Crossing the Bridge to Sustainable Infrastructure Investing | Mercer

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Crossing the Bridge to Sustainable Infrastructure Investing
Calendar09 May 2017

Mercer and the Inter-American Development Bank (IDB) and Mercer, a leading global consulting firm, issued Crossing the Bridge to Sustainable Infrastructure Investing, a report that focuses on the imperative for sustainable infrastructure (SI) in Latin America and the Caribbean and around the world.

Investment in infrastructure is widely recognized as crucial to promoting economic and social growth through the development of essential services and assets. As the global population grows and urbanizes, the demand for infrastructure grows with it.

Bridging the Divide – A Call to Action

Crossing the Bridge outlines a set of complementary actions needed to move aggressively beyond the status quo, focused on four key stakeholder groups: governments, multilateral development banks (MDBs), institutional investors and infrastructure industry initiatives. The three point call to action includes the following:

1. Convene the Conveners: Existing infrastructure investment industry initiatives should harmonize and standardize their approaches to support an accelerated and consistent approach to sustainable infrastructure investment.

2. Internal Alignment for Success: Governments, MDBs, investors and industry initiatives should explicitly align their organizational strategies to international commitments and structure incentives to deliver on those commitments.

3. External Collaboration for Success: A series of key collaborative interactions must take place between stakeholder groups to optimize links in the infrastructure financing cycle—including more coordinated project planning, clearer due-diligence processes, and investment strategies that consider alignment with countries’ nationally determined contributions (NDCs) under the Paris Climate Agreement.  

The Investor Perspective

Although there has been progress in incorporating environmental, social and governance (ESG) criteria and climate considerations into infrastructure investment at the transaction level, the report concludes that the “top-down” thinking about the transformational change required has not yet translated into the investment path ways that must accompany successful implementation of the Paris Agreement and the SDGs.

Key Findings - Investor Perspectives

Click here for infographic on Key Findings

The Trillion Dollar Challenge

The world needs an additional $2 to $3 trillion in annual infrastructure investment, particularly in developing countries, but not in the infrastructure of the past. Tomorrow’s infrastructure must focus on projects that are sustainable, low-carbon and climate resilient in order to achieve the economic, social and environmental objectives embodied by the Paris Agreement and the Sustainable Development Goals (SDGs).

“Public-private collaboration is key to address the challenges between now and 2030,” noted Amal-Lee Amin, Chief of the IDB’s Climate Change Division. “Sustainable infrastructure is crucial to addressing climate change, improving the economic competitiveness of our countries, and improving the quality of life.”

This report provides a realistic assessment of the significant gap between political commitments globally to sustainable development, and what is happening on the ground in terms of project pipeline availability and current investor mindset on sustainable infrastructure, based on interviews with leading institutional investors.

“The field of sustainable investment has evolved rapidly over the past five years,” noted Jane Ambachtsheer, Mercer Partner, “however, sustainable infrastructure hasn’t been a core focus for many investors. We expect this to change.”

Shared research between Mercer and Inter-American Development Bank (IDB)

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