INTEGRATED SUSTAINABLE URBAN DEVELOPMENT

COHESION POLICY 2014-2020

The new rules and legislation governing the next round of EU Cohesion Policy 
investment for 2014-2020 have been formally endorsed by the Council 
of the European Union in December 2013. 


This factsheet is one in a series highlighting key elements of the new approach.

Table of contents

What is meant by Integrated Sustainable Urban Development?

What is the aim?

What is included in the new approach?

What is different from 2007-2013?

What are the practical effects?

March 2014

Cohesion 
Policy



What is meant by Integrated Sustainable 
Urban Development? g Top

Cities are spatial concentrations of human activity and interactions. They are the engines of the 
European economy providing jobs and services and serve as catalysts for creativity and innovation 
throughout the EU. Almost 70 % of the EU population lives in an urban area, and these areas generate 
more than two thirds of the EU’s GDP. However, they are also the places where persistent 
problems such as unemployment, segregation and poverty, as well as severe environmental pressures, 
are concentrated. Policies pursued in relation to urban areas therefore have a wider significance for 
the EU as a whole.

It is increasingly clear that the various challenges facing urban areas – economic, environmental, 
climate, social and demographic – are interwoven and success in urban development can only be 
achieved through an integrated approach. Hence, measures concerning physical urban renewal 
should be combined with measures promoting education, economic development, social inclusion 
and environmental protection. The development of strong partnerships involving local citizens, civil 
society, the local economy and the various levels of government is an indispensable element. 
Combining capacities and local knowledge is essential to identify shared solutions and to achieve 
well accepted and sustainable results.

Such an approach is especially important at this time, given the seriousness of the challenges 
European cities currently face. They range from specific demographic changes to the consequences 
of economic stagnation in terms of job creation and providing services, to the impact of climate 
change. Identifying effective responses to these challenges will be critical for achieving the smart, 
sustainable, inclusive society envisaged in the Europe 2020 Strategy.

What is the aim? g Top
Cohesion policy 2014-2020 aims to foster integrated strategies which enhance sustainable urban 
development in order to strengthen the resilience of cities, and to ensure synergies amongst the 
investments supported by European Structural and Investment (ESI) funds.

What is included in the new approach? g Top
Integrated urban development strategies with a more holistic approach: 

As a basic principle, the European Regional Development Fund (ERDF) should support sustainable 
urban development through integrated strategies that tackle the economic, environmental, climate, 
social and demographic challenges of urban areas (Article 7 of the ERDF regulation). The meaning 
of this principle is twofold: it signifies that resources should be concentrated in an integrated manner 
to target areas with specific urban challenges; and at the same time, that ERDF-funded urban 
development projects should be integrated into the wider objectives of the programmes. EU Member 
States should seek to use the European Social Fund (ESF) in synergy with the ERDF to support 
measures related to employment, education, social inclusion and institutional capacity designed 
and implemented under the integrated strategies.



Stronger focus on urban development at programming level:

Partnership Agreements and Operational Programmes should set out the arrangements to ensure 
an integrated approach to the use of ESI funds for the sustainable development of urban areas 
within the wider context of territorial development. The Commission also expects to see this urban 
development approach closely linked to the integrated approach addressing the specific needs of 
geographical areas most affected by poverty, or of target groups at highest risk of discrimination 
or exclusion – as set out in the Partnership Agreement and the Operational Programmes.

Investment priorities tuned to facilitate tackling urban challenges:

A number of the thematic objectives supported by the ESI funds have urban-specific investment 
priorities e.g. promoting low-carbon strategies for urban areas; improving the urban environment, 
including the regeneration of brownfield sites and the reduction of air pollution; promoting sustainable 
urban mobility, and the promotion of social inclusion through supporting the physical, economic 
and social regeneration of deprived urban areas (listed under Article 5 of the ERDF regulation). 
These investment priorities could be embedded in the integrated urban development strategy of an 
urban area (Article 7 ERDF regulation), complemented by actions supported by the ESF under its 
investment priorities (Article 3 of the ESF regulation).

Improved tools to deliver integrated actions: 

»»The Integrated Territorial Investment (ITI) is a new delivery mode to bundle funding from several 
priority axes of one or more operational programmes for multi-dimensional and cross-sectoral 
interventions. An ITI can be an ideal instrument to support integrated actions in urban areas as 
it offers the possibility to combine funding linked to different thematic objectives, including the 
combination of funding from those priority axes and operational programmes supported by 
the ERDF, ESF and Cohesion Fund (Article 36 of the Common Provisions Regulation). An ITI can 
also be complemented with financial support from the EAFRD or the EMFF.
»»Community-Led Local Development (CLLD) is a tool to promote the implementation of bottom-
up, local development strategies prepared and implemented by local action groups involving 
representatives of all sectors of local interest. It is an extension of the LEADER approach into 
urban areas promoting community ownership and multi-level governance. CLLD allows for 
needs-based capacity building activities, networking and stimulating innovation already at 
neighbourhood level in order to empower communities to fully exploit their potential (Articles 32-35 
of the Common Provisions Regulation). 


