Transcript
Speaker: This is HSBC Global Viewpoint, your window into the thinking, trends and issues shaping global banking and markets.
Speaker: Join us as we hear from industry leaders and HSBC experts on the latest insights and opportunities for your business.
Speaker: Thank you for listening.
Speaker: This is Financing Future Cities, a podcast series created by HSBC to examine the complex and evolving role of urban hubs through the lens of banking and finance.
Speaker: With more than half the world's population living in cities, and this number only expected to grow.
Speaker: Urban hubs are increasingly the global drivers of prosperity, serving as models for sustainability and incubators of innovation.
Speaker: Join us now as we look to the future of sustainable urbanization and learn about the power and potential of future cities.
Speaker: Hello and welcome to today's episode where we're going to explore sustainable urban infrastructure.
Speaker: Thanks for tuning in.
Speaker: My name is Greg Clark.
Speaker: I'm group advisor for Future Cities and New Industries at HSBC.
Speaker: And today I'll be talking with Alice Charles from the World Economic Forum and HSBC's Christiane Desiglis.
Speaker: To briefly introduce our two guest speakers today,
Speaker: Alice leads the World Economic Forum's work on cities and real estate, including the Global Future Council on Cities and Urbanization, the Real Estate Industry Action Group, the Future of Urban Development and Services Initiative, and co-leads the Systemic Efficiency Transitioning Energy and Buildings Initiative.
Speaker: Alice has 19 years' experience working for the public and private sector in the areas of city and urban planning, real estate, urban development and regeneration, construction, infrastructure, environment, climate change, and public policy.
Speaker: Christian is Group Head of Sustainable Infrastructure and Innovation at HSBC.
Speaker: He's held various positions within HSBC,
Speaker: including Head of Sustainable Finance and Investments.
Speaker: Christian also leads the Fast Infra initiative, aiming to mobilize private investment to finance sustainable infrastructure, more of which shortly.
Speaker: Thank you both for joining me today.
Speaker: Thank you, Greg.
Speaker: It's great to be here.
Speaker: Thank you very much.
Speaker: A real pleasure to be with you today.
Speaker: Well, it's great to have both of you here.
Speaker: And let me now introduce the topic of today.
Speaker: As the world urbanizes rapidly, there's a marked difference between places that are infrastructure on and those that are infrastructure off.
Speaker: Indeed, we might define good urbanization as cities where infrastructure investment has been sufficient to accommodate population growth, economic transition, and carbon reduction simultaneously.
Speaker: Through infrastructure investment, the successful city has the carrying capacity it needs to make adjustments as the situation changes.
Speaker: Conversely, we might say that bad urbanization occurs when population growth and economic transition outstrip the infrastructure endowment
Speaker: and then produce high emissions and pollution, overcrowding, poor quality of life, low productivity, and all of the other side effects that go with them.
Speaker: So the quest here is on for cities that can maintain high infrastructure investment through cycles.
Speaker: But how do we do that?
Speaker: Alice, I'd like to come to you first, if we may.
Speaker: As we look around the world,
Speaker: How is the built environment and infrastructure of our cities changing?
Speaker: And what's driving those changes?
Speaker: So first of all, I'm going to turn to some of the drivers of change.
Speaker: Conflict is actually a driver of change within our cities.
Speaker: So what ends up happening is a lot of people flee that country and generally end up in cities in neighboring countries.
Speaker: So that's definitely a driver of change within our cities.
Speaker: Another significant driver, of course, is climate change.
Speaker: And we are seeing the effects of climate change.
Speaker: And our cities around the world are in the firing line, facing the worst effects in terms of sea level rises, etc.
Speaker: So climate change is rapidly changing our urban environment.
Speaker: It's a driver of change.
Speaker: But also, COVID-19 has managed to shine a light on many of the inequalities that already existed in our cities.
Speaker: And we're now starting to think more seriously about how we can address those changes.
Speaker: The whole issue of addressing inclusion is driving change within our urban environment as well.
Speaker: But also just to say technology is a driver of change because we are recognizing the role of technology in enabling us to deliver infrastructure and services within our city in a more smart and efficient way.
Speaker: So that is also a driver of change.
Speaker: But where we are right now in the world, the greatest changes that I'm seeing cities rapidly trying to adjust to
Speaker: is the green transition.
