SDG9: Are we at the dawn of a new era of sustainable infrastructure?

SDG9: Are we at the dawn of a new era of sustainable infrastructure?

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The ninth sustainable development goal seeks to redesign how the world works - but can we call time on polluting infrastructure fast enough?

The word "infrastructure" began as a specialist term to describe railway construction in the early 20th century. Today, it covers the delivery of a long list of services, including energy, water, transport, and telecommunications. But more than that it has come to be rightly regarded as the essential foundations of any modern society, the arterial system that determines both the health and vigour of an economy and the pace and direction of a country's development efforts for decades to come. As such it is clear that what businesses and governments build today - and how they build it - will significantly influence whether or not the world delivers on its climate and environmental goals long into the future. 

The ninth Sustainable Development Goal looks to highlight the critical importance of the physical systems that underpin the global economy with its wide-ranging ambition to "build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation". It is an over-arching goal that is not simply about climate change and environmental crises: it is about providing constant electricity to the 2.6 billion people who still cannot light their homes on demand, answering the needs of the 40 per cent of businesses in low-income African countries whose productivity is constrained by inadequate infrastructure, and connecting the four billion people who still do not have access to the Internet. 

SDG9 asks businesses and industry to consider the planet at the same time as they build a world that is clean, connected, and productive. But in many ways, the goal also returns to the heart of the climate challenge. Although no one knew it at the time, the rise of the Industrial Revolution, with its hunger for fossil fuels, would kickstart the process of global warming. The infrastructure that enabled the modern world has come with a potentially catastrophic price tag. The coal that was used to produce the steam upon which industry depended - a habit which the UK appears to have almost kicked after two centuries of reliance, but which still provides more than half of China's total energy consumption - triggered the escalating climate impacts that are already threatening future global development

Increasing the bottom line can be lined up with achieving the SDGs - Sue Reid, Ceres

Subsequent knowledge of the relationship between CO2 emissions and climate change has not, by itself, led to a step change among industry leaders. Between 1970 and 2010, total greenhouse gas emissions from industry almost doubled. Nonetheless, the fact that industry is now embedded in the heart of the SDGs is a sign of how much the world has changed since the Industrial Revolution. Once the cause of climate change, industry is now expected to offer solutions to the problem. Given the huge development needs still facing much of the Global South - and, indeed, the high carbon lifestyles embedded within the infrastructure in the Global North - there is no alternative.

The opportunities for businesses to build a world of net-zero carbon infrastructure are everywhere, from transport and energy to data and agriculture. Done badly, however, new infrastructure and accelerated industrialisation could reverse the scant progress already made to curb emissions and enhance climate resilience. "The social and environmental impacts of infrastructure can be profoundly harmful - both directly during construction and in more systemic ways, within and beyond the lifetime of the assets," a paper published in Nature Sustainability in April 2019 warned. "Fossil-fuel power stations are responsible for harmful air quality and greenhouse gas emissions. Construction of transport infrastructure (roads, railways, airports, ports and inland waterways) can destroy and fragment habitats, and provides access that enables the overexploitation of natural resources."

SDG9 is focused mainly on development, and its sub-targets are generally not defined in terms of climate change and greenhouse gas emissions. Yet the future health of the planet is nonetheless built into the goal. Its targets demand that both new infrastructure and industrialisation must be "sustainable", as well as inclusive, resilient, and reliable. Specifically, SDG target 9.4 calls for infrastructure to be upgraded and industry to be retrofitted by 2030, with "increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes" as standard - an aspiration that is measured in terms of CO2 emissions per unit of value added. 

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o to what extent are companies today engaging with the sustainability requirements of SDG9? It's certainly not difficult to find examples of businesses that are thinking about ventures that will improve infrastructure while, at the same time, minimising or reversing climate and environmental impacts. For example, Ford's historic River Rouge Plant, first built in 1917, is today covered in a green roof, mainly composed of a drought resistant species of sedum. The innovation at the company's industrial plant was considered part of its water management plan: it required fewer pipes, reduced the need for chemicals, and helped manage excess storm water. It also had climate benefits, acting as a natural controller of temperature, therefore reducing energy requirements by about five per cent, and offsetting some of the company's CO2 emissions, while helping to maintain biodiversity. 

