13 Aug 2019

good business

Congratulations GIH on this site, excellent! Is inclusive infrastructure just about doing the right thing, or is it good business as well?

By Jeff Delmon

Thanks Jeff. Both. It’s good business, as well as the right thing to do to adopt an inclusive approach.
It’s the right thing to do because governments have a responsibility for their entire populations; not just the well-off or communities where it is easy to deliver services. Today, it has become increasingly important to consider the needs of low-income, remote or otherwise under-served members of the community to enable governments to fulfil this responsibility.

Inclusive infrastructure is good business because:

  • Businesses benefit from reaching out to the full extent of their potential customers;
  • Businesses benefit from using the full diversity of skillsets in their workforces;
  • It helps reduce the social risks on projects; and
  • It helps to strengthen the social license to take forward infrastructure projects.

In the absence of strong social license, much-needed infrastructure can become a social hindrance rather than a crucial public service, which is a bad outcome for all parties involved. Members of the public and investors are becoming increasingly focused on the broader outcomes of environmental, social and governance standards in all areas of investment.

In addition, there are also growing areas of opportunities for businesses to engage on technology and innovation that support inclusive infrastructure (see Action Area 5). We also identified impact investing - where an inclusive approach can help businesses attract finance - as an area for further consideration and we would welcome additional comments in the forum on this topic.

What’s more, data shows us that an inclusive approach can enhance financial performance. In a 2015 Deutsche Wealth Management (DWS) meta-analysis of over 2,200 studies that measured the correlation of environmental, social and governance (ESG) and financial performance, 62.6 percent showed a positive correlation between the integration of ESG criteria into the investment process and corporate financial performance.

There is increasing awareness of these advantages, however it is worth being aware that while inclusive infrastructure is good business, arguably a traditional approach to cost-benefit and internal rates of return may not capture the distributive aspects or address affordability constraints, and good government policy and project planning continues to play an important role (see Action Area 3).

Response from Morag Baird, Global Infrastructure Hub

The tool is elaborate, instructive and demonstrative

I am particularly pleased with the level of detail presented in the tool. It is of significant impact that this tool is coming at a no too sooner time as it commercial principles seem to have trumped the social considerations in Infrastructure. Including a socioeconomic study in the financial feasibility studies that incorporates the economic and social costs and benefits of the project, as the tool recommends is a strong point we are also advocating to be included in the PPP life-cycle. You will see this in the first draft of our gender in PPPs guidelines, which is part of the giant strides the ICRC is taking to achieve the integration of gender considerations in Nigeria's PPPs.

The tool is elaborate, instructive and demonstrative, which is perfect for the audience. It is also very user-friendly and contains information on about every stage of the life-cycle. The tool also contains a significant and clear alignment to 2 prominent Project Management Bodies of Knowledge which is significant to the Infrastructure space. It must be emphasised that it is important and and also impossible to adequately manage a project through it life-cycle without the requisite knowledge of a PPP. Well Done GI Hub! This is not just a relevant tool, it is very useful to all jurisdictions, a great amount of work was put into this and I must say it is worth adopting by all in the industry, Worldwide for efficient integration of Socioeconomic considerations in Infrastructure development.

By Priscilla Jiwunde

Many thanks Priscilla for the feedback on our tool, we are indeed keen that it supports the development of more inclusive infrastructure in many jurisdictions worldwide. The GI Hub wishes you and ICRC the very best for the development and implementation of your Guidelines for Gender in PPPs in Nigeria.

Response from Morag Baird, Global Infrastructure Hub