ISCA sustainable infrastructure return on investment COVID-19 economic recovery

New research from the Australian Infrastructure Sustainability Council (ISCA) has shown that the return on investment for sustainable projects is key to helping Australia’s economic recovery from COVID-19.

ISCA’s study, IS Rating Scheme Return on Investment, found that infrastructure projects rated under the IS Rating Scheme will deliver up to $2.40 in benefit for every dollar spent.

Ainsley Simpson, Chief Executive Officer of ISCA, said that while the economic multiplier effect for infrastructure expenditure is well documented, this fresh research underscores an even bigger upside.

“Over the next few years, infrastructure will play a mission critical role in our economic rebound – but we must ensure the money we spend today can be leveraged to maximise environmental, social, cultural and economic benefits tomorrow,” Ms Simpson said.

“Governments know that public infrastructure is a great economic multiplier – and that every dollar they invest in public infrastructure delivers around four dollars in GDP value over the life of the asset.

“Over and above this productivity dividend, our research finds IS Ratings are set to deliver a minimum of $1.60 in benefit for every dollar spent – and this figure could be as high as $2.40 in benefit.”

ISCA’s IS Rating Scheme was launched in 2012, and has since measured the social, environmental, governance and cultural outcomes delivered by more than $170 billion major infrastructure projects.

The independent cost benefit analysis undertaken by RPS Group monetised benefits such as carbon, water, ecology and air emissions. 

IS-certified as-built assets have delivered accumulated reductions of 14 per cent in energy, 27 per cent in water and 31 per cent in materials when compared to standard practice.

Ms Simpson said the Return on Investment (ROI) study does not quantify wider social value such as health outcomes and human capital development.

“Our study makes the business case clear: sustainability and profitability are not mutually exclusive. Importantly, the non-market benefits of infrastructure should not be limited to major projects,” she said.

“If uptake of the IS Rating Scheme was doubled, the net benefit would soar to $90.7 million. All infrastructure – urban and regional, large and small, new and aging – can deliver more for our communities.”

Ms Simpson said the research also indicates that an IS Rating upskills the workforce, encourages innovation and drives process improvements. Applying the IS Rating scheme to infrastructure projects trains people to think more strategically across the asset lifecycle, which in turn enhances procurement and supply chain efficiencies.”

Given the central role that infrastructure will play in the next wave of fiscal stimulus, ISCA is calling on all governments to rebound with continued determination and decisive leadership, with five practical actions:

  1. Mandate sustainability: Set the policy default for all infrastructure to sustainable and resilient, as well as economically productive
  2. Prioritise productivity multipliers: Invest in projects that that deliver both productivity multipliers and non-market (benefits, including sustainability and liveability
  3. Leverage procurement: Stimulate local economies by developing skills and capacity and drive nation-wide innovation across the supply chain
  4. Commit to best practice: Adopt recognised standards on all shovel-ready projects to measure and achieve best practice sustainability performance
  5. Embrace transparency: Use assured performance data to communicate the outcomes delivered for business, communities and the workforce

“Infrastructure investment can help us achieve strong economic outcomes for Australia as we bounce back from the COVID-19 crisis. But we need to ensure we are spending our money wisely,” Ms Simpson said.

“Infrastructure Australia estimates that $20 billion worth of infrastructure projects were delayed, cancelled or mothballed over the last decade due to community opposition. Construction fatigue has put pressure on communities and jeopardised the industry’s social license.

“By mandating the IS Rating Scheme, governments can help us pivot from past practices and invest in sustainable infrastructure that de-risks assets, boosts financial performance and, most importantly, builds a better future for generations.”

Download ISCA’s full cost benefit analysis, executive summary and business case for sustainable investment here

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