Rapid urbanization demands investment in sustainable development of cities, meeting told

Geneva, 14 October 2014 (UNCTAD press release) – Investing in the Future: Sustainable Cities Round Table

UNCTAD and Jeffrey Sachs form new partnership to explore solutions.

Investment is key to making fast-growing cities liveable, inclusive, and sustainable, city and business leaders heard at a roundtable organized by UNCTAD and the United Nations Sustainable Development Solutions Network (UN-SDSN) as part of the UNCTAD World Investment Forum 2014 in Geneva.
Moderated by Jeffrey Sachs, Director of the UN-SDSN and a globally renowned expert on economic development and the fight against poverty, the event marked a new commitment by UNCTAD to support sustainable development at the city level. UNCTAD and the UN-SDSN have now formed a partnership to identify and share good practices of sustainable development in cities.

The roundtable, held on 14 October, considered challenges cities face, how cities can attract foreign investment, and the role foreign investment can play in sustainable development.

UNCTAD Deputy Secretary-General Petko Draganov said that just as it has been said that “all politics is local,” economic development starts at the local level, and the importance of the role of mayors and other city leaders is projected to increase even further. He said that more people now live in cities than in rural areas, and it is estimated that by the year 2050, cities will absorb another three billion people so that 70 per cent of the global population will live in urban areas. He added that, while cities generate 80 per cent of global GDP, they also generate the bulk of global carbon emissions.

Ali Masoud Al-Sunaidy, Minister of Commerce and Industry of Oman, described how using professionally managed funds can be superior to direct state investment. He said that cities must improve transparency, noting that “the more transparent you become, the more people are responsive to your needs”. To attract investment and for investment to succeed, city leaders agreed that cities need to be professionally managed and transparent.

Investment protection or guarantees are also important. “Investment generally is a coward—it only goes to places where its safety and security is guaranteed,” Hanan Gundadow Abdul-Rahman, the Metropolitan Chief Executive of Tamale, Ghana, said.
Public administrations require adequate executive capacity for public private partnerships, Jordi Joly i Lena, chief of Economy and Finance of the Barcelona City Council, said. He and other panellists said that the public sector needs to behave more like the private sector.

The roundtable also featured reactions and comments from senior executives of leading international firms such as Siemens, Europe’s biggest engineering firm, and Ericsson, the world’s biggest mobile telecoms equipment maker. “Cities with a long term plan always do better, even if they don’t follow the plan,” Martin Powell, Head of Urban Development at Siemens and a former environment advisor to London mayor Boris Johnson, said. He cited recent studies which projected a substantial, positive economic and environmental impact from basic automation and some intelligence in systems, while cautioning that unless cities update their grids, renewable energy investments will be wasted.

Elaine Weidman-Grunewald, Vice President of Sustainability and Corporate Responsibility for Ericsson, echoed Powell’s observations, and said that there is an enormous opportunity to leverage existing infrastructure investments. She said that cities need to optimize the whole value chain of electricity delivery – more than 70% of electricity is lost before it ever reaches end users due to inefficiencies in the electricity value chain.  Ms. Weidman-Grunewald and other panellists spoke about how many cities lack capacity and resources.

Gabriela Reyes Andrés, the Director of Sustainable Use of Energy, of the Ministry of Energy of Mexico, reported that Mexico has more than 2,000 municipalities, more than half of which lack resources and staff to carry out in-depth energy analyses.
Ms. Reyes Andrés described a pilot project supported by the World Bank to support energy efficiency in cities by carrying out a comprehensive energy diagnosis in each of the states of Mexico, which can assist mayors and help mainstream sustainable development into municipal policies. Panellists agreed that city leaders have an important role in each of the three main components of sustainable development—social and economic development and environmental protection.

In discussing public health and the environment, the acting head of the Durban Investment Promotion Authority, Russell Curtis, said: “We at a city level have the greatest vested interest, because we have to live and breathe this stuff every day. We can’t get on a plane and get to another state or another city.”

Business leaders said that economic development and environmental protection can go together, as cities that have protected and enhanced their green spaces and access to green spaces have also done better economically than cities that have not or that have eroded their green spaces. Noting that more than 60 percent of the total area that is expected to be urban in 2030 still remains to
be built, Ms. Weidman-Grunewald said: “This presents a huge opportunity to actually get urbanization right.”

Mr. Sachs said the financial system “is not working in a proper way right now because it’s not delivering the results that we need; it’s not delivering sustainable development. So we have to identify the flaws and fix it, and UNCTAD’s World Investment Report is a great start for that right now”.

The round table was held in partnership with the World Alliance of Cities Against Poverty, a network of more than 900 cities working together to confront development challenges collectively.