Modern Infrastructure Investment is Unsustainable Amanda Li, co-founder and COO of Banyan Infrastructure explores the growing economic case for green infrastructure projects and the critical need to streamline and accelerate investment therein Written by: Amanda Li, co-founder and COO, Banyan Infrastructure
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e all have an important role in the battle to fight climate change. However, certain carbon heavy sectors, such as the built world, will need to work harder than others to address the pressing challenge - this also creates the area for enormous opportunity. Currently, the OECD (Organization for Economic Co-operation and Development) estimates that 60 percent of global emissions are from infrastructure[1]. As such, it’s clear that future developments will have a huge impact on our ability to meet the 2050 Net Zero targets agreed to in the Paris Agreement. Furthermore, research by McKinsey has shown that for the world to achieve net-zero emissions in 2050, $3.5 trillion more would need to be invested into low-emissions capital stock each year than it is now [2].
BUILDING FOR CHANGE The need for change is immediate, and the growing economic case for green infrastructure projects is certainly accelerating the appetite for corporate investment. Fossil fuel-based energy 8 | North America Outlook issue 10
has become less appealing due to factors such as geopolitical events, policies that favor green, and volatile markets - whereas green alternatives, such as solar energy, are becoming more highly sought after. However, to take advantage of these trends, we must first create capacity to accelerate investment into this market. Today, investing in sustainable infrastructure projects remains a largely manual and inefficient set of processes, with limited standards of technology to leverage. Despite the advances in the availability of asset and financial data, many companies are slow to deploy investment for these projects with the same outdated techniques used for the past many decades. Moreover, while sustainable infrastructure projects have broadly become smaller, cheaper, and more numerous, the complexity of infrastructure lending has hardly changed.
RISK ASSESSMENT Now, with the world poised for an economic downturn, there is
an added layer of complexity for businesses to navigate. Although the interest to invest in sustainable infrastructure remains strong, there is a natural increase in risk assessment for investment decisions and without access to the full scope of data required to make an informed decision, businesses may well be less likely to invest at the needed scale or speed. Furthermore, where the process remains cumbersome and complicated, businesses stand to lose out on financial advantages that could have been gained. The World Economic Forum identified new sustainable buildings as a $24.7 trillion investment opportunity by 2030, in emerging markets alone [3].
AN AVOIDABLE DISASTER A slowdown in sustainable infrastructure investment at this point would be detrimental to the targets set for net-zero emissions. Ultimately, it could well end up being a fatal blow to the global community’s pursuit of broader environmental goals, including the IPCC’s universally
