Making the Case for Sustainable Infrastructure in Emerging Markets
Sustainable Infrastructure
EMSD´s work to put sustainability aspects on the global infrastructure agenda is bearing fruit with renewed efforts to operationalise guidelines and best practices.
The topic has featured prominently on the agenda of the Emerging Market Sustainability Dialogues (EMSD) since 2015, when EMSD launched a Policy Initiative on Sustainable Infrastructure during its annual Beijing Think Week. The Policy Initiative produced primary analysis on the effectiveness of sustainability indicators, the role of MDBs – particularly in emerging economies – and a scoping of bottlenecks for implementation of standards. At the time, much of the global debate around this, including at the G20, was about the huge perceived financing gap for infrastructure: USD 90 trillion between 2015 and 2030,[1] approx. two thirds of which in emerging markets. A key focus was on private investment and MDBs stepping up their commitments to close this gap. However, awareness of the importance of quality infrastructure in terms of its climate resilience as well as its social and environmental sustainability was low.
Through its network of think tanks and corporate and financial sector stakeholders, EMSD contributed to re-shaping the global narrative: infrastructure projects, which last as long as 100 years, create substantial economic, social and environmental lock-in effects for generations to come, and in a “business-as-usual scenario” would exacerbate climate change, environmental degradation and social unrest.
The urgency of integrating sustainability into the full project cycle of mainstream infrastructure projects, however, is not just a moral responsibility for future generations. It also has very clear advantages from a business and finance angle:
- Enhanced sustainability will mitigate environmental, social and governance risks, reducing stranded assets and in turn improving financial performance, and
- Sustainability will “leapfrog” inefficient, sprawling and polluting infrastructure systems of the past, providing space for innovation and clean technologies.
Making the case for sustainable infrastructure in international fora such as T20, B20, and BRICS, was just the first step. With the Transformative Working Agenda (TWA) Forum in Mexico and other initiatives, EMSD also actively supports national business federations to develop sustainability guidelines and practices. The “Sustainable Infrastructure Guidelines for Overseas Chinese Enterprises“, now applied by the China International Contractors Association (CHINCA) and its 1500 members, including some of Chinas largest infrastructure companies, are a telling example of these efforts. In Mexico, EMSD support for the development of sustainable business models in the infrastructure sector is bearing fruit as well. The Sustainable Infrastructure Guidelines for Mexico, which include a step-by-step guide for companies to move towards more sustainability in the infrastructure sector, concisely summarise lessons learned in the country, and make it easier for companies to reap the benefits of corporate sustainability innovations.
EMSD also works with knowledge and tool providers, such as Global Infrastructure Basel (GIB), to pilot their SuRe sustainability standard in infrastructure projects in China, India and Indonesia, supporting local target groups, such as banks and government entities, to incorporate best practice standards into their full project preparation cycle.
Way forward
Global debates such as the G20 and Paris Climate Agreement now clearly reflect the necessity to step up not just the quantity but also quality of infrastructure finance and projects. Bringing these commitments to life with concrete implementation steps and tools remains a major challenge. In order to move this forward, EMSD and its partners are now working on a platform to pitch innovative sustainable infrastructure solutions to emerging markets governments, corporates and investors. The aim is to systematically support best practice solutions that effectively demonstrate the business case for sustainable infrastructure, and to cluster and pilot these instruments along the infrastructure project-cycle.
For more information please contact antje.uhlig@giz.de or john.hauert@giz.de
[1] The New Climate Economy Report (2016), THE SUSTAINABLE INFRASTRUCTURE IMPERATIVE – Financing for Better Growth and Development, The Global Commission on the Economy and Climate.
