Six reasons global cities could save the world
Cities are often seen as having a negative impact on climate change. In the minds of many people, cities are intrinsically associated with pollution, whereas leafy suburbs are seen as the epitome of a greener way of life.
However, the modern reality is very different and recent data overwhelmingly shows that city-dwellers have a much smaller carbon footprint than people living in rural and suburban areas. Cities are now the most efficient places for people to live and the battle to slow climate change will have to start in cities.
Most of the world’s population will live in cities in the future
In 1950, only 30% of the world’s population lived in cities. It has been estimated that this figure will have grown to 63% by 2035. And by the end of the century, as much as 90% of the global population could be living in urban areas. If the climate change goals outlined in the Paris Agreement are to be achieved, there will need to be engagement with the masses. And as most of us will be living in cities in the future, it makes sense that the solution to climate change will reside there too.
Cities are incredibly efficient
Cities are an essential lever in the battle to reduce greenhouse gases and conserve energy.
People who live in cities tend to live in apartments, which are more energy-efficient than houses. The energy costs for high density housing, such as apartments, are about 30% lower than for a house. As apartments are clustered together, heating costs will invariably be lower. And as many new apartment buildings now have installed energy systems, such as solar panels, energy costs can be even lower.
If the UK is to meet its government-set target of net zero greenhouse gas emissions by 2050, higher levels of population density will be crucial. The larger a city grows, the more efficient it becomes. This is the theory of urban metabolism, which explains why cities become more productive and inventive as they expand in size.
Cities are innovation hubs
For centuries cities have been centres of culture and commerce. They are the source of some of the world’s greatest ideas, and we think they will undoubtedly provide the ideas and policies to reduce climate change.
Big cities attract people seeking job opportunities or to attend university. Industries are now increasingly clustering together in cities, allowing ideas and new technologies to be shared. Universities attract talented students who often stay and work in the city or create companies after graduation. This is the power of urbanisation.
Higher use of public transport helps to reduce our carbon footprint
People living in cities are less likely to own a car and more likely to travel to work on public transport or by bike. If they need to use a car they may access a car sharing scheme, rather than buying their own car. All of this leads to a smaller carbon footprint than for someone living in a rural area.
Big cities have extensive networks of public transport, which includes buses, trains, trams, riverboats and cycle hire schemes. And as more people use these services, governments spend more money on upgrading and extending them, which in turn leads to greater use, thereby cutting emissions further.
Cities can work together to tackle climate change
The C40 Cities Climate Leadership Group is a group of 94 cities around the world, representing around 700 million people and 25% of the world’s economy. Formed in 2005, C40 illustrates the power that global cities have in tackling climate change as a united force.
The elected mayors of the 94 cities in the group have committed to delivering some of the most ambitious goals in the Paris Agreement. They acknowledge that cities hold the answer to tackling climate change. Cities are increasingly vulnerable to the threat posed by climate change. By working together with other cities and utilising new technologies, they are best placed to tackle the challenge
Cities will play a vital role in achieving climate change targets
A number of leading countries around the world have set themselves targets to achieve zero net emissions. Before leaving office, former UK prime minister Theresa May pledged to cut the country’s greenhouse gas emissions to zero by 2050, saying that there was a “moral duty to leave this world in a better condition than what we inherited.” Cities currently consume 78% of the world’s energy and produce more than 60% of the world’s carbon. As such, tackling climate change will have to begin in cities.
You can find more of our insights into global cities here.
Our global cities index can be found here. It uses a number of factors to identify the most economically vibrant cities across the world. Cities are then ranked in the index to provide a view of where some of the biggest global real estate opportunities lie.
- COP26: Pressure growing for step change in climate policy
- Economic infographic: A view of the global economy in February 2020
- Why global cities could be more valuable than high-performing tech stocks
- How we hold companies to account on their climate change plans
- How the FTSE 100 returned 122% in 20 years but barely moved
- How the ageing population could be a boon for investors
This communication is marketing material. The views and opinions contained herein are those of the named author(s) on this page, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds.
This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Schroder Investment Management Ltd (Schroders) does not warrant its completeness or accuracy.
The data has been sourced by Schroders and should be independently verified before further publication or use. No responsibility can be accepted for error of fact or opinion. This does not exclude or restrict any duty or liability that Schroders has to its customers under the Financial Services and Markets Act 2000 (as amended from time to time) or any other regulatory system. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions.
Past Performance is not a guide to future performance. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Exchange rate changes may cause the value of any overseas investments to rise or fall.
Any sectors, securities, regions or countries shown above are for illustrative purposes only and are not to be considered a recommendation to buy or sell.
The forecasts included should not be relied upon, are not guaranteed and are provided only as at the date of issue. Our forecasts are based on our own assumptions which may change. Forecasts and assumptions may be affected by external economic or other factors.
Issued by Schroder Unit Trusts Limited, 1 London Wall Place, London EC2Y 5AU. Registered Number 4191730 England. Authorised and regulated by the Financial Conduct Authority.