The green roof on Ford's River Rouge plant

Yet Ford wasn't actively engaging with any of the SDGs, let alone SDG9. The transformation was undertaken in 2000, and was driven not by the planet but by money. "Ford's leadership regarded this investment as a business decision and not as corporate sustainability project," concludes a recent report on progress on SDG9 from consultancy giant PwC. "This was just the beginning of the company's journey of embedding sustainability throughout their operations and products."

This is often the pattern. Companies today are frequently acting and investing in a way that seems aligned to SDG9, without actively thinking about the goal itself. They have either noted the urgency of climate change, perhaps even thought about the requirements of the Paris Agreement, or are simply aware of the savings that measures such as energy efficiency can bring. As such sustainable infrastructure and industrialisation is edging its way into the corporate mainstream, but rarely at the pace required to ensure SDG9 is met by 2030, as required by the UN.  

Some experts argue that even when the SDGs are referenced by businesses, they still rarely prompt any fundamental change in corporate strategy. "I am not a great fan of the SDGs as it currently does not stimulate new action: companies are merely using the SDGs to reframe what they're already doing or plan to do," says Karlijn Arts, policy and sustainability manager at SkyNRG, an Amsterdam-based company that makes sustainable fuel for aviation

For SDG9, the rebadging of existing work as SDG compliant is particularly prevalent among companies based in the US, says Sue Reid, president of climate and energy at Ceres. "They tend by and large not to look at it in terms of SDG objectives, even as they do things that can significantly enhance their ability to achieve the SDG objectives," she says, although she also emphasises that there's a positive side to this. "There's a business case for moving in terms of retrofit, moving in terms of energy productivity - basically producing more value for every unit of energy that is put in. Companies are looking at the bottom line, and fortunately increasing the bottom line can be lined up with achieving the SDGs."

According to SDG Compass, a group providing guidance for companies on meeting the SDGs, there are a number of ways in which companies can engage with the ninth goal. These include investing in new, resilient infrastructure in developing countries or retrofitting existing infrastructure to make it more sustainable; bringing research and development to developing countries; promoting innovation in sustainability; consulting with minority groups; establishing standards and regulations that ensure projects and initiatives are sustainably managed; and collaborating with NGOs and the public sector to promote sustainable growth within developing countries. 

And there are various examples of companies that are actively thinking about delivering on SDG9, either individually or through collaborations brought about by green business organisations, such as BSR or the World Business Council for Sustainable Development (WBCSD). 

For instance, WBCSD is currently running a programme called Transforming Heavy Transport, bringing together multinationals to develop a strategy to reduce emissions from transport and freight, with the goal of achieving net zero logistics emissions globally by 2050. The initiative is explicitly focused on achieving SDG9, and already has a number of high profile companies on board.

Similarly, Iberdrola, the Spanish utilities company, spent almost €300bn euros in 2018 to develop new industries and technologies to speed along the energy transition, according to Agustín Delgado Martín, the firm's head of innovation, sustainability and quality. The company, he says, has focused primarily on supporting SDG7, which covers affordable and clean energy, and SDG15 that focuses on life on land. But the pursuit of those goals has necessarily meant engaging with SDG9, as it requires rethinking critical infrastructure such as energy generation and networks. For instance, the company has been exploring the how to use smart meters and demand side response, studying how and when customers are using energy, so that prices can be lowered when wind-powered generation is high. 

IberdrolaTechnology such as vehicle-to-grid chargers could help balance supply and demand for green energy | Credit: Iberdrola

"We have to invest in new infrastructures, new R&D or business models, and we are doing it faster because the pace of change the SDGs give us in this framework is higher," says Delgado Martín. "It is not only because it is written in the SDGs, but because the SDGs as a framework is something that everybody is embracing, so our investors are asking us to increase the speed of change."

Yet, more broadly, the relatively low levels of corporate engagement with the SDGs themselves - even as companies are thinking more than ever before about how they can address climate change - is partly down to the fact that the targets aren't necessarily designed for a business audience. Even where the goals has significant and direct implications for businesses and investors, as is the case for SDG9, many are focused on governance issues or emerging markets where companies may have a limited stake.

