Financing Resilient and Sustainable Infrastructure

At the Natural Capital Symposium, Goal 17 partners World Wildlife Fund (WWF) and Guggenheim Partners explored how to finance more resilient and sustainable infrastructure projects across the world.

The challenge – and the opportunity – is enormous. As Ryan Bartlett of WWF pointed out, 75 percent of the infrastructure that will be built between now and 2050 does not exist today. Of those future projects, it is estimated that 25 million kilometers of new roads will be built – enough to circle the Earth 600 times.

Furthermore, only a very small portion of the infrastructure assets already in use were designed and built to be resilient to the extreme changes in weather triggered by climate change.

In order to design, build, and operate infrastructure projects able to withstand the stark realities of climate change, add value to the planet’s natural capital, and provide for sustained social and economic development we must completely rethink how we approach infrastructure development.

Specifically, we cannot afford to look at infrastructure stock as “one off” projects built in isolation not just from each other but also from the social and environmental ecosystems in which they reside. Instead, infrastructure must be looked at as part of a broader network of assets that provide lasting value to people and the communities in which they live – and do so in a way that allows them to withstand a rapidly changing and unpredictable climate.

Taking a broader, longer-term approach to infrastructure will serve to “de-risk” projects, thereby unlocking their access to private sector capital. For investors looking to integrate sustainability considerations in their investment process, they not only need to know that a project meets a clear human, social, and economic need but will do so over decades.

Beyond those considerations, investors have legal responsibilities to generate a return on the investment to meet their long-term obligations to their fiduciaries and sustainable, resilient infrastructure projects are uniquely able to do that.

Having a set of clear and consistent measurement tools is critical to the investment community being able to understand the risks and opportunities in infrastructure projects so that the risks are mitigated and the opportunities accelerated.

As Ning Liu of Guggenheim Partners said, “You can’t manage what you can’t measure.”

It is the mindset of measurement that prompted Guggenheim Partners and WWF to commission State of Practice, a paper written by the Stanford Global Projects Center that evaluated thirteen frameworks that assess the sustainability of infrastructure projects. A key finding from State of Practice is that there is not a single framework able to comprehensively assess infrastructure projects on a global basis. While a single framework may never emerge, there likely will be a consolidation of frameworks that will bring greater standardization to how infrastructure projects are assessed against sustainability and resilience considerations.

The next phase in the collaboration between Guggenheim Partners and WWF is to apply specific infrastructure projects to a number of the assessment frameworks.

The insights from that work will provide valuable insights to how the 75 percent of infrastructure projects yet to be built can be built in a way that provide value to society, generate a strong rate of return for investors, and withstand the challenges of a rapidly-changing climate.

Ning Liu concluded the discussion on a very hopeful note, “I hope one day, every dollar in your 401k, your insurance payments, your bank savings will fund projects that are universally recognized as sustainable.”