Are national infrastructure plans SDG-aligned, and how can investors play their part?

• General sustainability themes, particularly on climate change, underpin several strategies, and work is underway – for example, in the UK, Kenya and Canada – to link those themes and core elements of infrastructure plans more directly to the SDGs. More broadly, several countries are beginning to work the SDGs into individual government department plans, many of which also touch on infrastructure investment needs.
• That growing focus on the SDGs should in time foster a pipeline of infrastructure projects that place sustainability at their core. This will require investors to consider how their approach and commitment to the SDGs aligns with government priorities and allows them to take advantage of the opportunities.

• There are mismatches between the time horizons of some national infrastructure or development plans and the SDGs’ 2030 target. Chile and Malaysia’s plans are developed to coincide with shorter-term political cycles rather than using 2030 (or beyond) as a timeframe. Given the long-term nature of most infrastructure investing, this can create misalignments between government and investor interests.
• In other countries, such as the UK and Canada, some elements of strategic infrastructure planning look far beyond 2030. In these cases, the SDGs remain a useful yardstick to assess priorities and measure progress towards specific social and environmental outcomes.

• Individual government agencies and subnational authorities are starting to select, procure and design projects using an SDG framework. This should also drive investors and their partners to more actively consider how SDG outcomes can add further value to existing ESG processes in project delivery.
• Some countries include sustainability factors at a basic level in project selection and procurement processes, but there is little formal evidence to suggest that these have been tied to an overarching SDGs framework.

• There is insufficient engagement between governments and infrastructure investors on how private money can be deployed in ways that support key sustainability objectives and deliver adequate returns. Changing political and social dynamics in many countries are placing question marks over the role of private finance in the delivery of public services and infrastructure, creating an additional headwind.
• More work is needed to resolve this tension and ensure that interests are aligned on the financial, sustainability and developmental elements of infrastructure projects. Engagement should be used alongside other tools (such as appropriate fiscal incentives and regulations) required to unlock more investment in sustainable infrastructure.

• Some infrastructure investors are already aligning their activities more directly with the SDGs, regardless of government intervention or direction. Although approaches vary across investor types and geographies, common activities include assessing the SDG outcomes of infrastructure investments, and the development of KPIs and data gathering exercises to assess long-term performance against specific goals relevant to different projects.
• Not all private sector activities and interests can be aligned with those of governments, but the infrastructure investor community’s take-up of the SDGs highlights a willingness to support critical government objectives to the extent that financial parameters allow.

• Some countries report on their overall performance in relation to the SDGs through Voluntary National Reviews. However, how indicators are chosen (in large part dependent on countries’ development priorities) and how progress is reported (often qualitatively rather than quantitively or using different statistical methodologies) is not consistent.
• Overall, there is limited data on the SDG performance of infrastructure projects and plans across different countries. Better ESG data in infrastructure investing is needed to compare projects and markets.

National infrastructure planning in the UK falls under the Cabinet Office and the Treasury, through bodies such as the National Infrastructure Commission (NIC) and the Infrastructure and Projects Authority (IPA). In the broadest terms, the NIC considers the country’s long-term infrastructure needs, while the IPA is responsible for the overall infrastructure project delivery system.

The NIC’s remit is to develop a “long-term vision for high quality, good value, sustainable economic infrastructure”, to which the government should respond by developing a formal infrastructure strategy. The current Conservative government, led by Prime Minister Boris Johnson, is due to announce this strategy in 2020, but has already committed to over £600bn in new spending on infrastructure with the intention to ‘level-up’ the country from a socio-economic development perspective.

The seven core proposals of the NIC’s first National Infrastructure Assessment (NIA), published in 2018, can easily be connected to a range of SDGs. The target dates to achieve several of these proposals also align with the goals’ 2030 horizon. The IPA’s National Infrastructure Delivery Plan highlights the importance of whole-life cost analysis to ensure that sustainability factors are better accounted for in project design and delivery. The NIC’s work does not include specific reference to the SDGs, nor do they feature in the IPA’s plan or broader mission statement.

Each UK government department has, however, been required to embed the SDGs in its annual Single Departmental Plan, which outlines the key issues they face for the year ahead. Here, there are references to multiple infrastructure investments that help deliver on the plans’ SDG objectives. For example, the Ministry of Housing, Communities and Local Government highlights the need for investment in better local transport infrastructure to ensure the sustainability of local communities, in line with SDG 11 on Sustainable Cities and Communities.

Infrastructure Canada5 is a federal government department responsible for the development of national infrastructure policy and programme delivery; it falls under the remit of the Ministry of Infrastructure and Communities. In 2016, the body published Investing in Canada: Canada’s LongTerm Infrastructure Plan, a CAD$180bn, 12-year investment plan, outlining the federal government’s priorities for infrastructure development.

The plan’s core elements, such as green infrastructure, social infrastructure and a focus on sustainable communities, can be tied to multiple goals even though it does not reference the SDGs directly. It also details the ways in which individual government departments will track progress against programmes highlighted in the strategy, using metrics which are related to sustainability and are closely connected to many of the SDGs’ individual indicators.

