Written by Coenraad Bezuidenhout
What would it entail to incorporate ESG in the African urban development context?
This is the question that Caroline Sohie of the international design practice Instinct set out to answer at the recent Europe-Africa Impact Investing Summit along with panelists Catherine Stone (Director of Spatial Planning: Western Cape Provincial Government) and Vusi Nondo (Development Executive at the V&A Waterfront), and global transport infrastructure specialist Leszek Dobrovolsky.
This article reflects on three key aspects of their conversation:
1) ESG should be used to address apartheid and colonial spatial development legacies.
Catherine Stone highlighted the critical need to integrate Environmental, Social, and Governance (ESG) considerations into urban planning. Using South Africa's Western Cape as an example, she cited significant commuting expenses and decreased labour productivity resulting from the unaddressed mismatch between employment and residential density. Environmental concerns continue to be addressed in isolation from these urban development challenges. Yet 88% of greenhouse gas emissions in the Western Cape are attributed to energy generation and 70% of emissions in the transport sector stem from passenger vehicle usage in the region.
Private sector developers exacerbate this legacy by primarily investing in low-density sectional title estates. Without incentives for ESG-focused development, such projects remain financially less risky but contribute to urban sprawl, forcing long commutes and consuming valuable agricultural land. There was a shortage of densified, affordable housing for the middle class. While private sector developers of affordable rental housing (including small-scale developers of high-yield township developments) have emerged, there is a clear opportunity for more sustainable finance to promote their scalability. Without a change in course, it would complicate infrastructure and local economic development, forcing household costs up and impeding safety.
2 ) Precinct developments could leverage circular and shared value strategies for greater inclusivity but required more effective sustainable finance deployment.
Vusi Nondo presented Cape Town’s iconic V&A Waterfront was an example of how ESG considerations could change the course of urban development. While not part of its development plans more than three decades ago, shared value through inclusionary housing and circularity has become vital considerations for improving the precinct’s social impact and resilience. It has contributed to development of the ocean economy and tourism and technology sectors.
“A key barrier though was the availability of expertise and intermediaries to help deploy well-intentioned capital. Bridging the gap between developed financial perspectives and emerging market contexts is crucial for meaningful capital placement”, Nondo concluded.
3) Rapidly urbanising African cities need to intentionally pursue the sustainable development potential underleveraged assets.
Urban areas generate 70% of global emissions and will house a significant portion of the world's population by 2050. Challenges like slum proliferation accompany urbanization, but there are also opportunities for economic growth and improved living standards. Using Belleville, a location 23 kilometres from Cape Town, as an example, Caroline Sohie drew attention to the potential of strategic nodes with existing transportation interchanges and underutilised development rights. Amongst other, this involved understanding the cultural ecology of an area, which in the case of Belville comprised the youth, a specific community spirit, the proximity of iconic educational institutions, and existing infrastructure to create catalysts for regeneration and opportunity.