Towns and cities set a course for a sustainable future Towns and cities set a course for a sustainable future

Urban areas are evolving in ways not seen for centuries. Most of the UK’s cities and towns have declared a climate emergency and many are committed to net zero plans which will fundamentally alter the services they provide to each location’s residents and businesses. 

At the same time trends for living and working are reshaping the idea of urban life. The 15-minute city concept is bringing about a rethink in how to create centres that negate the need to regularly travel large distances and that focus on sustainable living and working. There are big ambitions around major areas such as transport, housing, and energy use.

The question is: how to turn these ambitions into reality? It can be all too easy to get caught up in the latest great idea or technological advance and hope this offers the answer. More important is to take a deep breath and step back to focus on the bigger picture. Key to this is leaving outdated ways of thinking behind. 

The first of these old ideas to be ditched is concentrating on too short a horizon. A great deal of policymaking has historically been predicated on short-term financial settlements. The National Infrastructure Commission has pointed to the need for a 50-year funding cycle; recent initiatives such as the City Regional Sustainable Transport Settlements are based on more medium-term strategies.

Second, urban areas cannot be viewed in isolation. Planning should take in the surrounding locations, including neighbouring cities. Only by encompassing the entire geographic and economic ecosystem can a realistic vision be created and a viable long-term strategy be set.

Third is siloed thinking. Planning for key service areas such as transport, schools, hospitals and education can no longer take place solely within discrete departments. A critical overview of all policy areas and their inter-dependences can ensure civic leaders set a clear destination for overarching transformation to a sustainable environment which fits the needs of all the city’s users.

Fourth is focusing on outcomes rather than outputs. Even if outcomes are seen as important in project aims, delivery and payment are usually based on outputs. This misalignment can lead, for example, to infrastructure which looks great and is “ribbon-cuttable” but which fails to fulfil the sustainability outcomes which were intended.

KPMG helps clients transform their thinking and planning to overcome these issues by adopting a system of systems approach. This helps makes sense of the complexities involved to come up with plans for distinct delivery areas in a way in which creates optimal integrated benefits across their service provision in a way fit for a city planning for transition to net zero carbon.

Many cities that are planning for a sustainable transition are working on the resilience of their existing infrastructure, improving its performance, capacity, and yield. KPMG has worked for the Centre for Digital Built Britain to look at the economic value of enhanced asset data and digital twins, and has produced a report that emphasises the significant economic benefits that can be achieved through improved data in asset management.

The integration of transport modes plays an important role. Mobility as a Service (MaaS) considers not just buses, trains and trams but also e-scooters, hire cars and taxis. KPMG has worked with two of England’s four future transport zones on their MaaS schemes, and advised on multiple schemes around the globe.

Technology is key to decarbonisation of transport, supporting the transition to electric vehicles and zero-emission buses. Here KPMG helped secured funding for a Local Government’s new zero-emission bus fleet, is advising on the business case for investment in a large portfolio of ultra-rapid EV charging hubs, and delivered multiple research projects for a client’s Mission Zero Transport Industry Advisory Group, and Bus Decarbonisation Taskforce.

A great deal of capital is looking for investment that fits environmental, social and governance (ESG) criteria and local authorities are keen to tap into this private sector investment. Successful outcomes depend on creating the right commercial structures with the right balance. Insufficient public funding deters private finance from entering the market, while too much public funding can crowd out private finance. 

New forms of collaboration are needed to encourage the private investment in resources and finance to deliver the transformational longer-term change required. This requires forms of co-investment in which businesses have more than a financial stake in transformative projects: local leaders should be looking for businesses to deliver social value and sustainability benefits as well. 

Adoption of an outcomes-based mindset is crucial, and realigning incentives can help shift the focus. An approach that balances risks and rewards over longer periods with a new type of monitoring and evaluation can be set at the start – an approach which is based on outcomes that each member of the partnership should share and commit to.

Once the ambition is crystalised and milestones set, actions follow. Designing delivery programmes with rigour and strong governance can help local authorities see where the quick wins are to get off to an encouraging start. But they will also be able to understand what trade-offs will be required, such as setting an annual carbon budget as part of the trajectory towards net zero. 

Ideas of sustainability need to be integrated with operational plans. This is at the heart of the work KPMG has done with a transport client. We are helping to design the new governance, skills, data, reporting, contracting and procurement models for net zero, building them into the business-as-usual processes, and embedding sustainability and net zero into construction projects from the outset.

Sustainability performance needs to be embedded into job descriptions and its assessment given the same importance as financial performance. It has to be part of the skills training and inherent in normal business processes. This brings about the changes in mindset needed to introduce new technologies and how they should be managed – a prerequisite for the ongoing evolution of the sustainable cities of tomorrow.

A thriving, well-functioning city operating sustainably is good for government, for residents, and for business. Finding new ways for the public and private sector to work together can create cities that fit properly into their region and are better positioned to deliver healthier and more balanced environments for all. Achieving this takes a clear head and a longer-term view than civic leaders are used to. But the rewards for getting this transformation right will echo down the generations.

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