The federal government in Canada has other initiatives that seek to promote more sustainable infrastructure investments. For example, Canada’s Expert Panel on Sustainable Finance6, a body established to research how the local financial system can be aligned with the country’s long-term economic and climate goals, highlighted the need to align Canada’s infrastructure strategy with its long-term sustainable growth objectives and leverage private capital in its delivery.

Finally, the country’s 2018 Voluntary National Review highlighted the need for investment in new energy and transportation models. The federal budget in 2018 also established a dedicated SDG unit within the federal government to support implementation of the country’s 2030 agenda and to track the progress of different ministries and government agencies against the goals.

Strategic planning for and review of Australia’s infrastructure needs at a national level lies with Infrastructure Australia, an independent body established by the federal government in 2008. It is accountable to the Ministry for Infrastructure, Transport and Regional Development.

The organisation’s Infrastructure Plans (the latest of which was prepared in 2016) and Infrastructure Audits (the most recent being in 2019) assess the country’s future infrastructure needs (the latter) and the policies required to fulfil them (the former). Sustainability – in terms of social inclusion and the environment – has become increasingly prominent in the latest reports. For example, the Australian Infrastructure Audit 2019 included coverage of social infrastructure for the first time, highlighting its significance to the country’s growth and development. This is also reflected at the individual project level: the economic, social and environmental value is one of the three major components by which Infrastructure Australia assesses the merits of large-scale national projects.

There is little direct correlation between Infrastructure Australia’s work and the various company, public and intergovernmental initiatives that support Australia’s overall SDGs agenda. However, a strength of Australia compared to many other countries is the quality and depth of data provided to measure progress against the SDGs. The government has a live database of SDG-indicator-specific information across all 17 goals.

The Bureau of Infrastructure, Transport and Regional Economics has developed a national infrastructure data collection and dissemination plan. As part of this, for example, the Australian Urban Research Infrastructure Network draws on 3,500 datasets from 90 different sources to directly inform reporting against SDG target 9.1 on the development of quality of infrastructure.

Malaysia has no formal national infrastructure plan or strategy. However, strengthening infrastructure is one of six key “thrusts” of the government’s 11th Malaysia Plan. This plan, covering the period from 2016 to 2020, lays out the steps needed to transition Malaysia from a developing to a high-income economy, and falls under the direct supervision of the Prime Minister and his staff.

Investment in new infrastructure is also critical to other pillars of the 11th Malaysia Plan, such as a focus on green growth, enhanced economic sustainability and resilience, and increased inclusiveness and reduced income inequality. There is no direct mention of the SDGs in the plan, but the six key “thrusts” can clearly be aligned with several of the goals. The Malaysian government has also developed its own indicators to measure achievement against the plan’s targets, many of which could align directly with SDG indicators.

Malaysia’s most recent Voluntary National Review further underlines how the goals have helped to shape the priorities of the 11th Malaysia Plan. The 12th Malaysia Plan, due to start in 2020, therefore represents a clear opportunity to more clearly align strategic planning with the SDGs, particularly as the National SDG Council also sits under the direct supervision of the Prime Minister. This includes aligning the specific targets or indicators to measure progress. On this front, the government has made some progress towards ensuring that datasets are available for all SDGs. For example, it claims to soon be able to provide data against all the specific indicators for SDG 9 on Industry, Innovation and Infrastructure.

The government in June 2019 announced a new national infrastructure plan to cover remainder of the current presidential term, up to 2022. This reflects the short-term nature of Chilean infrastructure planning, a point highlighted by a 2017 OECD review of the country’s infrastructure governance system.

Details of the new plan are light, but largely focus on greater transport connectivity, particularly new road and airport concessions. There is no reference to the SDGs or indeed to broader sustainability issues as a core driver behind the plan.

However, at an individual project level, the Ministry of Public Works, which leads most major infrastructure development in the country, has worked with development finance institutions such as the InterAmerican Development Bank (IDB) to strengthen its capabilities for incorporating sustainability factors into project planning and design. The government is also considering the use of financial instruments such as green and social impact bonds as a way of financing future infrastructure projects.

Except for specific commitments on SDG 13 on Climate Action, including more renewable energy and greater resilience to physical climate risks, infrastructure investment is also a relatively small component of the country’s ‘Agenda 2030’ for achieving the SDGs.

Strategic infrastructure planning in Kenya falls under the umbrella of Kenya Vision 2030, the country’s overall social and economic development strategy, which predates the SDGs. The government works towards the overall goals of Kenya Vision 2030 through individual five-year Medium Term Plans (MTPs). The country is on its third MTP, covering the period from 2017 to 2022.

This MTP’s core aims are to develop a sustainable and resilient economy. Infrastructure is the first ‘key’ element, with a core focus on transport and information communication technologies. For example, the MTP is targeting the expansion of aviation and port facilities, railways and road infrastructure. An increase in renewable energy generation, nuclear power generation, and greater grid stability are also important features. This aligns with broader government efforts to develop a framework for making climate change a central part of strategic planning, by assessing infrastructure projects partly on their resilience to climate risks.

The MTP also aims to explicitly align the goals of Kenya Vision 2030 with the SDGs: “The domestication and integration of the SDGs is embedded in this MTP III, Sector Plans and County Integrated Development Plans.” To this end, the government created a special SDGs unit in 2016 to serve as a focal point for action on the goals, and all relevant national and sub-national authorities will be required to report on performance against specific SDG indicators.