ESG Essentials for Corporates: The environmental angle #4 - Investing in a smarter and greener infrastructure – sustainable cities

04 September 2020

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Cities play a crucial role in the fight against climate change: they’re home to more than half the world’s population and have shown that they can often move faster than regional or national governments in implementing climate action plans.

The New Climate Economy estimates that better urban planning could help create more sustainable cities, worth up to $17 trillion in economic savings by 2050, and reduce CO2 emissions by up to 3.7 gigatons annually – nearly the total emissions of the EU today – over the next 15 years[1].

In our second article about environmental infrastructure we explore how sustainable cities can dramatically reduce greenhouse gas (GHG) emissions, simultaneously enhance citizen wellbeing and ultimately attract corporate investment.

Jargon buster

NCE: The Global Commission on the Economy and Climate, and its flagship project The New Climate Economy, were set up to help governments, businesses and society make better-informed decisions on how to achieve economic prosperity while also addressing climate change.

ITDP: The Institute for Transportation and Development Policy has worked with over 100 cities in more than 40 nations to design and implement transport and urban development systems and policy solutions that make cities more viable, fair, and liveable.

WorldGBC: The World Green Building Council is a global network of national Green Building Councils in over 70 countries, which collectively have 49,000 members. Its goal is to accelerate action to ensure all buildings worldwide have net-zero emissions by 2050.

NBS: Nature Based Solutions work with and enhance nature to help address societal challenges. The concept is based on the idea that healthy natural and managed ecosystems produce a diverse range of benefits for human wellbeing.

Sustainable urban developments bring social and environmental gains

Cities consume 75% of the world’s natural resources, produce half the planet’s waste and generate 60-80% of global greenhouse gas emissions[2], while only occupying 2% of the world’s land mass[3].

Given these staggering numbers, C40, a network of 96 megacities committed to addressing climate change, exclaimed, that “ending climate change begins in the city”[4].

With cities having a vital role to play in tackling climate change, global efforts, including the UN’s New Urban Agenda, peer-to-peer networks like C40 and the Coalition for Urban Transitions, are helping cities to build strong policy agendas for environmental change[5].

But what exactly makes a city a sustainable city? The ITDP describes sustainable cities as places, which offer “inclusive access for all to local and citywide opportunities and resources by the most efficient and healthful combination of mobility modes, at the lowest financial and environmental cost, and with the highest resilience to disruptive events”[6].

Apart from environmental factors, well-planned and well-managed cities can also deliver more growth and jobs, boosting productivity. The importance of sustainable cities is also reflected in the UN’s Sustainable Development goals, with SDG 11 “Sustainable Cities and Communities” aiming to make cities (and human settlements) inclusive, safe, resilient and sustainable[7].

In order to achieve sustainability, cities need to be smart, too. Therefore, the term “smart cities” is closely linked with the term “sustainable cities”. The World Economic Forum’s Global Future Council on Cities and Urbanization, which published a report in August identifying 25 leading smart city projects, considers big data analytics, artificial intelligence (AI) or other systems, and connectivity as important parts of a smart city[8].

Below, we’ll look at the key ingredients for smart, sustainable cities: green buildings, nature-based solutions, smart street lighting as one example of connectivity and energy efficiency, and new mobility concepts. 

Green buildings combine environmental and social benefits

Responsible for 28% of global carbon emissions[9], transforming buildings into green buildings is a key deliverable for cutting carbon emissions, which derive from the energy used to heat, cool and light them. In addition, shifting to sustainable cement, which is made from materials such as industrial waste, coal fly ash, blast furnace slag or finely ground limestone can save between 1.72-2.75 billion tonnes of CO₂ emissions annually[10] – and the production of sustainable cement itself helps to significantly lower CO₂ emissions – between 50-80% – compared to traditional cement[11].

Green buildings deliver environmental, social and economic benefits for private and corporate occupants. Reduced energy consumption (for heating, cooling and lighting), which can cut carbon emissions by more than 30%, lower water wastage and improved air and water quality (protecting ecosystems), showcase the positive environmental impact.

Looking at the social benefits, green buildings have shown to improve the health and comfort of their occupants while minimising the strain on local infrastructure. Add to this the economic benefits of lower operating costs, improved occupant productivity and the business opportunities arising from developing smart technologies for green buildings, it’s no surprise that a survey in the construction sector found that half of the respondents expect that by 2021 the majority of their projects (over 60%) will be green[12].

However, a lot of work needs to be done: The Committee on Climate Change (CCC) stated in its February 2019 report “UK housing – fit for the future?”, that “GHG emission reductions from UK housing have stalled, and efforts to adapt the housing stock for higher temperatures, flooding and water scarcity are falling far behind the increase in risk from the changing climate,”adding that new homes must be built to be low-carbon, energy- and water-efficient and climate resilient[13].

