234. How the energy crisis has accelerated our need for new infrastructure
Renewable energy has been around for some time, but with an energy crisis in the UK and Europe,...
Buying a house is off-limits to many, thanks to rising rents, pay freezes and a general lack of affordable homes. It hasn’t always been this way, but in recent decades in the UK, the cost of buying a home has risen faster than wages, leaving many priced out of the market. In addition, affordable social housing has become scarcer, leaving many households with no choice but to rent – often paying more than they would for a mortgage. I can testify for that last part! Putting things right will not be simple, but there are things that can be done to improve the situation. Sustainable cities and communities should be a global priority that includes constructing and retrofitting energy efficient buildings, to designing and building safe and resilient public transport facilities, services and centres of innovation.
“A protected bicycle lane in a city in a developing country is a powerful symbol, showing that a citizen on a $30 bicycle is as important as one in a $30,000 car.”
— Enrique Penalosa, former Mayor of Bogota
The UN’s Sustainable Development Goal #11 is to make cities and settlements inclusive, safe, resilient and sustainable for all by 2030. This includes access for all to both affordable housing and basic services. The ten related targets also cover accessible transport systems, safeguarding the world’s cultural heritages, air quality, waste management and universal access to safe and inclusive green and public spaces.
When it comes to the environment, cities are huge contributors to pollution and climate change. Rapid urbanisation has resulted in a growing number of slum dwellers, inadequate and overburdened infrastructure and services and worsening air pollution. There were marked reductions in the latter during lockdowns, as life ground to a halt. Satellite images, for instance, showed significantly reduced levels of nitrogen dioxide in cities from New York to Beijing. Obviously, lockdowns are not a long-term solution, but the results were telling.
And globally, more than 1 billion people still live in informal settlements and slums*. The pandemic has hit these people the hardest – the people who were already suffering from a lack of adequate housing, no running water at home, shared toilets, few or no waste management systems, overcrowded public transport and limited access to formal health-care facilities.
Deeply rooted inequalities led to disproportionate pandemic-related impacts on migrants, the homeless, and those living in urban slums and informal settlements. The needs and concerns of these billion people are rarely considered in conventional urban planning, financing and policymaking, leaving an enormous segment of the global population behind. Recovery from the pandemic offers the opportunity to rethink and reimagine urban areas as hubs of sustainable and inclusive growth.
As David Harrison, manager of Rathbone Greenbank Global Sustainability fund explained to me, “Up to 40% of global emissions come from buildings and infrastructure around the world. This is a huge area for improvement when it comes to emissions and both the medium and long-term opportunities are significant.”
In a recent interview, David explained how there are several ways to gain exposure to the theme of sustainable cities. For example, he is invested in Advanced Draining Systems, which makes pipes out of recycled plastic. It remains an area of interest for the fund and one that David is particularly excited about as the number of entry points is diverse and growing over the long term.
Another area David highlighted was building efficiency. Niall Gallagher, manager of GAM Star Continental European Equity, also highlighted this area within his fund’s broader theme of decarbonisation. Within this Niall considers companies such as those that supply insulation and building components, as well as firms looking to reduce a building’s energy consumption.
Rexel, an electrical equipment company, also fits in this space, according to Rosemary Simmonds, co-manager of Barings Europe Select Trust. Rexel is supported by both the demand for renewables and the drive to electrification and energy efficiency.
Poorly planned and managed urbanisation translates to a disconnect between the provision of infrastructure and residential concentration, leading to inadequate networks of streets and a lack of reliable transport systems. As we discussed with infrastructure’s spotlight on transport (SDG 9), the transport sector will have a large role in achieving climate-based targets and goals such as #11. This goal, like many other SDGs, is strongly linked to climate action (SDG 13), as well areas like clean energy (SDG 7) and responsible production (SDG 12).
The access to safe and affordable cities disproportionately impacts vulnerable populations such as elderly and women and girls, meaning this goal will also have a long-term rollover effect on gender equality (SDG 5), poverty (SDG 1), economic growth (SDG 8), education (SDG 4) and health (SDG 3) for generations to come.
*Source: United Nations Department of Economic and Social Affairs