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Executive Perspectives

EXECUTIVE PERSPECTIVE: A Tale of Sustainable Cities

Tim Nixon

09 Oct 2018

With an alarming update from the IPCC, and growing urgency over the state of the world’s climate, cities are becoming the center of life and power for the world’s inhabitants.  IUCN Director General Inger Andersen, as part of the recent launch of a new Global Alliance for Green Cities, sets the context.

“By 2050, over two-thirds of the human population will be living in cities. There is growing evidence that conserving, restoring and enhancing green infrastructure such as urban forests, green walls and roofs, and urban wetlands can have multiple benefits to people. These include improved physical health and well-being, reducing the risk of flooding, and both cleaner air and water.”

Expectations from national and city leaders are rapidly evolving around the role of the private sector in contributing to “green infrastructure”, health and economic vitality, all as part of a partnership for the economy and planet. Consider this litany of evidence on the growing importance of transparency and sustainability from diverse leaders  over the last 90 days.

Kenya, Estonia and California

Nairobi Kenya, in mid-July 2018, Ruth Kagia, Senior Advisor to Kenyan President Kenyatta explains that global investors coming to her country are going to face increasing scrutiny.  “We need to know their record and future plans as they relate to taking care of the environment while at the same time growing their business. Right now, we are not receiving enough information. In the future, transparency should be a condition of doing business.”  She is not alone in the huge market presented by the developing world.

Next stop is Tallinn Estonia, early September, for a special session of the United Nations Business, Science and Policy Forum convening to set the agenda for the UN policy-setting meetings in the spring of 2019. High on the agenda is the crucial importance of a small number of companies with an enormous impact on the sustainable development of the planet. Key questions remain about the dedication of the CEOs leading our energy, transportation, utilities and capital goods sectors. Will these firms, many of whom are responsible for much of the world’s GHG emissions, prioritize sustainable development over short term profits?

Next stop is San Francisco.  At the Global Climate Summit and C40 events in San Francisco we interview four mayors from Dhaka Bangladesh, Pittsburgh Pennsylvania, Capetown South Africa, and Rotterdam Holland.  All four, despite coming from fairly different cultural and developmental contexts, sense a growing role for their leadership in partnering with the private sector to produce “green cities”, as the IUCN initiative will begin to measure.

There is no tradeoff between sustainability and economic vitality. Major Aboutaleb of Rotterdam summarizes the sentiment that  –

“there is little distinction now between our sustainability goals and our economic goals. One cannot be achieved without the other. Private sector partners must be completely transparent and perform to deliver more sustainable, healthy and economically vital results. Our procurement process will drive these results.”

And alongside the mayors are a panoply of private sector investors and businesses. One example of a trend on the investor side comes from global bank ING, which is increasingly tying sustainability performance to the cost of credit.

Leon Wijnands, Global Head of Sustainability summarizes that “we support our clients in improving strong ESG or sustainability performance with incentives, like the Sustainability Improvement Loan where clients pay a lower interest rate if their sustainability performance goes up and vice versa. Sustainable business is simply better business for us, as strong ESG performers tend to exhibit operational excellence and are more resilient to perils ranging from ethical lapses to climate risks. They are better able to anticipate market changes and are forward looking, often leading to a sustainable financial performance.”

Final Stops

Fourth stop is New York City, where CEOs from NRG and Glaxo Smith Kline, and a top executive from IBM, along with investors with over $45 trillion in AUM are meeting to hear long-term value creation plans from the corporate executives.

Key themes are the importance of transparency and stakeholder engagement to staying on course with value creation and future proofing a business. 

Investors like Vanguard, State Street, and Goldman Sachs are present and beginning the process of transforming how business communicates on strategies for the next three to seven years rather than the next 90 days, to reorient capital markets for the long term.

Being a part of the “green infrastructure” of the future, whether it’s in the form of energy or health care or artificial intelligence, is a growing priority and business opportunity. “More companies need to talk about their long-term planning more often,” says Daryl Brewster, CEO, CECP. “As we look to scale, we invite more CEOs to join in the effort to explain to investors why their companies are a good long-term investment.”

The final stop is upcoming, in Paris in mid October. Representatives from the United Nations alongside many global corporations alongside most of the world’s space agencies are gathering to plan the next steps on how to measure and manage the health of our planet.

The transparency question is moving from a question of “who is disclosing” to “what can be disclosed” using external satellite platforms combined with cutting edge artificial intelligence. 

New indices to measure the health of population centers, and the causes of damage to that health will draw on this kind of data. One such example is the upcoming IUCN City Nature Index, which will provide “a standardized way for cities to measure the quality of their underlying stock of natural resources – known as ‘natural capital’.”

A New Kind of Leadership

To summarize, as power and population centralizes in more urban locations, leaders of these places will be increasingly looking to corporate partners to produce both economic and sustainability outcomes. On the overall potential for those “outcomes” Helen Mountford, Program Director of the New Climate Economy and Global Director of Economics at World Resources Institute says that

“we now know that climate action can unlock many economic and social benefits”, citing NCE’s recent report that found that “bold climate action could deliver US$26 trillion in economic benefits through to 2030 compared with business-as-usual.”

Transparency on past performance and future eco-deliverables will be a cost of doing business. Those who can adapt to this civic-business model will see business opportunity in the decades ahead as this new tale of cities accelerates towards sustainability.

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