Businesses worldwide have yet to discover the magnitude of the business case for sustainable cities. And there are still lots of low hanging fruits to be picked.  

Jakarta is slowly sinking, large parts of India are choking in smog, energy dissipates from buildings, the transition to electric vehicles is dawdling despite the right incentives, construction needs a circular revolution. And so the list goes on…

But there is only one way for cities: sustainable development.

As we know, urbanization is unstoppable. Populations will grow and jobs will move from the countryside to cities, making the cities expand dramatically. In fact, one billion people will be added to cities over the next 15 years. To ensure that cities evolve sustainably requires political will and collaboration on a scale that makes the moon-landing in 1969 seem like a walk in the park.

As cities emit 70% of all carbon, the great responsibility for slowing climate change lies largely on their shoulders. In this issue of The Sustainian, Mark Watts, the director of the largest network for sustainable cities, C40, gives salience to the challenges ahead. 2020 marks the year when carbon emissions must commence a steep decline in order for the world to remain within the safe limits of greenhouse gas emissions. However, current C40 estimates predict a 35% rise in emissions by 2020, disregarding the 5% limit needed to avoid dangerous climate change.

Now you’ve heard the bad news, so let’s take a peek at the good news.

Building sustainable cities may represent the most significant business opportunity of the twenty-first century. As businesses avidly seek new markets, ventures and opportunities, the case of sustainable cities should become evident. All businesses, regardless of size or sector, could have their share of the opportunities offered by sustainable urban development.

We have dedicated this issue of The Sustainian to stress the true magnitude of these markets, and highlight new forms of collaboration which could lead to radical innovation. Cities are melting pots for breakthrough innovation and co-creation as they involve a multitude of partners and users.

A US$ 3.7 trillion market

The Better Business, Better World reports provide the hard numbers of sustainable city opportunities. A staggering US$ 3.7 trillion could be unlocked each year if businesses pursued urban development priorities outlined in the Sustainable Development Goals.

A few examples from the report should underpin this argument.

  • Affordable, sustainable housing is a market worth anywhere between US$ 650-1,080 billion. But more than that it is an opportunity to build more resilient, inclusive societies, and lift millions out of slums. We can quickly debunk the myth that there is no business case for affordable housing. A report from 2014 by McKinsey has listed the 10 myths of affordable housing, and their arguments easily wipe out the notion that it is not an attractive market.
  • Energy efficiency upgrades in buildings are worth US$ 555-770 billion. As there will be no sustainable transition without energy efficiency, this should be a top priority. Anyway, who can bare to see energy – and money – dissipate out the window?
  • The market for sustainable mobility solutions (which includes public transport, circular models in the automotive industry, manufacturing of electric and hybrid vehicles, car sharing etc.) is estimated at US$ 2 trillion a year. It is hard to perceive the transition to green mobility as hampering business growth.

In this issue we also took a look at the nine cities facing the most significant risks, and illustrate how these risks can be turned into business opportunities.

Still lots of low hanging fruits – data should harvest them

The myth that the low-hanging fruits of sustainable cities have been picked must also be debunked. For instance, energy efficiency is an opportunity which is gravely neglected, and where immense savings could be made instantly and relatively easily. But, to fully harvest those opportunities, we need better data to “act on facts”. The truth is that although the sufficient data increasingly exists, it can be difficult to retrieve.

As a KPMG report from June, 2018 shows: “The challenge is the ability to gather, manage and manipulate data safely and effectively to produce actionable insights. This is no easy task when many councils have complex sets of legacy IT systems and gaps in the specialist data science and technical skills needed to unlock the value from this unique asset.” The report emphasizes that unlocking data opportunities relies on leadership and culture. Businesses must adopt a trial and error approach and focus on engaging  the whole organization – not just the analytics or IT department.

Involving people, getting the right data, and making new multi-centered partnerships is what could lead to harvesting many low hanging fruits in terms of economic gains and benefits for the planet.

But the real users of cities must be involved too – citizens. They are in a way the experts, and could reveal the crucial insights to enhance the user experience greatly. When cyclists in Copenhagen were asked to upload their use of the city through smartphones and tablets, more than 10,000 people participated, which is extremely valuable data for city authorities and companies.

There could, as a recent McKinsey report emphasizes, be huge opportunities in this kind of participatory data extraction, not least in Asian megacities, with their young populations of digital natives and big urban problems to solve. The McKinsey report also notes that we’ve only seen a preview of what technology can do.

Involving people, getting the right data, and making new multi-centered partnerships is what could lead to harvesting many low hanging fruits in terms of economic gains and benefits for the planet. And here cities are the obvious connectors, conveners, and test facilities that can show that there is a way for synergies between people, planet and profit.