The private sector’s role in urban development
The recently released World Bank book, “Private Cities, Outstanding Examples from Developing Countries”, noted the significant contributions that private sector actors can potentially make in urban development. Yet, it also noted the potential gaps that might arise from private developments. These might range from exclusion of certain groups, lack of transparency throughout development processes, or unreliable environmental commitments – many of which are mentioned as examples of potential corporate accountability gaps in World Benchmarking Alliance’s Corporate Accountability White Paper.
Governments, and particularly local governments, will remain responsible for driving the implementation of sustainable development goals at the municipal level. Yet given the rapid urbanisation and growth that is expected to occur in the relatively underdeveloped regions of East Asia, South Asia, and Africa over the next decades and the pressures it is expected to bring to existing urban infrastructures and services in these regions, it is more likely than not that businesses will also need to take part in helping cities in these regions achieve their sustainable development commitments. In contrast, regions such as Europe, North America, and some countries in East Asia – many of which may be considered advanced economies – are experiencing a rapid decline in natural population growth rates. The merging of this trend with other parallel global trends, such as digitalising economy and climate change, means that cities in these regions will need to plan not just for a more sustainable urban future but also a more inclusive and “senior” one. The theme of this year’s World Cities Day, “Financing Sustainable Urban Future for All”, is a reminder of how infrastructure is an enormous challenge for urbanisation and the massive demographic shifts that are happening in cities today and that the current infrastructure financing gap may impair growth and our aspirations for a sustainable, inclusive and resilient urban environment, particularly in rapidly growing regions in developing countries. Many of the challenges hampering our efforts in creating more sustainable urban environments are substantial and can only be addressed via multi-stakeholder efforts, which necessitates communities and businesses to be involved together with government actors.
However, while cities in advanced economies do not face the same level of urbanisation as developing countries do and typically enjoy better access to urban infrastructures and services than their developing country counterparts, the IMF estimated in 2015 that advanced economies still possess up to 13 per cent public-investment efficiency gap, which is key in enabling delivery of public services and connecting citizens and firms to economic opportunities. Considering the sizable gaps and challenges that remain in cities in Europe, North America, and other advanced economies, businesses will still have an important role to play in helping cities achieve their sustainable development commitments in advanced economies. Aside from region-specific trends, some issues continue to persist and affect advanced and emerging economies. Housing, for example, remains an issue globally, with an estimated affordable housing shortfall for 3 billion people by 2030. Considering the urgency and scale of housing issues across the world, as well as the substantial amount of housing units that the private sector contributes to the global housing stock, it is likely that the role of private sector actors will likewise be crucial in addressing this issue, together with other development actors.
Translating global agendas into local action
Global agendas have often recognised the importance of cities, local governments, and private actors in their implementation. However, the manner in which these national-level commitments can be translated to actionable policies at the local level is often a lot less defined.
This lack of actionable policies is even more apparent for private sector actors. There are project- and sector-specific standards that are applicable for individual projects within the urban sub-sectors, such as for real estate development, buildings, water utilities, and urban mobility, for instance. However, considering the complexity of urban environments, it is often the case that implementation of standards across these urban sub-sectors would overlap or even contradict one another, be it due to conflicting standards and interests of different development actors or asynchronous implementation of projects among other things. Therefore, despite the availability of sector-specific standards for individual urban sub-sectors, there is a need for policy-level, mesoscale standards that establish common understanding, principles and expectations for companies engaged in urban development in what would constitute sustainable urban developments to help align businesses’ contributions towards cities’ urban development goals.
The World Benchmarking Alliance’s (WBA) Urban Benchmark methodology seeks to address this gap by introducing a set of standards against which companies can be consistently assessed for their practices across different aspects of sustainability. Given the lack of clarity on the specific roles and accountabilities of private actors in urban development, WBA’s Urban Benchmark exercise is expected to help identify the common ways in which companies have been contributing to sustainable urban environments. This would, in turn, help inform the establishment of a baseline on what companies can, and therefore, ought to contribute to make cities more sustainable, inclusive, healthy and resilient. The gaps that were identified from the benchmarking exercise could be used to help companies, investors, and communities alike identify potential areas for improvement – essentially providing companies with a roadmap to enhance their practices. Subsequent urban benchmarking exercises can then monitor and evaluate whether companies are maintaining their commitments to better the urban environment, as well as whether they are making progress in key areas. Broadly speaking, these measurement areas may be classified into environmental indicators and social indicators and is conceptually grounded on the ecosystem approach that frameworks such as the Planetary Boundaries and Doughnut Economics as well as the WBA’s Seven Systems of Transformation adopt. These frameworks essentially see the urban sector as part of a larger system of industries where changes are critical for the SDGs to be achieved and that sustainable urban development may only be attained if we succeed in delivering our commitments for cities within the planet’s environmental threshold, while simultaneously meeting the foundational socio-economic needs of its inhabitants.
WBA’s Urban Benchmark Socialisation in APUF8
The World Benchmarking Alliance has recently socialised its second iteration of draft methodology in a parallel session titled “Private Actors, Partnerships, Accountability for Urban Development” on the 25th October 2023, in the Asia-Pacific Urban Forum 8, held in Suwon City, the Republic of Korea. The session was co-organised with the Korea Land and Housing Corporation (KLH), the United Nations Office for Disaster Risk Reduction (UNDRR), and the Tokyo Metropolitan Government (TMG). This session was held as part of APUF8’s Urban Finance discussion track, in alignment with this year’s. Overall, the session was attended by WBA allies from human rights groups in the Republic of Korea, industry associations, several businesses, and Asia-Pacific national and local government representatives
A discussion on the experiences of KLH’s experiences in delivering slum upgrading projects as a third-party development actor in Pakistan and UNDRR’s works in encouraging private sector participation in disaster risk reduction formed the first part of the session. This was followed by a discussion on the roles of monitoring and evaluation frameworks to ensure public sector progress towards sustainable urban development, building on the case of the TMG. The WBA Urban team concluded by highlighting the significant influence of companies in shaping today’s urban environment and the necessity of aligning public and private sector goals so that the two actors’ urban development goals are better aligned. The conversation also touched on the need to establish a baseline on what private actors’ roles ought to be in shaping sustainable urban environments.
Being the last methodology to be released among the other benchmarks in WBA’s Seven Systems of Transformation, this socialization of WBA’s Urban Methodology represents a significant milestone for WBA in completing its broader mission of expediting corporate contributions to the SDGs across the entire business ecosystem.