Speaker: And we have more than a thousand cities around the world that are committed to be in net zero carbon by 2050.
Speaker: And indeed, many have interim targets of cutting those emissions in half
Speaker: by at least 2030.
Speaker: So that is a very significant change that's happening in all of our cities around the world.
Speaker: Alice, thank you very much.
Speaker: As much in what you've said, population movements, climate change itself, the pandemic and the revealed inequalities that come from it, technology.
Speaker: And then lastly, I think you're saying something about the pace of change, particularly in the green transition.
Speaker: Is that right?
Speaker: Absolutely.
Speaker: Like if I think back a decade ago, it was only the most progressive of cities around the world that were taking climate seriously.
Speaker: But the movement that we now have, particularly which developed from COP26, is significant.
Speaker: And, you know, just this morning, I was looking at plans from cities in the Philippines, and it was amazing to see cities in various locations in the Philippines saying, we want to cut our emissions by 75 percent by 2030.
Speaker: Great, Alice.
Speaker: Thank you very much.
Speaker: And it's so exciting, isn't it, to see a kind of race to the top at last rather than a race to the bottom.
Speaker: Now, there's a lot of talk around about sustainable cities, green cities, net zero cities, resilient cities, smart cities and adaptive cities.
Speaker: Alice, enlighten us.
Speaker: Do these concepts all mean the same thing?
Speaker: And what implication do they have?
Speaker: for infrastructure and the built environment.
Speaker: So first of all, wouldn't it be great if we actually had a definition of what a city is, right?
Speaker: So that's the very first thing, you know, different countries around the world have different definitions of what urban is and what a city is.
Speaker: And we don't have one clear definition.
Speaker: So you see these huge variations in the percentage of people that are regarded as being urban as a result of us not having that clear definition.
Speaker: But then the second thing is there's huge variations in, you know, what we regard as
Speaker: sustainable, what we regard as net zero, what we regard as resilient.
Speaker: And the latest term coming on board is adaptive.
Speaker: And I'll come to that in a second.
Speaker: So I suppose sustainable is broadly around ensuring that what we build today in our cities will meet future generations and will respect economic, social and environmental issues within our city.
Speaker: And that's kind of very broadly where we're coming from in terms of sustainability.
Speaker: Net zero is a term that has really emerged in the last number of years.
Speaker: And I think some people often use the term and don't necessarily know what they're getting at there.
Speaker: But it's around achieving balance between the emissions that we emit and the emissions that we remove.
Speaker: Resilience is something that's got a wider definition.
Speaker: What I would say is that most people still interpret it as referring to climate resilience.
Speaker: But resilience is about a city being prepared to deal with a major shock.
Speaker: So that, you know, you have the systems in place to deal with it right now, but also prepare for it.
Speaker: So it's about being prepared to deal with major shocks.
Speaker: An adaptive city is a term that we're hearing a lot more now.
Speaker: And, you know, what we have seen as a result of COVID-19 is
Speaker: is a complete change in the way we're using real estate.
Speaker: So, you know, we're seeing, for example, that there's a lot more shopping online.
Speaker: We may see reduced retail footprints.
Speaker: We already see it in some places.
Speaker: We may see it over the longer period of time.
Speaker: We've seen businesses close like hospitality or hotels and so on and so forth.
Speaker: And we're also seeing some reductions in office footprint.
Speaker: So adaptive cities is about how a city can adapt to that kind of experience and how we can repurpose and reuse our buildings for alternative purposes.
Speaker: And of course, residential, because we already had an affordable housing crisis in many cities around the world.
Speaker: is seen as something that you can repurpose some of these existing real estate for.
Speaker: So we're very much thinking about how we can adapt the uses within our cities to respond to the economic circumstances that we find ourselves in.
Speaker: Thank you very much for unpacking all of that for us, Alice, because it's otherwise a minefield.
Speaker: And you've emphasised changes in the built environment, particularly buildings.
Speaker: But are there particular implications for infrastructure we need to be aware of?
Speaker: Yeah, absolutely.
Speaker: You know, if I think about net zero, what are we really getting to there?
Speaker: Where do most of the emissions come from and what do we need to do?
Speaker: Most of the emissions come from building, they come from energy and they come from transit.
