The Challenges of Living Large: Scaling Up Sustainable Urban Growth

November 6, 2012
  • Raj Sapru

    Former Director, Advisory Services, BSR

Note: To read part two of our series on sustainable cities, “Sustainable Urban Growth: Is Hong Kong a Model for China?” click here.

In 2010, we quietly crossed a global threshold: The majority of the world went from living in rural areas to living in cities. As with foreign direct investment flows and the rise of atmospheric carbon-dioxide concentrations, this shift is a reminder that we live among imperceptible but significant megatrends.

By 2050, it is estimated that 70 percent of all people will live in cities, and the infrastructure needs to accommodate them and sustain this growth are massive, requiring a delicate balance of social, environmental, and economic considerations. As we have seen, urbanization can take multiple paths— sometimes resulting in cities that thrive, and other times creating cities with multiple tiers of poverty and disparity.

These trends make the case for sustainable urban growth appealing: We need to invest in sustainable infrastructure now because the lead times are long, the capital expenses high, and the systems that enable a lower per capita social and environmental footprint today will have exponential savings tomorrow. While the logic is sound, the growth of sustainable infrastructure has not kept pace with the need.

Over the past few weeks, I’ve had a chance to speak with several individuals in the private sector who are at the forefront of infrastructure development and who have shared their views on the challenges that business faces and what needs to change to make sustainable urban growth attainable.

City Focus

The conversation about opportunities to create sustainable cities has intensified over the past couple of years. One such effort, the CDP Cities project, allows cities to report carbon inventories in a similar model to the organization’s widely used corporate climate disclosure platform. CDP Cities usefully built off of the C40 Cities project, led by a group of like-minded city mayors with a long-term vision for energy reduction. Similar to the corporate-reporting platform, CDP Cities is a way to identify and manage risks and opportunities while creating the accountability to demonstrate improvements to a variety of stakeholders, including investors.

The global infrastructure and technology firm Siemens also entered the fray with its Green City Index, which ranks more than 120 global cities on a variety of environmental dimensions. Cities at the bottom have the greatest opportunities, and the ones at the top have the most lessons to offer (my hometown of Detroit is dead last in the North America rankings and therefore has a significant opportunity for improvement and many lessons to learn). Siemens’ index is also public, which helps catalyze a deeper discussion about the unique strengths and weaknesses of each region.

“Cities are looking at sustainability as their strategy,” says Alison Taylor, Siemen’s vice president. “I talk to cities about their strategy and goals just like I would with a company. City CSOs are making the same decisions as companies and have very similar challenges with internal engagement. How do you get the city departments like transportation, energy, utilities, and others out of their silos when they all have different needs? The best way is to sit down with city CSOs and learn about the struggles and challenges.”

Just like in corporations, setting goals and having a vision proves to be an essential start for cities that want to engage business. The WBCSD Urban Infrastructure Initiative (UII) brings together 14 leading companies from sectors including energy, buildings, materials, transport, engineering, water, equipment, and support services to help urban authorities turn their sustainability vision into practical and cost-effective action plans.

Matthew Lynch, the project lead, said one of the main success factors is the opportunity for direct and open dialogue. “The companies in the UII are engaging collaboratively with cities upstream in the planning process, demonstrating the value of the early involvement of business and showing how a multisector group of leading companies can help cities find integrated solutions to interconnected challenges,” he said.

The UII project, which is working with nine cities around the world, has already produced three “solution landscape reports”—for Turku in Finland, Tilburg in the Netherlands, and four cities in India’s Gujarat state. The reports for the remaining urban areas will be published in the coming months. The “solution landscape” presents a menu of potential options for cities to address their key sustainability challenges. Lynch said one of the main success factors is the opportunity for direct and open dialogue. “Business adds value by being involved in the beginning, looking at the big plan, and looking at the issues landscape and challenges,” he said. WBCSD decided to work with multiple companies as opposed to a more ad hoc engagement to encourage the idea that it was business, not just individual companies working with cities.

The WBCSD expects that companies will use the landscape reports to refine their own approaches to working with these cities, targeting specific challenges and opportunities.

