The world requires about $3 trillion yearly over the next 10 years to close infrastructure gaps especially in developing countries where deficits are particularly staggering, the World Bank Group has said.
To get infrastructure finance right, the Bank through the FAST-Infra, a Climate Policy Initiative (CPI), is pushing for collective action to mobilize private finance and de-risk investments in sustainable infrastructure.
The World Bank in one of its blogs last week, FAST-Infra: Promoting sustainable growth through common standards on sustainability, said: “Public budgets alone remain insufficient to close a sustainable infrastructure investment gap estimated to be in excess of $3 trillion a year over the next 10 years, particularly in developing countries where infrastructure deficits are particularly staggering.”
The report noted that while investors see significant upside opportunity presented by sustainable and low-carbon investments, the supply of bankable infrastructure projects that are genuinely sustainable remains inadequate and insufficient to achieve the scale necessary to truly move the needle on this issue.
Specifically, it said that much of the infrastructure built in the last century, which people need to thrive: energy, transportation, sanitation, hospitals, and schools, have been significantly carbon intensive.
As a result, the blog authored by Towfiqua and Carmel Lev, said the world needs much more infrastructure in the coming years as the population expands, urbanization increases, and the ambitions of people to improve their livelihoods grow.
The report therefore warned that “In the face of an intensifying climate crisis, unless we quickly develop ways to deliver a new generation of infrastructure that is sustainable, it will be impossible to meet our national and global decarbonization goals in line with the Sustainable Development Goals SDGs) and Paris Agreement commitments.”
Recognizing the need to crowd-in more private investment into sustainable infrastructure, the Global Infrastructure Facility (GIF), collaborated with the CPI, HSBC, the International Finance Corporation (IFC), and the Organization for Economic Co-operation and Development (OECD) on a joint venture called FAST-Infra—the ‘Finance to Accelerate the Sustainable Transition-Infrastructure initiative.
Developed in early 2020 under the auspices of French President Emmanuel Macron’s One Planet Lab, FAST-Infra is a public-private initiative bringing more than 50 organizations together to push for collective action to mobilize private finance and de-risk investments in sustainable infrastructure in developing countries.
As part of this initiative, GIF co-chairs a working group with Macquarie Green Investment Group on a key component of FAST-Infra—the creation of a consistent, globally applicable labelling system for sustainable infrastructure assets.
In the face of an intensifying climate crisis, unless we quickly develop ways to deliver a new generation of infrastructure that is sustainable, it will be impossible to meet our national and global decarbonization goals in line with the Sustainable Development Goals SDGs) and Paris Agreement commitments.
The Sustainable Infrastructure Label (SI Label) is meant to add value across the infrastructure lifecycle—serving as a tool to inform upstream project planning, prioritization, and design.
It will also send clear market signals further downstream post-construction to help investors align their decisions with environmental, social, resiliency, and governance needs.
The label certification aims to increase financing potential and motivate governments to design more projects with sustainability criteria at their core—encouraging developers to maintain high environmental, social, and resiliency standards at all stages of the infrastructure lifecycle.
To this end, FAST-Infra opened the SI Label Framework and Criteria for public consultation through August 31, 2021. It said the inputs from this consultation will help the promoters to further refine the SI Label Framework and build momentum ahead of COP26 this November.
They have also issued a call for Expressions of Interest through August 31, 2021, to provide support for the SI Label’s Secretariat and Data Reporting Function—key components that will allow for the longevity of this label for COP26 and beyond.
The report concluded that creating a sustainable future cannot be done alone, as this will require the joint action of stakeholders across the public and private sectors. “Initiatives like FAST-Infra demonstrate the power of partnerships and offer a viable pathway to close the infrastructure investment gap and promote sustainable, inclusive growth.”