Speaker: Also, a critical thing is you cannot have a net zero city unless it's a compact city, but you also cannot economically deliver infrastructure in the best way if it's not a compact city with density.
Speaker: So to get to net zero,
Speaker: We are going to have to look at alternative sources of energy.
Speaker: We are going to need to decarbonize our energy grid systems, which requires huge investment.
Speaker: We are going to have to completely change our transit systems.
Speaker: So,
Speaker: You know, that means investing in public transit.
Speaker: It means investing in walking and cycling.
Speaker: It means the integration of transport infrastructure.
Speaker: So we will need a lot of investment in transit, but also buildings.
Speaker: We will need to retrofit our building stock because such a significant portion of the emissions come from buildings as well.
Speaker: And that's all buildings.
Speaker: You know, so it's not just commercial real estate.
Speaker: It's civic buildings.
Speaker: It's private housing.
Speaker: It's affordable housing, etc.
Speaker: It means that huge investment is required in particularly these infrastructure asset classes, but also there are other asset classes that will require investment in the short to medium term to bring about that transition.
Speaker: Thank you, Alice.
Speaker: That's a perfect point to segue to Christian and to say then that Alice has highlighted all of these investment needs and
Speaker: Christian, you've been working very closely with colleagues at the IFC, the World Bank, and many other partners, it needs to be said, to create a brand new financial mechanism for sustainable infrastructure, and it's called Fast Infra.
Speaker: So firstly, Christian, just tell us what is it and how should it work?
Speaker: Thank you very much, Greg.
Speaker: So look, FAST, infra stands for finance to accelerate the sustainable transition with a focus on infrastructure.
Speaker: It's an initiative which started under the auspices of the One Planet Lab, which is the think tank of the One Planet Summit, which was launched by President Macron following the withdrawal of the U.S. from the Paris Agreement.
Speaker: And about two years ago, we received a mission from President Macron to start thinking about ways to finance the
Speaker: sustainable infrastructure at scale, but with a focus on emerging markets.
Speaker: So for the last two years, together with the IFC, the Global Infrastructure Facility, the OECD, CPI, and approximately 80 other institutions, both from the public sector and the private sector, also from NGOs,
Speaker: We've been looking for practical solutions that would be helping transform sustainable infrastructure into an asset class and mobilize finance, particularly for the development and construction of infrastructure.
Speaker: And here, I would like to just maybe stress or highlight a few things that Alice was saying and explain why it's an important topic.
Speaker: First of all, approximately 70% of global GHG emissions are coming from infrastructure assets.
Speaker: So whether it is transport, whether it is buildings, or whether it is power.
Speaker: And approximately 70% of those 70% come from emerging markets.
Speaker: And emerging markets is particularly critical because it's estimated that over the next 30 years,
Speaker: emerging countries will double their stock of infrastructure assets to meet the needs, the developmental needs, the demographic and economic growth needs of the emerging and developing world.
Speaker: So that's just to give you a sense of the scale of the issue and the importance of making sure that the infrastructure that is built is actually sustainable and aligned with the transition.
Speaker: So there is a need now to
Speaker: overhaul the type of infrastructure assets we have, think about it differently so we can succeed in something which is critical for the transition to net zero, that is a decoupling between emissions growth and economic growth.
Speaker: And the only way we are going to be doing that is if we define and we agree on global and globally agree
Speaker: on key terms and key definition of what a sustainable infrastructure asset is.
Speaker: That will be important for development of new assets, but that will also be very important for retrofitting existing assets.
Speaker: And then we need to
Speaker: mobilize money because, as Alice was saying, this will involve an enormous amount of money.
Speaker: So the OECD estimates that approximately $7 trillion a year will need to be spent in infrastructure for developing assets which will be aligned with the SDGs, the development goals, but also aligned with the transition.
Speaker: Today, there is a lot of money which is being invested, but most of that money is actually coming from public sector sources, from the budget.
Speaker: Some of it is also coming from multinational development banks and development finance institutions.
Speaker: But the private sector, which is holding trillions of dollars of assets that could have an appetite in investing in intrasets, especially in the current environment of higher inflation, where real assets are likely to feel better,
Speaker: very little private money is actually invested in sustainable infrastructure.
Speaker: So what we've set out to do with FastInfo is one, define what a sustainable infrastructure is, so provide a global set of standards.
