to urban challenges of European Union relevance. The ultimate goal is to inspire the use of mainstream Cohesion policy programmes in urban areas with proof-tested innovations, especially those receiving support from ERDF, funding source of the EUI, on specific objectives defined in Article 3 of Regulation No 2021/1058 of the European Parliament and of the Council of 24 June 2021 on the European Regional Development Fund and on the Cohesion Fund[3] (hereinafter: the ERDF/CF Regulation), and to strengthen the innovation capabilities of cities as beneficiaries or intermediary in the management of these Funds.

A standard definition of innovation is provided by OECD – Oslo Manual (2018)[4]: “An innovation is a new or improved product or process (or combination thereof) that differs significantly from the unit’s previous products or processes and that has been made available to potential users (product) or brought into use by the unit (process)”. However other definitions of innovation can be considered. For example, “the successful implementation of new ideas” (BIS), “change that creates a new dimension of performance” (Peter Drucker), “new ideas that work” (Nesta), “fresh thinking that creates added value” (Richard Lyons). Whereas innovation in the private sector relies on activities to ensure competitiveness in new markets, innovation in the public sector seeks to create value and impact by responding to public interest, addressing citizens’ basic needs and enhancing efficiency of public services (Hartley). For an urban authority to innovate implies a good understanding of the situation on the ground, including on its capacity (legally, financially or technically) to act as a public institution, the needs of the population its serves, the innovation ecosystem it can contribute to create and/or mobilise, as well as a high degree of creativity and willingness to take risks. Understanding how things work, how they can be improved and what is actually missing (yet not existing). To be innovative, means applying creativity and imagination to design, prototype, and test in a real urban setting and eventually scale up and successfully transfer novelties which citizens and users would perceive as having an added value.

However, whilst research on urban issues is well developed, with many universities, urban planners and the urban authorities themselves proposing new and innovative ideas, these potential solutions are not always put into practice. EUI offers such an opportunity to test innovative ideas for ‘real’, at urban scale with all the associated risks and complexities (e.g. buy-in from residents and stakeholders, legal requirements, safety, data protection, etc.) through co-creation processes embarking users and the population, to turn it into viable and financially self-sustainable solutions to urban challenges that can be scaled-up and transferred to other urban realities across the EU.