In some ways, this lack of focus does not matter. Whether companies are making statements and plans around SDG9 is less important than whether they are taking action to reduce emissions and develop sustainable infrastructure on the ground. But it does mean that, come 2030 and the target date for the SDGs, measuring progress could be complicated. 

"I think it's going to be messy when we do a counting exercise in 2030 and ask: what has actually been achieved, and what was business responsible for achieving?" predicts John Hodges, managing director at BSR. It is a challenge that could be exacerbated by those companies whose engagement with SDG9 has been defined more by token gestures than by meaningful engagement with the specific targets and indicators. "A lot of people aren't measuring; they're doing it as a PR statement and not actually doing the math to figure out whether they actually are having a positive impact."

These are questions of systemic change - Eliot Whittington, Prince of Wales' Corporate Leaders Group

This kind of loose engagement with the goal need not necessarily be a bad thing. The broad nature of the SDGs means that it is almost inevitable that companies will be doing something that aligns to some element of SDG9, says Eliot Whittington, director of the Prince of Wales' Corporate Leaders Group. But that process needs to "mature and deepen", he says. "Particularly with very business relevant goals like this, there is an important need to have a genuine open grown-up conversation with policymakers and business peers about things that need to change," he argues.

Recognising that businesses may be limited not by lack of will, but rather through a lack of appropriate tools, SDG Compass has developed an alternative set of indicators by which companies can measure their progress. But the obstacles to SDG9 engagement extend beyond a lack of appropriate indicators. Ultimately, the goal requires a total rethink of the way that industry operates and infrastructure is built, and that needs buy-in from the government and financial sector, as well as a willingness by business itself to think creatively about the future of infrastructure. Carbon intensive industries such as steel, cement, mining, energy, and transport will have to change beyond recognition in the space of three decades if the SDGs and the Paris Agreement are to be met - a fact relatively few businesses, investors, and governments are prepared to wrestle with.  

"These are questions of systemic change," explains Whittington. "There are examples of things that can be done purely within the business community, and there are equally some examples where the business community doesn't have a lot to offer. But the bulk of what's required to deliver this change needs multiple parts of the system to move together, which is why business and policymakers working together constructively is really important."

However, there are signs corporate thinking is starting to change. Across transport, heavy manufacturing, and energy there are countless examples of big brands and multi-billion dollar investors who are now wedded to net zero emissions goals and are exploring how emerging technologies such as electric vehicles, carbon capture and storage, renewables, and storage systems will enable an entire new era of 21st century sustainable infrastructure.

Certain quarters of the financial sector have also started to look at how they can align with the SDGs. For example, in 2018 the investment firm KKR established a Global Impact fund, which "identifies promising companies that measurably contribute to solutions addressing critical global challenges identified by the UN Sustainable Development Goals". Among the recipients of its funds is Barghest Building Performance, a southeast Asian company working on energy saving solutions in heating and cooling in commercial and industrial buildings. It is just one part of a global trend that has seen engagement with environmental, social, and governance (ESG) financial products boom, at the same time as some iconic investors have divested from carbon intensive infrastructure assets.

 

Nonetheless, the financial sector still has some way to go in its support for SDG9 - investment in demonstrably unsustainable infrastructure that will continue to operate deep into the second half of the century is still far too easy to come by. "There needs to be a rethink across all finance of, say, new pipeline infrastructure for oil and gas, and other carbon intensive resources," argues Ceres' Reid.

Government certainly has a role to play in sending the right investment signals in support of sustainable infrastructure. For example, Canadian Prime Minister Justin Trudeau sparked fierce criticism over his decision to approve the Trans Mountain expansion oil pipeline project in June 2019, after the federal government bought it in 2018 to ensure its survival. His pledge that any revenues received from the project would fund Canada's "transition to a green economy" was greeted with scepticism by those opposed to this huge expansion of crude oil transportation. 