National Green Building Councils as well as other organisations, such as the Energy Saving Trust in the UK, work with the building and construction industry to accelerate innovations in the design and constructions of new zero-carbon buildings as well as provide advice for the retrofitting of existing buildings – with a potential to achieve energy savings and emissions of at least 50% worldwide by 2050[14] [15].

Nature Based Solutions

Nature Based Solutions (NBS) have gained the attention of cities and companies alike as an urban planning concept that improves urban ecosystems, cuts emissions and enhances the health and wellbeing of citizens and employees. Green roofs and walls, planting trees, creating ponds and wetland and designing green community spaces are typical examples of NBS: they can moderate the impacts of heat waves, capture storm water and abate pollution, while also having positive outcomes for mental and physical health[16].

Often as part of business alliances, big companies have started throwing their weight behind the implementation of NBS. Business for Nature is one initiative that aims to “reverse nature loss and restore the planet’s vital natural systems on which economies, well-being and prosperity depend.”[17] Its more than 350 corporate members have made commitments to help reverse nature loss and restore vital natural systems through NBS.

Smart street lighting

Lighting accounts for nearly 6% of global CO2 emissions. The Climate Group has calculated that a global switch to energy-efficient light emitting diode (LED) technology could reduce energy consumption between 50-70%, save over 1,400 million tons of CO2 emissions and avoid the construction of 1,250 power stations[18].

As with users of lighting systems, cities across the world have a vital role to play, and city leaders are acknowledging that smart street lighting can be the first major step on the path to more sustainability – as much as a cost-saving technology, not only reducing energy costs but also maintenance costs. 

Going one step further, smart street lighting uses a management system that can also deliver smart city services such as for example traffic and parking management, environmental monitoring and extended Wi-Fi.

Mobility concepts

While smart street lighting, green buildings and nature-based solutions all have essential parts to play in the transition to low-carbon, greener and smarter cities, it’ll be mobility, that’ll bring a dramatic transformation, not only for cities.

Three technology-driven trends are shaping modern-era mobility concepts:

1) Electric vehicles (EVs) and alternative powertrains,

2) Connected and autonomous vehicles (CAVs), and

3) Mobility-as-a-service (MaaS).

Combined, the global value of the mobility ecosystem is forecast to grow to more than US$1 trillion by 2030[19].

While today’s mobility systems suffer from congestion and inefficiencies, innovative urban transport systems – ranging from shared cars, taxis and bikes to better rail and bus infrastructure – promise to be 25-35% cheaper, 10% faster, accommodate 30% more people, and reduce GHG emissions by 85%[20].

New technologies powering EVs, CAVs and peer-to-peer sharing will take centre stage in designing a green transport infrastructure for cities. A multitude of sectors, including telecoms and technology firms will benefit from huge growth opportunities, with collaborations between automobile and technology companies already emerging, such as Cisco and Hyundai’s partnership to build a “hyperconnected car” or VW and NVDIA developing AI powered vehicles.  

It goes without saying that mobility is equally a key topic for any company. New logistics concepts such as Transport Capacity Sharing or new delivery modes, for example the use of drones, in particular for last-mile deliveries, offer environmental as well as cost benefits.

In parallel, companies are looking at mobility through an employer lens: How can their employees get to work and back home in the most efficient and greenest way? Should public transport tickets be subsidised? Are there sufficient parking spaces for bicycles and electric cars (equipped with charging stations)? Are carpooling concepts offered (and will company cars be abandoned or substituted for EVs)? Answering these questions and implementing an efficient corporate mobility concept brings many advantages apart from environmental benefits: improved employee satisfaction, the image as a modern employer (which can help to more easily attract talents) as well as significant cost reductions, in particular by introducing company car pooling concepts.

Green collaboration between companies and cities

Often, cities don’t have the resources or expertise to ‘go it alone’ on their sustainability journey. As a result, mayors are acknowledging that the private sector is vital for their cities’ green success. And while it can be a balancing act for companies to collaborate with cities, which can also be their regulator, a quickly growing number of firms are offering their know-how to co-create climate change solutions with city partners.

BP, for example, has established a “mobility city partnerships” team, which is working with a growing number of UK cities, including London, Manchester and Birmingham, to help them explore future mobility options, infrastructure, consumer behaviour and business models. In doing so, the firm also aims to not only partner with mayoral offices and transport operators, but also with other corporates, power companies, investment funds and start-ups[21].