Speaker: And second, look for financing mechanisms, which will crowd in private finance alongside public money to develop at scale and at pace sustainable infrastructure across the world.
Speaker: Christian, thank you so much.
Speaker: That's a brilliant description.
Speaker: And in a minute, I'll ask Alice for her reactions.
Speaker: But I think I heard you say three things.
Speaker: Firstly, it's about fast-developing, middle-income, emerging economies where infrastructure, as in the rest of the world, is such a big emitter of carbon.
Speaker: Secondly, it's about decoupling that growth from carbon emissions through a different kind of infrastructure.
Speaker: And then thirdly, it's about crowding in public and private finance in a new kind of blended model so that risks and returns are shared and the money is able to really match the scale and the pace of growth that's happening in those markets.
Speaker: It sounds absolutely brilliant.
Speaker: Alice, have you heard about FastInfra before?
Speaker: And is it interesting to you?
Speaker: Yeah, I didn't know a lot about it.
Speaker: I'm now learning a lot.
Speaker: But I think it's a fabulous initiative because the majority of the world's cities are going to be in Asia and Africa.
Speaker: The majority of the world's population is going to be in Asia and Africa.
Speaker: Consequently, if we're living in an urban world,
Speaker: And what we're talking about there is they have a need for infrastructure that isn't yet built, whereas in Europe and North America, it's about retrofitting our infrastructure.
Speaker: And I think, you know, one of the critical points that you made, Greg, at the beginning was the need to provide infrastructure in tandem with development if we're going to have a good urban environment.
Speaker: And that is critical.
Speaker: And what we have seen is
Speaker: In many of the cities, sprawling cities that are in the global south, we haven't been able to provide that infrastructure in tandem with development, and it has all kinds of implications.
Speaker: A sprawling city cannot be a zero-carbon city, as I was saying, and the economics of delivering infrastructure in a sprawling city don't make sense either.
Speaker: So it absolutely makes sense.
Speaker: I think one of the difficulties, though, is cities –
Speaker: don't have a good understanding of finance.
Speaker: So what you generally hear from the financing world is we have the financing available.
Speaker: There's a lack of projects with a structure and profile to attract investment.
Speaker: And when you say that to a city, they have no idea what you're talking about.
Speaker: You know, they generally don't have the capabilities within the city to prepare a project in such a way that it's actually going to attract investment.
Speaker: And the same goes, by the way, for the national level of government, because, of course, you know, for some of the infrastructure that we're talking about, energy infrastructure, it's generally the national government that's leading on preparing the business case for those particular projects.
Speaker: So there is this gap of capacity that's existing within government systems to properly prepare these projects to attract investment.
Speaker: Thank you very much.
Speaker: Very, very important comment.
Speaker: Christian, let's take this in two parts, if we may.
Speaker: The first part of the question, I suppose, is do you believe that fast infra can apply to sustainable infrastructure in cities?
Speaker: And if so, how would it work and how would it combine with other sources of finance?
Speaker: And then let's pick up Alice's very good question about what about the flow of good projects that are well prepared that you're going to need?
Speaker: But firstly, can fast infra work for cities?
Speaker: Sure.
Speaker: FastInfra works for every type of infrastructure asset throughout the lifecycle of the asset.
Speaker: And whether it's a built piece of infrastructure or whether it's natural capital, we have deliberately chosen a very wide definition of infrastructure assets.
Speaker: But we have narrowed
Speaker: the definition of what sustainability means and the sustainability criteria of infrastructure asset.
Speaker: And this has been one of the main pillars of FastInfra over the last, well, a little bit more than a year now.
Speaker: We have two sets of objectives.
Speaker: One is to create an asset class that will be conducive to mobilizing institutional investors, private finance.
Speaker: And the second one is to embed higher criteria for sustainability into the development of projects.
Speaker: So to do that, we've chosen a couple of routes and we took inspiration from the Greenbone principles and from the definition of green building, the BRIM and LEED certification.
Speaker: We decided that we needed to have a commonly accepted definition of what sustainable infrastructure is.
Speaker: And this standardization is really important if you want to bring in large institutional investors.
Speaker: and also if you want to create this need for scale in the development of finance and the crowding in finance.
Speaker: So we launched at COP after approximately one year of work, the first label for sustainable infrastructure.
