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In March, Panasonic announced it would pay employees in China a premium to compensate for high levels of PM2.5 – tiny particles that can affect the heart and lungs – in its urban areas. But if the Japanese multinational’s decision demonstrates the costs for polluted cities, municipal leaders are increasingly convinced of the economic benefits of clean, green urban environments – and are investing accordingly.

Some of these investments pay back in ways that can be measured. Often the return comes in the form of lower bills as a result of installing LEDs (light-emitting diodes) in street lamps or refitting buildings with more energy-efficient heating and cooling systems.

“There may be capital investment but nonetheless these things usually do pay for themselves,” says Rohit Aggarwala, of the charitable Bloomberg Philanthropies’ environment team. In addition, investments in public transport, green buildings and energy efficiency create jobs for contractors, equipment installers, energy auditors and others.

This became evident when Mr Aggarwala was leading the development of PlaNYC, New York City’s sustainability programme, launched under the administration of Michael Bloomberg. When designing the Greener, Greater Buildings Plan, members of the real estate sector voiced concerns about a lack of specialised auditors to meet the demand for energy audits.

As a result, the team built job training into the plan. “The unions loved the idea that we were going to provide training,” he says. “And professionals such as registered architects, engineers and building trades saw huge job opportunities.”

However, perhaps the most compelling argument for cities to invest in environmental sustainability is that urban areas with plenty of green spaces and clean air tend to attract talent. “A lot of the league tables of the greenest cities correlate quite well with economically successful cities,” says Peter Madden, chief executive of Future Cities Catapult, an urban innovation centre launched by the UK’s Technology Strategy Board.

“In the UK, the cities that win the green awards include Bristol, Edinburgh and Brighton and they’re also economically vibrant and outperforming the national average,” he says.

Less understood is the nature of the relationship between economic success and urban sustainability.

“The causation may be that wealthy and successful cities spend more on environmental protection,” adds Mr Madden. More work may need to be done to quantify the links between green, liveable cities and their economic success. However, some are convinced of the connection.

“As cities compete for jobs and economic growth, they have to think about making themselves walkable, liveable places,” says Jennifer Crozier, whose team leads IBM’s Smarter Cities Challenge, which offers pro bono advice on everything from clean water to efficient transport.

“There’s a giant grab for millennial talent and we know that they want to live in cities that are sustainable,” she adds. The question for policy makers is how to achieve city sustainability, particularly when this may involve the participation of numerous municipal departments.

Mr Madden points to the institutional barriers. “Our cities are effectively 19th-century institutions with 20th-century pots of money thinking about 21st-century problems,” he says.

“This means that for new issues such as resilience and adaptation to climate change, they haven’t necessarily got their policies and budgets aligned.” But while city governments may struggle to break down silos, they often have one big advantage over states or countries when it comes to working across different agencies: strong mayors.

“When I was sustainability director for New York City, I’d sometimes remark that the real sustainability director was in fact Mayor Bloomberg, because he was in charge of bringing it all together,” says Mr Aggarwala.

Another advantage cities have is that their residents tend to be keen to participate in any initiatives that improve the places in which they live, as seen in the rise in citizen-designed apps and grassroots environmental initiatives, whether they are restoring local parks or helping residents report water leaks.

This energy and innovation is something cities can tap into. “It’s cheaper R&D,” says Peter Hirshberg, chairman of the Re:imagine Group advisory. “And because they’re engaged, they’re going to take more ownership.” In designing its “Vancouver Green Capital” branding effort, the Canadian city brought in business development experts. And while the initiative is a way of tackling environmental challenges such as carbon emissions and waste and of becoming “greenest city in the world by 2020”, Vancouver is also using the brand to market the city overseas.

However, Mr Madden says that green city credentials are increasingly more than a branding advantage. “It’s coming to be seen as a necessary part of city leadership,” he says. “To be seen as a top-performing, world-class city, this is one of the elements you’re being expected to demonstrate.”


Chicago: Co-ordinated effort by diverse agencies helps city realise its ambitions

The monthly meeting on Sustainable Chicago 2015, the city’s environmental sustainability plan, is usually packed.

Among those attending are officials from the mayor’s office, the department of fleet and facilities management, the city’s schools, the department of transport, the housing authority and the department of water management.

The gathering reflects Chicago’s recognition that creating a resilient, healthy and environmentally sustainable city requires the participation of a diverse set of organisations.

“We’re trying to create the most liveable, the most competitive and the most sustainable city,” says Karen Weigert, Chicago’s chief sustainability officer. “And we see those as integrated opportunities.”

The city’s priorities demonstrate why a co-ordinated approach is necessary. The Sustainable Chicago 2015 plan has prioritised seven areas: economic development and job creation, energy efficiency and clean energy, transport, water and wastewater, green spaces and healthy food, waste management and recycling, and combating climate change.

Investments include upgrades to the bus and rail transit system, the water system, and the energy infrastructure.

Energy-saving retrofits are planned for businesses, homes and government buildings, as well as investments in renewable energy. On energy, the goal is to improve the city’s efficiency by 5 per cent and to generate an additional 20 megawatts of renewable energy.

There are savings to be made in both costs and emissions. Energy efficiency investments of about $225m in public assets such as buildings – made through the Chicago Infrastructure Trust – could lead to savings for the city of more than $20m a year, while carbon dioxide emissions would be cut by the equivalent of taking 30,000 cars a year off the road.

Reducing environmental impact is a focus for the plan, but it also aims to link sustainability to economic success, estimating the generation of more than $8bn in public and private investments over the next 10 years.

Projects under way will eventually support about 40,000 jobs. The city also plans to use its strengths in manufacturing, research and technology to expand the number of clean technology jobs.

Ms Weigert points to the decision of Method, a manufacturer of cleaning products, to move to Chicago. “It’s an example of how sustainability and economics can come together in manufacturing,” she says.

Copyright The Financial Times Limited 2017. All rights reserved.
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