Financial instruments:

Member States are encouraged to make extensive use of financial instruments in supporting sustainable 
urban development. The scope of financial instruments is extended and covers all thematic 
objectives and investment priorities and all kinds of beneficiaries, projects and activities (Articles 
37-46 of the Common Provisions Regulation).



Ring-fencing funding for integrated sustainable urban development:

A minimum of 5 % of the ERDF resources allocated to each Member State shall be invested in the 
implementation of integrated strategies for sustainable urban development. There are several 
options as to how these strategies can be financed:

• using the new Integrated Territorial Investment (ITI) tool,

• by means of a specific operational programme, 

• or through a specific priority axis (Article 7(2) of the ERDF regulation).

Increased responsibility for urban authorities:

The implementation of sustainable urban development strategies requires a degree of delegation 
to the urban authority level (Article 7(4) and 7(5) of the ERDF regulation) This may vary according 
to the institutional arrangements of each Member State but urban authorities shall be responsible 
for at least the selection of operations. Each Member State is required to set out in its Partnership 
Agreement the principles for the selection of the urban areas where integrated actions for sustainable 
urban development are to be implemented and an indicative allocation for those actions.

Innovative urban actions:

€ 330 million will be provided to support innovative actions in the area of sustainable urban development 
(as set out in Article 8 of the ERDF regulation). These innovative urban actions shall include 
studies and pilot projects to test new solutions to urban challenges that are likely to grow in the 
coming years. 

Strengthened networking:

»»The Commission will establish an Urban Development Network comprising urban authorities 
which receive funding from the ESIF to be spent in line with ERDF Articles 7 and 8 (Article 9 of 
the ERDF regulation), This Network will act as a forum for capacity building and exchange 
between the cities pioneering new techniques and developing integrated investments. The 
Network is not a funding instrument but a way for cities to share feedback on the use of these 
new approaches.
»»Under the European Territorial Cooperation (ETC) objective, the exchange and learning programme 
for cities will continue to provide them with networking opportunities in order to share 
and develop good practices in urban development (Article 2 of the ETC regulation 2014-2020). 
In particular, cooperation between urban authorities will continue under a financially strengthened 
URBACT III programme. 


What is different from 2007-2013? g Top
Reinforced integrated approach to tackle urban challenges: 

While only an option in the 2007-13 period, urban development shall be implemented through strategies 
setting out integrated actions in the 2014-2020 period (Article 7 ERDF regulation). Article 12 of 
the ESF regulation also provides for the complementary contribution of ESF to such strategies. 



More functional approach allowing for interventions at the right scale: 

As interventions of sustainable urban development can cover different types of cities and urban 
areas, as defined by Member States, it allows for the financing of integrated actions ranging from 
neighbourhood or district level to functional areas such as city-regions or metropolitan areas – 
including neighbouring rural areas. 

Introduction of new tools to promote integrated actions:

New and more flexible tools such as integrated territorial investment (ITI) and community-led local 
development (CLLD) support the integrated approach to sustainable urban development and facilitate 
a mix of instrumental and participatory ways of implementing urban development strategies. 

More responsibilities and opportunities for cities:

Member States will be able to give cities the opportunity to design and implement fully integrated 
strategies, which combine the resources of different priority axes and operational programmes.

Operations supported by several funds, multi-fund Operational Programmes 
and cross-financing:

The implementation of integrated urban development strategies will be enhanced by the possibility 
to combine actions financed by ERDF, ESF and CF either at programme or operation level. Cross-
financing between ERDF and ESF of a part of an operation (up to 10 % of each priority axis of an 
Operational Programme) will remain to complement the multi-fund approach (Article 98, Common 
Provisions Regulation).

What are the practical effects? g Top
Integrated sustainable urban development has become an integral part of the strategic framework 
of cohesion policy 2014-2020. This will have a number of practical effects on the various levels of 
governance concerning the preparation and implementation of programmes:

»»Urban authorities receiving funding in line with ERDF Article 7 will have to prepare integrated 
urban development strategies that are able to tackle the multiple challenges facing their cities. 
They will also have a broader scope of responsibility concerning the actual implementation of 
that strategy as a minimum level of delegation will be required. When designing these integrated 
strategies, urban authorities are encouraged to use the Reference Framework for Sustainable 
Cities (RFSC) which is a practical web-based tool designed to assist cities in this regard.
»»Member states are required to provide a thorough territorial analysis and a stronger urban 
focus in their relevant Operational Programmes. They will also have to put in place arrangements 
to delegate a number of tasks (at least project selection) to urban authorities related 
to implementation of sustainable urban development strategies. 
»»The European Commission will pursue: greater integration in terms of urban development by 
exercising scrutiny on this aspect during the assessment of the Operational Programmes; 
increased innovation through the Innovative Actions initiative; and reinforced capacity building 
and exchange of experience through the Urban Development Network and the financially 
strengthened URBACT III. programme. 




KN-04-14-354-EN-C doi:10.2776/47320

For more information
For more factsheets related to aspects of Cohesion Policy:

http://ec.europa.eu/regional_policy/what/future/publication/index_en.cfm

For more general information about Regional Policy:

http://ec.europa.eu/regional_policy/index_en.cfm



