How Cities’ Sustainable Strategies Can Deliver Change at Scale

Istanbul is Turkey’s economic powerhouse and has been identified as the world’s 3rd fastest-growing metropolitan economy in 2014 by The Brookings Institution. This comes at a price; the city’s world-famous silhouette is often embedded in dark smog.

The transformation process of emerging economies is moving forward at unprecedented levels of pace and scale. Their rapid urbanisation is one of the major driving forces of both economic development and environmental hazards. In this paper, I will lay down why and how sustainable cities can contribute greatly to climate change mitigation. Particular focus will be put on the inclusion of the corporate world in cities’ development strategies – not only for the sake of environmental preservation, but also for people‘s welfare and powerful economic activity.

According to the United Nations, the population share expected to be living in cities is to increase dramatically from today’s 54 % to 66% in 2050 (2014). The Global Institute of McKinsey (2012) has identified the top 600 cities by their contribution to the world’s GDP growth – and projects these alone to generate 65% of global GDP increase until 2025. This urban force will trigger an unparalleled demand for natural and capital resources in highly populated areas and has a potential to drive cities on the brink of environmental collapse. But it can also be seen as an excellent opportunity to implement change at scale – as the behaviour of millions of inhabitants can be impacted by city administrations’ measures. Istanbul’s sub-sea metro tunnel “Marmaray” is expected to reduce greenhouse gas emissions by 144,000 tons yearly because of the city’s sheer scale. The public-private partnership’s daily passenger coverage is estimated at 1.5 million people using the metro instead of emission-intensive private cars, ferries or public buses (European Investment Bank, 2013). Beijing being one of the earth’s greatest agglomerations, its occasional driving ban on 50% of its cars covers millions of drivers. Such a policy prevents roughly the same number of cars from driving, as if a whole country of the size of Switzerland was restricted from car usage. Hence, it is hardly surprising that cities account for roughly 80 % of global greenhouse gas emissions (McKinsey Global Institute, 2010) and play a crucial role in combating climate change. However, Beijing’s restrictions on car usage have a highly negative impact on operating businesses and hence are neither sustainable from an economic nor a social perspective.

Elkington‘s Triple Bottom Line (1999) model aims at balanced accounts of financial, social and environmental dimensions resulting from economic activity. Indeed, many solutions targeting environmental interests do come along with an increased social as well as economic welfare. The city of Hong Kong provides an excellent example. With public transport accounting for 90% of daily motorized trips (The Hong Kong Institute of Surveyors, 2014), Asia’s business hub tops the global list of the Arthur D. Little Urban Mobility Index. Instead of being funded by government subsidies, the city’s “Property+Railway”-model determines that the railway company MTR itself finances the construction of railways. As compensation, Hong Kong’s administration grants MTR the land above and near railway stations for heavily reduced prices. As both the city and the company have long-term incentives to maintain railways and their surrounding properties, Hong Kong‘s rail network is highly effective, self-financing and a role-model of how business and cities can collaborate successfully to achieve highly sustainable results. As a consequence, Hong Kong boasts an extremely low ratio of 61 private cars per 1000 inhabitants (Transport Department Hong Kong, 2016). Besides transport, the city has especially focused on a wide range of green building solutions. However, Hong Kong displays one of the worst air pollution indexes in Asia. In a report issued in 2006, Merrill Lynch advised clients to sell Hong Kong assets due to air pollution levels. Professionals were departing the city because of health concerns (The Brookings Institution, 2007). Indeed, the WHO has identified increasing cancer and respiratory diseases due to rising smog levels, ultimately resulting in a slowdown of economic development (2001). This is a major threat to both people and businesses operating in affected cities.

Ironically, Hong Kong’s air pollution is only to a small extent created within its own borders but mainly caused by the neighbouring Pearl River Delta Economic Zone, which is China’s largest. This interdependence perfectly showcases our planet’s challenge – no matter how successfully countries or cities combat emissions – ultimately all breathe the same air and share the same resources globally; hence all will suffer from other regions not abiding to sustainable practice. The Green Climate Fund addresses this issue and provides countries with support in pursuing global goals for sustained growth. Especially newly liberalized economies with their sprawling cities, but lacking financial resources to invest in latest technologies, can benefit by creating healthier city spaces.

