Receive our newsletter – data, insights and analysis delivered to you
  1. Analysis
16 July, 2021updated 02 Nov 2021 15:00

SDG focus: Cities must think smart to bounce back from Covid setback

Investments in green buildings, smart transportation and smart city technology can make cities inclusive, safe, resilient and sustainable, which is the UN’s 11th Sustainable Development Goal.

By Sofia Karadima

smart-city-sdg11

Smart city technology can help urban areas bounce back from the challenge of Covid-19 to meet the SDG11 targets by 2030. (Photo credit should read Prakash Singh/AFP via Getty Images)

The Covid-19 pandemic has had a particularly heavy impact on urban areas, with data revealing that globally more than 90% of infections have occurred in non-rural areas. This is a setback in terms of making cities “inclusive, safe, resilient and sustainable” by 2030, which is the target of the 11th UN Sustainable Development Goal (SDG).

“The SDGs have been developed to advocate that no one will be left behind,” says Dr Mahmoud AlBurai, senior advisor at the Dubai Land Department. “But the reality on the ground shows higher inequality compared with the time prior to Covid-19. Although it hit everyone, it hit the poorest the hardest.”

Covid-19’s impact upon cities

Indeed, the Covid-19 pandemic has had a more prominent impact upon the poorest members of society, and those living in densely populated urban areas, including informal settlements and slums. In such overcrowded areas it is harder to socially distance and self-isolate.

Karena Vaughan, CEO at Catalina Consulting, says that the pandemic has seen an outflow of knowledge workers to more rural areas, which is depriving city businesses of income. This is leading to job losses, a large fall in city tax revenues from service and hospitality businesses, and reduced demand for public transport. “This outflow may well continue as remote working and use of digital technologies makes FDI projects mobile on a global scale,” she says.

It is not only the Covid-19 pandemic, however, that is holding back hopes of achieving the targets of SDG11. The rapid urbanisation of the past few decades has also meant that “four billion people in the world’s cities have faced worsening air pollution, inadequate infrastructure and services, and unplanned urban sprawl”, according to the UN’s website.

Analysis by Investment Monitor shows that a high number of cities in the developing world face sustainability and community risks. More specifically, the Sustainable City and Community Risk Index 2021 finds that Africa and Asia face the most challenges based on the number of displaced persons, air pollution, rural access and urban population rates.

Content from our partners
Abu Dhabi: A buoyant, resilient economy with a positive outlook for investors
Boom with a view: Surprise’s success, explained
Transformative power: How Hamburg is leading the way to a green hydrogen future

On these issues, the UN states: “Safe public transportation, reliable basic services and open public spaces are especially important now to ensure the health and livelihoods of urban dwellers. Successful examples of containing Covid-19 demonstrate the remarkable resilience and adaptability of urban communities in adjusting to new norms. Cities will emerge from the pandemic, but whether they are prepared for the next crisis will depend on how much they can advance when it comes to data-driven inclusive and sustainable urban development.”

So will investing in areas such as green buildings, smart transportation and smart city tech sectors in order to maximise their profits help cities to achieve the targets of SDG11?

Investing in green buildings

The green building market provides opportunities for investors both domestically and internationally, given its potential for future growth. According to a Market Research Future (MRF) report, the global green buildings market is set to grow at a compound annual growth rate of 14.3% between 2020 and 2027.

Green buildings focus on eliminating the negative impacts of commercial and residential construction, but also creating positive impacts through their design, construction, site selection and operations, among others.

The MRF report states that “economic green buildings provide several financial or economic benefits that comprise job creation, high property value for building developers, low construction costs and cost savings on utility bills for households or tenants”.

At the core of green buildings is energy efficiency and reducing carbon emissions. Indeed, data from Energy Star shows that the US buildings sector accounted for two-thirds of the decrease in total energy-related US carbon dioxide emissions in 2019 (see chart below).

Investing in smart transportation

As well as green building, investment opportunities in smart transportation are set to increase in the post-pandemic world.

Indeed, the smart transportation market will be worth an estimated $33.6bn by 2027, according to a report by Meticulus Research.

Examples of 'smart transportation' are car navigation systems, traffic signal control systems, automatic number plate recognition and speed cameras. The Meticulus Research report reveals that the growth in this market is driven by “rapid urbanisation, increasing demand for efficient transportation, a rising government focus on reducing greenhouse gas emissions and curbing alarming levels of traffic congestion, the emergence of autonomous vehicles and increasing investments in smart city projects”.

Investing in smart cities

The term ‘smart city’ has generated various descriptions, but it tends to refer to the use of digital means to collect data that then informs and enhances operational efficiency and improves the quality of public services and citizen welfare.

While smart transportation is one of the more high-profile areas of a smart city's make-up, research has shown that some 90.8% of announced internet of things (IoT) smart city deployments in 2019–20 were associated with areas such as civil infrastructure, communications, construction, retail, travel, education, utilities and transport.

Can FDI be a tool to achieve SDG11?

While the challenges that cities face as a result of the Covid-19 pandemic are well documented, there are also going to be opportunities for investors as these areas all look to rebuild and bounce back in a stronger position than they were in before the virus hit.

Gareth Presch, founder of the World Health Innovation Summit, states that almost 70% of the urban infrastructure that will exist in 2050 is yet to be built, which presents myriad opportunities.

Green buildings, smart transportation and smart city technology are only a few of the sectors that offer opportunities for foreign direct investment (FDI), offering the potential for strong returns and a positive societal impact. Other opportunities could come in so-called '15-minute cities' (urban areas where residents can meet almost all of their needs within a short walk or bicycle ride from their homes), in digital technologies and environmentally focused physical infrastructure, and in low-carbon goods and markets.

“The market in low-carbon goods and services is already creating new jobs in clean tech, renewable energy, urban farming, data, investment and risk management, legal, financial services and digital technologies," says Vaughan at Catalina Consulting. "Many of these roles are mobile and while we are currently witnessing an outflow of workers who want to reside in rural locations, we believe that blended working models will bring workers back to cities, albeit on a part-time basis.”

Making cities "inclusive, safe, resilient and sustainable" is key to ensuring viable development and economic growth. While investors should continue to embrace environmental, social and governance (ESG) criteria in their site-selection processes, cities should also focus on developing an ESG profile and seek to attract investments that demonstrate a commitment to being net zero, increasing the diversity of the city, and improving the lives of its citizens. If the targets of SDG11 are to be achieved by the 2030 deadline, the world's urban areas are going to have to make up for the time lost to the Covid-19 pandemic. Embracing ESG criteria and adapting to greener buildings and smart technology will be key to doing just that.

This is the 11th in Investment Monitor’s SDG Focus series. The other articles can be found here: 

NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. Data, analysis and deep insights on foreign direct investment delivered to you
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy
SUBSCRIBED

THANK YOU