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Infrastructure is the cornerstone of future economic development. Assets such as transportation systems, power-generation facilities, sanitation and fibre networks are all key in order for society to function efficiently and support the development of energy transition, urban mobility and digitalisation of services. Hence, it is one of the main pillars of the UN’s Sustainable Development Goals. Goal number 9 states, “to build resilient infrastructure, promote inclusive and sustainable industrialisation”.
The UN has also set some specific infrastructure development targets in order to develop quality, reliable, sustainable and resilient infrastructure and to support economic development and human well-being, with a focus on affordable and equitable access for all. One of the targets, is that by 2030, all countries should upgrade infrastructure across industries to make them sustainable by maximising efficiency and adopting appropriate technologies. Another key target is to provide universal and affordable access to information and communication technology.
In order to achieve these goals and targets, infrastructure should not be viewed as individual assets but as part of a system of interlinked assets.
It should also aim to deliver services to improve people’s life quality and to increase connectivity and mobility. This approach implies having in place a long-term strategy to stimulate GDP growth, to encourage a negative carbon footprint economy and to provide easy access to inclusive services. It emphasises the role of the infrastructure in all three dimensions of sustainable development: economy, environment and society. Moreover, alongside the government budget for infrastructure development, new forms of financing are also emerging.
While ESG (environmental, social, governance) has been a mainstream concept for a long while and it will likely be increasingly necessarily incorporated in investment strategy going forward, impact investing has been attracting more and more attention from conscious investors. There has been a tremendous growth in market size to reflect the willingness of investors to make this world a better place.
The resilience of infrastructure is key. It must be resilient to any shocks and stress in order to be able to guarantee the continuity of its function.
The current environment heavily affected by Covid-19 is testing the existing infrastructure. For example, the digital infrastructure, including internet, virtual private networks and cloud computing providers, have been facing increasing pressure to deliver reliable connectivity and services.
The consumption of digital services has surged dramatically as more and more countries are implementing social distancing and forcing people into working from home. Recently, following a request from the European Commission, Netflix and YouTube have reduced streaming quality in Europe for at least a month to reduce data consumption. Live streaming has become the most popular way of conducting daily activities in a working-from-home environment thus putting more pressure on infrastructure. Many VPNs, which allow employees to access company internal database remotely, are not built to be able to handle a high number of companies demand at the same time.
The sudden increase in internet consumption may soon reveal weak points in the ecosystem itself, especially in developing countries.
This unprecedented pandemic has forced everyone to reconsider the fundamentals of daily life, including the role of infrastructure. Natural catastrophes typically reunite people to support and help each other, which result in reducing physical and emotional distancing. On the contrary, the current virus has led people to practice “social distancing” and is causing disconnection based on fear. People are stockpiling toilet paper, food and basic medicines, public gatherings and events are banned, social places such as pubs and restaurants are shut and private visits of close relatives and friends are forbidden.
The concept of infrastructure based on mobility and connectivity, has been questioned and is needing an urgent and immediate innovative redesign to avoid single points of failure.
This trend is converse to the purpose of infrastructure in bringing people together. No more jammed train stations of people commuting. No more tubes spilling over with people squeezing into tiny spaces. No more crowded airports of people travelling to the most remote places in the world. No more freedom of movement, the core principle of the entire concept of globalisation. Countries are battling to safeguard domestic economy. People are becoming more individualistic and are starting to look inwards.