Planning, measuring, controlling... the new green finance

Elodie Woillez | Renaud de Montaignac | Nicolas Miravalls

#ChangingRoadsNow : episode 4

The entire financial eco-system for countries’ infrastructure is questioning its model, and there is one recurring theme coming up: the Green Finance. Should finance systems be colored, green is definitely the preferred one now. No space for red or yellow, the world is going green at full steam.

Decisions to be made on infrastructure, including stimulus packages for COVID-19 recovery, will have long-lasting impacts, a crucial role for the future of societies and will affect our relationship with nature. Infrastructure finance requires strategic alignment on those objectives, obvious financial means to sustain ambitions, and an actionable portfolio of projects to fulfill development for a country or a region. We can reasonably say we got those 3 almost green in most cases, particularly since the emergency of new policies and the growing awareness on climate change impact or global warming.

There is one thing not yet systematically in place though, for a good execution of this noble plan: execution standards with measurements and controls. Indeed, if it is almost granted in principle to ban polluting energy, or improve public transportation, it is certainly not enough to stand on those statements for the execution stage. Mature development with inclusive and ecologically balanced investment is required, offering a top class competitive advantage to all countries going green ...

Regression is not an option and most developing countries won’t accept to not have the same opportunities as more “advanced” economies. In short, the world will still need a lot of industries, energies and public transport. Financing it “green” will require new habits, new tools and some changes in the current practices.

Those public development policies are complex topics, with a multi-angle approach from economical and societal standpoints. There’s no room for simplicism or caricatural positions in managing them. There is no room neither for a stubborn opposition towards no investment, no industry or no transport at all, leading to guaranteed long term recession and further inequalities.

The answer is certainly in a balanced, responsible and mature finance, stepping back from immediate profit or singularly focused on standard financial parameters, as this has been the case from the past. A finance that will consider multi parameters, beyond political statement, with rational indicators and KPIs, and able to weight and navigate its investments guided by effective impact analysis. 

This finance can now exist, and the emergence of AI and expert systems in many sectors allows to do it smart, low impact and purpose-driven. We can also salute public and private sectors getting their hands more and more into those new systems, combining traditional finance recipes with advanced technological assets and data management. Maybe that's what “green finance” must be: a mix of classic and new tech !

Let's take roads for example, easy to condemn, difficult to replace due to their strategic nature for moving people, food, goods, access to services, smart mobility etc... Also more and more complex to analyze, qualify, maintain, measure, ... no way out of neutral and balanced analytics to make the right choices and avoid blind criticism from civil society.

Beyond trajectory traced by WEF and UNEP in the building circularity report (https://pacecircular.org/sites/default/files/2019-02/WEF_Building_circularity_through_sustainable_procurement_WCEF_2018.pdf), ORIS is available as a service to augment decision process based on total cost of ownership, material usage and circular economy.

For more info : www.oristic.net + Our previous opinion pieces for reference...

Sustainable finance in road construction: the imperious need of measuring impact

Accelerating economic recovery while transforming road construction

The urgent need for a governance transformation in road public investments