According to the World Economic Forum, cities not only house 60% of the world’s population but are responsible for over 70% of total emissions, meaning that they are at the heart of the green transition.
ESG approaches can guide cities towards a more efficient social and environmental strategy as well as help to reach the 17 United Nations Sustainable Development Goals since they make finding solutions to socio-environmental challenges easier.
But what does ESG mean for cities in a practical sense? And how can its principles be applied?
What is ESG?
ESG stands for environmental, social and governance framework. It refers to a set of standards that revolve around a company or city’s impact on the environment and its transparency around it.
An ESG strategy can be the key to proving that steps are being taken to become more environmentally and socially friendly. This type of framework can provide greater stability for overcoming and addressing today’s socio-environmental challenges.
This is particularly important because, as the latest UN Emissions Gap Report revealed, delays and policy failures mean that members are not on track to meet the Paris Agreement emissions reduction objectives to prevent global temperatures from exceeding 1.5°C.
What does an ESG approach mean for a city?
When a city includes an ESG-based approach, its government will focus on five primary factors:
- Regulations: increased ESG regulation strengthens and speeds up the implementation of companies’ ESG strategies.
- Strategic planning: city governments formulate strategic and overarching master plans for the city, following national objectives and directives.
- Funding and financing: the efficient allocation of financial resources is a key step in an ESG-based approach since it promotes sustainable economic growth and addresses important urban issues.
- Service provision: regional, local and city governments often set the rules for service providers in sectors responsible for emissions.
- Monitoring: city governments have the power to monitor local service delivery, and to make sure that regulatory compliance is present.
Which cities are adopting ESG strategies?
Several cities around the world are already adopting ESG approaches, with the main objective being to reach a more sustainable and efficient society.
Here are a few examples of cities that have adopted ESG-friendly approaches.
One of the main focal points for Dubai is service provision to help the city achieve net-zero targets in a timely manner.
Indeed, the Dubai Electricity and Water Authority (DEWA) announced the EV Green Charger initiative. This entails new charging solutions around the Emirate to not only augment the number of electric vehicles (EVs) in the city but also to procure EVs for the authorities.
By the end of 2022, the number of green chargers reached 350, with over 620 charging points across Dubai. In addition, the number of EVs went up to 15,100, while there now are around 13,500 hybrid vehicles. So far, 91% of this project has been completed, which is on track with the Dubai Carbon Abatement Strategy.
As the European Green Capital in 2019, Oslo is also the most sustainable city on Arcadis’s Sustainable Cities Index 2022.
The Norwegian capital aims to reduce emissions by 95% by 2030, in comparison with 1990 levels. Today, it produces the cleanest and most renewable energy in Europe partly thanks to its investment in hydroelectricity.
When it comes to infrastructure, Oslo also had the first zero-emissions construction site in the world, which only used electric machinery. In addition, electric cars are entitled to cheaper parking in the city and there are various low-emissions zones that can only be accessed for free with hybrid or electric vehicles.
The Big Apple’s regulations to reduce building-related emissions are part of the Climate Mobilisation Act, which has the objective of reducing emissions by 40% by 2030.
These new regulations, called Local Law 97, mostly cover large buildings like skyscrapers and their energy efficiency.
This law focuses on making New York City reach net zero by 2050. Buildings are responsible for about two-thirds of greenhouse gas emissions in the Big Apple, and this is one of the most ambitious plans for reducing emissions in the whole nation.
Under this plan, the majority of buildings over 25,000 square feet will have to undergo energy efficiency renovations and reduce their emissions by 2024, with tighter objectives in 2030. As a consequence, the emissions produced by the city’s largest buildings should be reduced by 40% by 2030 and 80% by 2050.
[Read more: Look to cities, but past their mayors, for new climate solutions]