Speaker: And this label is interesting because not only does it include ESG criteria, but it also includes adaptation and resiliency.
Speaker: So this is, to my knowledge, the first label which has been globally accepted and endorsed by GFANS, endorsed by ICLE, endorsed by investor leadership networks, sustainable markets initiatives, and
Speaker: and many others that has been broadly accepted as representing the sustainability, the best in class sustainability criteria for an infrastructure asset.
Speaker: So that was a really important piece of work.
Speaker: And we're also in the process of building a platform that will accelerate the development of projects and the financing of projects.
Speaker: It's an end-to-end platform which should play a critical role in overhauling and the speeding up of infra development.
Speaker: So that was a really important piece of work.
Speaker: And the second pillar of FastInfo is on mobilizing finance, so creating blended finance, de-risking financing mechanisms, which will mix private and public money to help bring financing where it's today difficult to go.
Speaker: Alice, I really like what you said about bankability issues.
Speaker: We set up, for instance, a joint venture between HSBC and Temasek to provide financing to sustainable infra projects aligned with the fast infallible that are marginally bankable.
Speaker: So that needs a little bit of a push to make them bankable.
Speaker: Today, they are typically projects which HSBC would not finance.
Speaker: But by setting up this financing vehicle, by bringing the Asian Development Bank on board,
Speaker: their technical assistance, capacity building, their credibility also with governments in Southeast Asia that will allow us to improve the bankability of projects and finance them.
Speaker: We're developing also guarantee mechanisms to cover off-taker risk in difficult markets, particularly in Africa.
Speaker: We're developing new syndication facilities that will be
Speaker: mobilizing private and public finance for the finance of sustainable infra in emerging markets.
Speaker: So all this is happening as we speak, and we are looking forward to announcing a few news at Charmelsher in Egypt at COP27.
Speaker: Once again, Christian, I think it's a brilliant answer.
Speaker: And in my simple way, I think I heard three things again.
Speaker: One, that you've really focused on distilling.
Speaker: What are the qualities of
Speaker: to produce a credible proposition about sustainability.
Speaker: And very interesting that you picked up on Alice's points about adaptability and resilience, as well as the decarbonization agenda.
Speaker: Secondly, it's about mobilizing finance, and you've already said it, at pace and at scale and blend it, public and private, long and short, patient and impatient, all these different kinds of capital working together.
Speaker: And then thirdly, picking up Alice's very good question, bankability is right at the heart of what you're doing.
Speaker: Technical assistance, project preparation, guarantee schemes, corporate finance skills,
Speaker: And also, of course, joint ventures, very interesting with sovereign wealth funds and with others.
Speaker: So I have to say, it sounds like what we've all been waiting for, actually, if you think about it like that.
Speaker: But do you think that as you think about this and you work on it, do we have any examples yet of
Speaker: of how it might work in an urban context.
Speaker: If we go back to Alice's point that it's hard to define a city, but you know one when you see it, how could it work in an urban context?
Speaker: Before I answer that, I would like to stress the importance of the label because when you look at creating the right environment that will be conducive to changing our infrastructure, you need to look both at the supply side and at the demand side of the equation.
Speaker: So it's not only about the financing that is needed, but it's also the supply of infrastructure.
Speaker: I want to stress the importance of the label.
Speaker: The label is really what connects the two.
Speaker: It's the hyphen between the supply and the demand side.
Speaker: If we do have a strong label with strong sustainability criteria in it, it will attract investors and it will provide a very, very important signal to developers, sponsors on how to embed sustainability criteria.
Speaker: into a project in order to make it bankable, in order to make it financeable.
Speaker: So it's a really, really important mechanism.
Speaker: That's wonderful to hear, Christiane.
Speaker: I think Alice's mind will probably be alive with 100 ideas of places where this could go.
Speaker: But let me just reiterate the point you made.
Speaker: This is a whole-of-market initiative where the label is designed to signal in both directions that something important and unique and different is happening here.
Speaker: A bit like when green bonds were introduced a decade ago, a bit like when real estate investment trusts were introduced 20 years ago, suddenly the market understood what this new suite of products was that you could invest in.
Speaker: It had a big mobilization effect.
Speaker: So let's turn back to Alice for a minute.