Mismatched Timeframes

One significant challenge with deploying sustainable infrastructure solutions in cities is the vastly different time cycles used by business and government. Because of these challenges, Bill Sisson, director of sustainability at United Technologies Research Center, recommends that business engage on these issues early. “The time to intervene is now, before significant growth, and before there is a locked-down strategic plan,” he said. “Our experience is that building trust is critical. There can be conversations about public-private partnership, and we can talk about what the private sector can bring to the table. The timing of this conversation is important.”

Kate Brass, GE Energy’s ecomagination program manager, said there’s a “need for better coordination and understanding among governments, industries, and NGOs so that cities holistically plan for and build the infrastructure of tomorrow rather than create an infrastructure of mismatched components and potentially stranded assets. She also notes that, “Energy has a long development and life cycle, so buying the lowest-cost technology today doesn’t usually create the infrastructure of tomorrow. Purchasing decisions need to take into account the full lifecycle cost of technology, including operating and maintenance costs as well as potential disposal costs. This truly gives the technology of tomorrow fair weighting and consideration for its long-term value.”

Aligning Incentives and Strategies

Like other transactional aspects of sustainability, most notably supply chain issues, getting the incentives right allows for greater transparency, better decision-making, and more “sustainable” sustainability solutions.

As UTC’s Sisson put it, “When we see cities stepping up and making policies and strategies in support of energy efficiency, that is a clear signal to us.” He also pointed out that city visions can vary dramatically, so it’s important to understand their objectives. “One of the cities we worked with in Finland, for example, was looking at all of the energy content in the city, while another in India felt its primary responsibility was to improve the efficiency of its public lighting” he said. “We cannot apply the same approach for both.”

From 'Smart Cities' to 'Wise Cities'

Gary Lawrence, who previously served as Seattle’s planning director and is now vice president and CSO of the global technical and management support company AECOM, also challenges some of the assumptions and reframes the debate about “smart cities.”

“We do a lot of analytics,” he said. “When we crunch the numbers, cities get tired of hearing about ‘smart.’ Where is the wisdom? What is the outcome? Who are you today really? What kinds of problems are you having with poverty alleviation, for example? Who are you trying to become? What is the city you are trying to govern?”

Lawrence pointed out that much of mega-city discussion ignores the fact that most of the growth will be in what are fourth-tier cities around the world (using China’s commonly used but non-exact classification). “This means that companies like ours need to be more sophisticated in the Global South and emerging markets, and [take time to understand] the associated cultural components,” Lawrence said. For instance, understanding demographics is critical to creating solutions. “The aging population is the fastest-growing cohort, yet most of our cities are designed by men for young men in commerce,” he noted. How will women, children, and the elderly thrive in those cities?

How to Fast-Forward Progress

City-focused initiatives, lead by NGOs and the private sector, are drawing more attention to the clear opportunities, but the results are still lagging behind the pace of the growing challenges. While innovation is important for developing sustainability solutions, technologies and infrastructure systems that will help achieve sustainable growth already exist.

Companies that provide infrastructure systems and components for energy, buildings, and transportation, must push fast-forward to deploy these technologies faster. They can start by collectively understanding the challenges and the role that each stakeholder sector can play in support of sustainable growth:

  • NGOs and civil society organizations can develop credible standards, decipher local issues, and create the environment that supports sustainable urban growth.
  • Government policies can create income distribution, economic and social mobility, the right incentives for the private sector to invest, space for truly engaged discussion, and a commitment to longer-term sustainability strategies.
  • Business can deploy systems that address real social and environmental challenges—along with the partnership of government and civil society—rather than having to settle for incremental improvement and shorter-term sustainability gains.

At BSR, we know that when business engages stakeholders proactively, the insights gained will lead to more informed decision-making, more valuable collaboration, and more inspired business models. The challenges are large, but the quiet and unstoppable megatrends are larger. The sooner meaningful engagement is at the forefront of the sustainable urban infrastructure agenda, the sooner we can hit fast-forward and have a chance at truly sustainable growth.

BSR is expanding our work on the theme of urbanization through a series of interviews in seven global cities. In our next brief, we will be highlighting views from NGOs, civil society, and government to understand the challenges and opportunities for scaling up sustainable growth and the significant issues that need to be addressed.

Let’s talk about how BSR can help you to transform your business and achieve your sustainability goals.

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