Another example is logistics firm, UPS, which is helping cities on their journey to low-carbon places through a variety of delivery concepts created specifically for urban centres through collaborations with city officials, universities, customers, thought-leaders, and other stakeholders. UPS is currently running more than 30 pilot projects in cities around the world, which include:

  • In 2019, UPS launched one of the first Federal Aviation Administration (FAA)-certified drone airlines, UPS Flight Forward, and is now testing residential drone delivery in partnership with CVS Pharmacy for a 135,000 resident retirement community in Florida.
  • Collaboration with the Seattle Department of Transportation and University of Washington to make deliveries using eBikes in congested areas of downtown Seattle.
  • Introduction of the “urban Eco Hub,” a mini distribution center that is brought into the city center once daily, with workers delivering packages from the hub by foot or electrically-assisted cargo tricycle. These urban Eco Hubs have been deployed in Dublin and Munich, Frankfurt, and Hamburg in Germany[22].

Collaborations don’t stop at city borders: In May last year, Drax Group, Equinor and National Grid Ventures announced a new zero carbon partnership, which could lead to the Humber estuary becoming the world’s first net-zero carbon region and home to a new hydrogen economy. The three companies will work together to:

  • Explore the opportunity to scale-up the bioenergy carbon capture and storage (BECCS) pilot project at the Drax Power Station in order to create the world’s first carbon-negative power station in the 2020s.
  • Explore the potential development of a large-scale hydrogen demonstrator within the Drax site by as early as the mid-2020s – in line with the CCC’s recommendation that hydrogen should be produced at scale in at least one industrial cluster by 2030.
  • Explore the strategic opportunities in developing a hydrogen economy in the region[23].

To help cities form “City-Business Climate Alliances” CDP developed a step-by-step guide last year, pointing out that such collaborations may also “be a vehicle for joint advocacy and campaigns to address systemic barriers that may limit cities and businesses from accelerating climate action.”[24]

Poor air quality and pollution ranking

Source: weform.org

Read the other articles in the series:

Green commitments and green legislation

The business case for corporate environmental action

Investing in a smarter and greener infrastructure part 1 – clean energy and sustainable land use

Sustainable supply chains

“Carbonomics” – the future of energy

 

Corporate clients who would like to discuss this topic further should contact:

Dr Arthur Krebbers, Head of Sustainable Finance, Corporates or

Varun Sarda, Head of ESG Advisory

 

[1] https://newclimateeconomy.report/2018/executive-summary/

[2] https://www.climate-kic.org/areas-of-focus/urban-transitions-2/why-urban-transitions/

[3] https://www.c40.org/why_cities

[4] https://www.c40.org/ending-climate-change-begins-in-the-city

[5] https://www.pwc.com/gx/en/sustainability/assets/4ir-for-the-earth.pdf

[6] https://www.itdp.org/our-work/sustainable-urban-development/

[7] https://sdgs.un.org/goals/goal11

[8] http://www3.weforum.org/docs/WEF_Smart_at_Scale_Cities_to_Watch_25_Case_Studies_2020.pdf

[9] https://www.worldgbc.org/news-media/WorldGBC-embodied-carbon-report-published

[10] http://wedocs.unep.org/bitstream/handle/20.500.11822/25281/eco_efficient_cements.pdf

[11] https://theconversation.com/uk/environment

[12] https://www.worldgbc.org/news-media/world-green-building-trends-2018-smartmarket-report-publication

[13] https://www.theccc.org.uk/wp-content/uploads/2019/02/UK-housing-Fit-for-the-future-CCC-2019.pdf

[14] https://worldgbc.org

[15] https://energysavingtrust.org.uk/clean-growth-plan-2050-ready-new-build-homes-policy

[16] https://www.naturebasedsolutionsinitiative.org/what-are-nature-based-solutions/

[17] https://www.businessfornature.org

[18] https://www.theclimategroup.org/project/led-scale

[19] https://assets.kpmg/content/dam/kpmg/xx/pdf/2019/02/mobility-2030-transforming-the-mobility-landscape.pdf

[20] https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/the-future-of-mobility-is-at-our-doorstep

[21] https://www.bp.com/en_gb/united-kingdom/home/who-we-are/BP-in-the-UK/bp-and-cities.html

[22] https://sustainability.ups.com/sustainability-strategy/sustainable-solutions

[23] https://www.drax.com/press_release/energy-companies-announce-new-zero-carbon-uk-partnership-ccus-hydrogen-beccs-humber-equinor-national-grid/

[24] https://6fefcbb86e61af1b2fc4-c70d8ead6ced550b4d987d7c03fcdd1d.ssl.cf3.rackcdn.com/cms/reports/documents/000/004/732/original/City-Business-Climate-Alliances.pdf?1570550817

ESG/Sustainability


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