Managing infrastructure assets for ESG and sustainability

In order to address the future infrastructure needs we need to understand how economies will flex and change to become more sustainable. In response to the challenge economist Kate Raworth sets out her vison for the future of economics as a ‘donut’ or ‘donut economics’, acknowledging the planetary limits that society must exist within referred to as the ‘ecological ceiling’.

This limit is broken down into nine ‘planetary boundaries’ beyond which Earth’s environmental systems will reach tipping point and become not only unsustainable but unliveable for future generations. Having set the upper limit, the baseline societal needs are represented as the ‘hole’ or ‘core’ of the donut below which basic needs are not met. This represents the essential minimum requirements for society. For example, access to clean water and energy should be a pre-requisite, as should education and the opportunity to partake in an equitable economy. 

When applying this concept specifically for core infrastructure requirements this can be summarised and aligned with the relevant UN Sustainability Development Goals (SDGs):

As per the UN SDGs, it is important to address the socio-economic targets and ensure adequate investment is provided and accelerated for parts of the world where access to clean water and energy currently do not exist. The responsibility of other societies will be to recognise this need, where increased CO2 emissions and raw materials from the earth will be needed to achieve this minimum level of infrastructure. Not ideal in terms of environmental impact.

This is where the concept of ‘offsetting’ becomes powerful if applied well. Places where base infrastructure is the standard will need to reduce the impact of the systems that exist already and those planned for the future. For example, societies with access to clean water should reduce any ecological impact of wastewater and encourage responsible use of water. In Ireland the urban and rural divide is a good example where different levels of energy or transport infrastructure is needed across the island; a system approach would allow balancing of environmental impacts across the new and existing infrastructure. 

The key change in mindset is once this baseline is established, infrastructure assets are used and maintained within an ‘ecological limit’. This is the limit beyond which emissions, pollution and other environmental impacts become unsustainable. By considering the asset lifecycle at all stages and using methodologies such as circular economy principles, for example reuse/repurpose policies for materials, we can start managing infrastructure within this band of thresholds and move towards ‘balancing and thriving’ rather than constant ‘growth and expansion’. 

So how do we even begin to change and transition? Well, we start where we are and use the knowledge we already have to make the first of many incremental changes. Asset management practices are well placed to guide the whole-lifecycle approach that is needed, and the circular economy principles start to break the problem down into areas of influence such as designing for the end in mind.

The goal is to create an infrastructure system that continues to be sustainable through the build phases right into everyday operations. ESG is a hot topic at the moment with many sectors looking for guidance on how to design and implement ESG strategies and measures.

The National Delivery Plan is ambitious and appropriately so. The eight priorities outlined here will direct efforts towards achieving meaningful change where targets will be set to ‘balance out and offset’ rather than solely relying on profit and growth as the measure of a successful society. The KPMG Asset Management ESG Model serves a reference for all infrastructure sectors to begin making this transition.