Speaker: And Alice, you
Speaker: At the beginning when we introduced you, it's very clear that you are convening and coordinating so much global discourse around this urban future, this infrastructure future.
Speaker: and the cross-sector networks that you organize, they drive thinking and good practices all over the world on cities.
Speaker: So what are the current priorities you're looking at?
Speaker: And how does this fast infra initiative connect to the broader debate about the future financing of cities?
Speaker: So the World Economic Forum is an international organization for public-private collaboration.
Speaker: So everything that we do is about public-private collaboration.
Speaker: And in that sense, in this space, a lot of the work that we do is convening.
Speaker: It's bringing the relevant stakeholders together.
Speaker: And so bringing the relevant officials from government.
Speaker: And I think one of the things that we try to do, particularly where it's infrastructure related, we try to bring what I often call the multi-headed clients of government.
Speaker: So try and bring national, regional and city government together because they often do not come together and they need to come together when they're planning major infrastructure, as well as
Speaker: relevant players from the private sector.
Speaker: So that's the designers and providers and operators of infrastructure, as well as the financiers and investors and wider civil society and academia.
Speaker: And I think just to sort of highlight why it's important to bring those stakeholders together.
Speaker: It's important to bring those stakeholders together so that
Speaker: A city or a government can understand what an investor needs.
Speaker: They can understand what is the latest in terms of innovation and technology in that space.
Speaker: So if they're going to procurement, they can actually procure what is the latest innovation and technology rather than procure something that's quite outdated.
Speaker: It can very much influence that aspect as well.
Speaker: But it also helps to build trust and enable them to consult with a variety of stakeholders as they're seeking to prepare projects.
Speaker: So some of the practical things we do is we prepare knowledge to inform cities at the much wider level about what good looks like, what you would need to do to attract investment.
Speaker: But also we do work that's more specific, things like city strategy dialogues, whereby people
Speaker: We work with the city to understand what is their vision for the future of that city.
Speaker: So what do they want to do, for example, on the climate?
Speaker: And then understand the pipeline of projects that they're seeking to bring forward as a city, but hone in on a project that they're looking to attract investment in and have early stage conversations between the city and the private sector, civil society and academia about how they could prepare that project so that it would attract investment.
Speaker: And equally, we also do exercises with cities, for example, to help them better understand their emissions profile so that they understand what they should focus on to transition infrastructure-wise in the first place.
Speaker: We've done a lot of what we call city sprints, where we've worked with cities in all different locations around the world to help them understand what is the principal triggers of their emissions profile.
Speaker: what they could do based on what other cities have done elsewhere in the world that had a similar difficulty, how they could address that problem and the types of projects that they would need to bring forward.
Speaker: Great.
Speaker: And do you foresee a need or a demand for the FAST-INFRA initiative that Christians described, Alison?
Speaker: Yeah, absolutely.
Speaker: I think one of the things that a lot of people are scratching their heads a little bit about at the moment is, has our risk landscape changed positively or negatively because of the geopolitical events that are unfolding?
Speaker: Even on that, I think we probably do need to have a discussion around, number one, there probably will be a reluctance to invest in certain markets where the geopolitical environment is such that it will cut off investors.
Speaker: But number two, there will be a greater willingness to invest in the transition.
Speaker: So I think certainly that's something that we will need to start to discuss to a much greater extent in the coming months.
Speaker: Thank you very much, Alice.
Speaker: We're coming to the end.
Speaker: I want to invite Christian, in a sense, to look forward a little bit.
Speaker: From your perspective, having established this label,
Speaker: having built this big coalition of financial institutions, public and private, that are working around this fast infra program.
Speaker: What should happen next and what will good look like, Christian, if this all works?
Speaker: We've established a set of principles and I think now it's going to be important to move from principles to implementation.
Speaker: I think this will be one of the major objectives of COP27.
Speaker: and particularly implementation towards the developing world.
Speaker: I totally agree with Alice that we have to take into consideration what's happening now.
Speaker: I think this will drive probably in the short term more investment in high carbon fuels, but over the medium and long term, I think because of the need for more self-sufficiency, we will see increased investment in renewable and maybe also in other sources of energy like nuclear.
Speaker: So I think, yes, it's really important to reassess the priorities in light of the current situation.