Apart from this, direct cooperation on a city level proves to be a valuable platform to combat global warming. The WBCSD’s Urban Infrastructure Initiative brings together city representatives, professionals from international organisations and business leaders to engage in early planning stages of big-scale projects. Transport systems, waste water management and energy efficiency were identified as the key areas to work on in emerging market cities (WBCSD, 2014). In this regard, PricewaterhouseCoopers advises businesses to co-fund both natural and social infrastructure of cities such as water networks or schools, where these are crucial to a company’s longer-term success (2015). However, most corporations see mainly governments responsible for this development (Macomber, 2013). By failing to recognize the highly symbiotic relationship of companies and cities, leaders not only loose out on possibilities for financial profits but also on a healthy environment for their future employees and a strong CSR. The city of Lausanne has launched a platform called IFGRA, involving several city councils, universities and corporations across the globe. Operating under the slogan “local solutions” and “worldwide cooperation”, this initiative seems very promising as Lausanne’s city administration greatly profits from their global partners’ expertise and networks (Heiden, 2010); while supporting an implementation of projects by local businesses, mainly using locally sourced materials.

Various initiatives have been launched to drive sustainable business solutions in urban areas. However, they are certainly still the exception rather than the rule. City administrations often seem to be wary of companies‘ involvement, as most business strategies used to neglect environmental implications in past decades, as evinced by Milton Friedman underlining that „the business of business is business“. But whether acting out of idealism or pragmatism – today‘s business leaders do increasingly invest in strategies against global warming. Cities will need to intensify seeking business solutions and collaborations; urban areas‘ unique positioning as leaders of global transformation can only be reached with talent and investment of the corporate body.

By bringing together leaders from different organisations to work hand in hand, cross-fertilisation in both the WBCSD‘s initiatives and Lausanne‘s IFGRA has created „win-win“ solutions for all participants. A brilliant example of where results achieved together are even “greater than the sum of its parts“ (Aristotle) and a role-model for upcoming initiatives to follow suit.

By Julius Kup

References

Elkington, J. (1999): Cannibals with Forks: The Triple Bottom Line of 21st Century Business. Oxford: Capstone.

European Investment Bank (2013) The Bosphorus tunnel: Istanbul united. [Online] http://www.eib.org/index.htm [Accessed 23/07/16]

Heiden, Nico van der (2010): Urban Foreign Policy and Domestic Dilemmas. Colchester: ECPR Press.

Hong Kong Transport Department (2016) Hong Kong Fact Sheet – Transport. [Online] Available from http://www.td.gov.hk/en/home/ [Accessed 22/07/16]

Macomber, J. (2013) ‘Building Sustainable Cities’ Harvard Business Review, July-August, 91, pp. 40-50

McKinsey Global Institute (2012) Urban World: Cities and the Rise of the Consuming Class. London: McKinsey Global Institute.

McKinsey Global Institute (2010) India’s Urban Awakening: Building Inclusive Cities, Sustaining Economic Growth. London: McKinsey Global Institute.

PwC (2015) The World in 2050. London: PwC UK.

The Brookings Institution (2007) The Economic and Political Effects of Air Pollution in Hong Kong and China. Washington, DC: The Brookings Institution.

The Hong Kong Institute of Surveyors (2014) Hong Kong: Our Smart City in the Next 30 Years. Hong Kong: The Hong Kong Institute of Surveyors.

United Nations, Department of Economic and Social Affairs, Population Division (2015). World Urbanisation Prospects: The 2014 Revision. New York: UN DESA.

World Health Organisation (2001) Report of the Commission on Macroeconomics and Health: Investing in Health for Economic Development. Geneva: WHO.

World Business Council for Sustainable Development (2014) The Urban Infrastructure Initiative. Geneva: WBCSD

 

Bibliography:

The World Commission on Environment and Development (1987): Our common future. Oxford: Oxford University Press.

Haanes, K. et al. (2013) ‘Making sustainability profitable’ Harvard Business Review, 91, March, pp. 132-135

Friedman, M. (1970) ‘The Social Responsibility of Business is to Increase its Profits’ The New York Times Magazine, 13th September. p. 17

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