Reid would also like to see more innovation in how sustainable infrastructure is funded in emerging economies, where the businesses that need funds are not necessarily the "major corporation with a big track record of interactions with major finance institutions and a strong credit rating". "The companies that are part of the demand for that supply coming from emerging economies can play an enabling role, but we need more innovation and finance across the board, more of the multilateral development banks and public finance institutions, doing blended finance with private investors," she adds.

Certainly, when progress on SDG9 was reviewed by the UN in 2017, the picture was not entirely sunny from an environmental or a development perspective. Manufacturing had consistently improving its performance, particularly in Europe and North America, where the sector reduced its emissions intensity by 36 per cent between 2000 and 2014. Yet over the same period, emissions intensity actually increased globally, as a significant share of manufacturing value added moved to countries with more carbon intensive energy.

Even in the Global North, improvements in the sustainability of infrastructure and industry have been incremental, suggests BSR's Hodges. The "hockey stick moments" that a true transformation would require remain elusive, he warns. And that is why the third element of SDG9 - innovation - is of such critical importance. Electric cars in the US have been gaining ground, but the share of EVs in the market by 2020 is still not expected to exceed two per cent. Research into alternatives, such as Elon Musk's Hyperloop, could change how transport systems work altogether and while there has been considerable scepticism about this idea, it also has backing from some big investors and businesses, including Virgin.

"In the way that the railways powered the last 100 years, Hyperloop could transform the next," wrote Richard Branson in Wired in 2018. "It is in this changing landscape of human connectivity that the hyperloop has gone from an abstract idea to an on-the-ground practical necessity. It is one that will be realised within the next decade as the first game-changing transportation technology in a century. Sustainability is the reason for hyperloop's existence."

 

Hyperloop could prove integral to a new era of sustainable infrastructure or a costly dead end. But innovation that enables economy-wide system change, be it through driverless vehicles, a hydrogen economy, circular and re-usable resource models, smart grids, or, most likely, a combination of clean technologies, is central to industrialised nations efforts to deliver on SDG9.

The Global South, meanwhile, is poised to take advantage of well-established modern technologies, leapfrogging many of the carbon intensive mis-steps made by the developed world in the 19th and 20th centuries. This will be particularly true if the other SDGs are successful. SDG7, for instance, sets the goal of "universal access to affordable, reliable and modern energy services" by 2030, while SDG6 promises to deliver "clean water and sanitation". Meet those targets and the world will have gone a long way towards delivering more sustainable industry, innovation and infrastructure. 

In places like Europe and America, on the other hand, SDG9 success will depend more on the extent to which businesses are able to retrofit and innovate. This has already shown to be a challenge in itself, particularly when it involves making potentially expensive changes to infrastructure that has not yet reached the end of its useful life. The faltering progress of a carbon capture and storage sector that is deemed critical to averting an escalating climate crisis is a case in point.

"There are real competitive concerns or investment concerns, because how do you upgrade an entire industrial infrastructure in a few decades? Who bears the cost of that?" reflects Whittington. The New Climate Economy's 2016 report on sustainable infrastructure may have found that some $90tr will be invested in infrastructure over the next 15 years, and that aligning these investments to global climate goals would not, in the long run, cost much more thanks to efficiency gains and fuel savings. There is plenty of modelling to suggest sustainable infrastructure delivers net economic benefits once energy security, climate, air quality, and health benefits are taken into account. But current market and policy frameworks create a labyrinth of split rewards, perverse incentives, and chronic short termism. The question is how can businesses be convinced to take on potentially higher upfront costs in pursuit of longer term gains? 

"It's future proofing your investments," suggests Whittington. "It's looking at the trends that are taking place, and thinking about what are the future markets? What do people want?"

It may have come to life describing railroad tracks, but in today's world infrastructure defines almost every aspect of life. How clean drinking water is, how warm homes are, whether food arrives fresh or spoiled, whether deep decarbonisation is feasible or a pipe dream. Good infrastructure is the difference between visiting family once a week or once a year. Between a flooded home and a dry home. Between melting streets and breathable cities. For business, good infrastructure is the foundation stone for a sustainable future. The need to call time on polluting infrastructure and embrace the innovation that can herald a new era of sustainable development has never been clearer.

 

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