Speaker: I don't think there is like a single blueprint to mobilize finance for the transition to net zero.
Speaker: I think we need to invent new business models, new instruments.
Speaker: We need to invest in new technologies.
Speaker: We recently announced an investment into the Breakthrough Energy Catalyst, which has been established by
Speaker: Bill Gates, and which is investing in projects which will be critical for the deep decarbonization, direct air capture, green hydrogen, sustainable aviation fuel, long duration storage.
Speaker: And we're looking forward to helping reduce the green premium and also deploy more money towards cities and emerging countries.
Speaker: But I think, you know, this is a really good example of the type of new collaboration that is needed.
Speaker: Alice was mentioning that also the role of the World Economic Forum as a convener.
Speaker: We need to create that.
Speaker: We need to create new policies, new markets, whether it is in development of new technology or financing for sustainable infrastructure.
Speaker: So we have an environment that is
Speaker: conducive to rapid innovation, but also rapid deployment of finance and technology.
Speaker: So it's exciting because it's a whole new world that has to be created.
Speaker: Again, the joint venture with Temasek, what the Breakthrough Energy Catalyst is doing, are really interesting pilots of what could be done, but that need to be scaled up.
Speaker: Thank you both very much.
Speaker: I'm going to end with a very quick question to both of you.
Speaker: We've been talking about cities, urban infrastructure,
Speaker: financing, the massive acceleration that's required to meet our goals.
Speaker: What are one or two indicators that you look out for that will tell us whether or not we're on the right path and making progress?
Speaker: Alice, what are the indicators you look at around this?
Speaker: One of the things actually that I started to look at during COVID was
Speaker: to try and get an understanding of cancellation of projects across cities.
Speaker: And unfortunately, I did get that information from cities that certain cities were going to have to cancel projects because of the financial position that they were in due to COVID-19.
Speaker: One of the things I will be looking for has that turned around and trying to see what is being done year on year in terms of projects that are getting financed in cities is going to be critical.
Speaker: The other thing is hearing from companies, because a lot of the infrastructure that has to be changed is actually in the private sector's hands to change.
Speaker: Hearing from companies around the targets they have to transition,
Speaker: Very clear.
Speaker: Thank you, Alice.
Speaker: Christian, what about yourself?
Speaker: What are the indicators you look to to tell us if we're on the right path?
Speaker: I think the transformation of pledges like the GFunds pledge, for instance, and others into actual commitment is going to be important and tracking the evolution of climate finance, the financing of projects aligned with the transition.
Speaker: I would agree with Alice.
Speaker: decommissioning of coal-fired power plants, for instance.
Speaker: Together with the Asian Development Bank, we've participated in the launch of the energy transition mechanism, which is looking at ways for early decommissioning of coal-fired power plants in a way which will be aligned with the national energy plan, the social needs, the trust transition, something we actually launched with the World Economic Forum and the direct principle for a just and urgent energy transition.
Speaker: So seeing actual projects, actual pilots that can be scaled up because what I've observed over the years, that's why Fast Info is important because it's a way to standardize a definition and to create financing instruments which will be scalable.
Speaker: And I just want to pick up on that point very, very quickly.
Speaker: We've seen so many pledges of we are going to be net zero carbon by 2050.
Speaker: And the critical thing is, what does the city or organization do the very next day?
Speaker: So I think keeping an eye on how those pledges are turning into hard action is critically important.
Speaker: So from the energy transition to the urban transition,
Speaker: with a capital transition being required to achieve some really practical scale in all of this.
Speaker: I just want to say thank you very much, Alice Charles, Christiane Deliglie.
Speaker: It's been a great pleasure talking to you both.
Speaker: Thank you for joining us on the Financing Future Cities podcast.
Speaker: And to our listeners, thank you for tuning into this episode of Financing Future Cities.
Speaker: If you enjoyed this discussion, then listen to the full series as we take a deep dive into key topics on the urban decarbonisation journey of cities and their ecosystems.
Speaker: If you're interested in learning more about how HSBC can support you in your transition to net zero, visit the link in the episode description.
Speaker: Thank you for listening today.
Speaker: This has been HSBC Global Viewpoint Banking and Markets.
Speaker: For more information about anything you heard in this podcast or to learn about HSBC's global services and offerings, please visit gbm.hsbc.com.
