Abstract

This document presents a framework for both public and private sectors to support planning,
designing, and financing of infrastructure that is economically, financially, socially,
environmentally, and institutionally sustainable. This document is intended to generate
discussion amongst key stakeholders and serve as a basis for research and experimentation
within the IDB and with clients; it should be considered as a working document.

This framework forms the basis of the IDB Group working definition of sustainable infrastructure
as “infrastructure projects that are planned, designed, constructed, operated, and
decommissioned in a manner to ensure economic and financial, social, environmental
(including climate resilience), and institutional sustainability over the entire life cycle of
the project.”

The purpose of the framework is to enhance clarity, reduce risks, and realize the opportunities
that sustainable infrastructure supports inclusive growth and productivity, enhancing coverage
and quality of services embodied in the SDGs, and accelerating the transition to low carbon
growth and climate resilient economies in Latin America and the Caribbean. The framework
presents four main principles of sustainability covering economic and financial, environmental,
social, and institutional dimensions, and it proposes that each of these needs to be considered
across the project cycle including, critically, how upstream policy, legislation, regulations,
planning, and organizational capacities contribute to delivering sustainability. Within this
framework, the document proposes a menu of over 60 criteria that are important for
operationalizing sustainability.

The framework will help to identify key actions across the project cycle that can ensure
sustainable infrastructure—from strategies and planning to portfolio and project design,
construction, operations and maintenance, and ultimately decommissioning.
The purpose of the framework is to help promote convergence among key stakeholders on the
objectives for sustainable infrastructure, to provide a common language for dialogue around
sustainable infrastructure, and to ensure a more consistent approach toward key challenges
and opportunities across the project cycle.

The framework should therefore help promote scaled-up investment in sustainable infrastructure
as needed for delivery of the Addis Ababa Action Agenda, the 2030 Agenda for Sustainable
Development, and the Paris Agreement on climate.

JEL Classifications: Q51, Q54, Q56

Keywords: Sustainability, Sustainable Infrastructure, Inclusive growth, Environmental, SDGs,
Low carbon, Climate

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Table of Contents
1. Background ......................................................................................................................... 5
Why Should Infrastructure Be Sustainable? .......................................................................................... 5
What Is the Role of Private Capital? ....................................................................................................... 6
Why Define Sustainable Infrastructure? ................................................................................................. 7
2. A Definition of Sustainable Infrastructure................................................................. 10
Economic and Financial Sustainability.................................................................................................. 11
Environmental Sustainability, including Climate Resilience .............................................................. 12
Social Sustainability ................................................................................................................................. 12
Institutional Sustainability ........................................................................................................................ 12
3. Delivering Sustainable Infrastructure ........................................................................ 13
Criteria for Project Preparation and Design ......................................................................................... 13
Upstream Institutional Actions to Enable Delivery of Sustainable Infrastructure ........................... 18
Using Financing to Drive the Sustainable Infrastructure Transformation ........................................ 20
Delivering the 2030 Agenda for Sustainable Development ............................................................... 22
4. The Role of IDB and Partners ....................................................................................... 23
Acknowledgments ................................................................................................................... 25
References ................................................................................................................................. 26
Appendix 1: Project Design and Preparation Criteria Descriptions .......................... 31

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 1. Background

Why Should Infrastructure Be Sustainable?

Infrastructure services, such as the supply of drinking water and electricity, the disposal and
treatment of waste water, the mobility of people and goods, and the provision of information and
communication technologies, are the backbone for economic development, competitiveness
and inclusive growth in Latin America and the Caribbean (Serebrisky, 2014; Calderón and
Servén, 2014; Serebrisky et al., 2015; The New Climate Economy, 2016; Bhattacharya et al.,
2016). Infrastructure investment needs in the region are estimated to be 3-8% of gross domestic
product (GDP), yet investments range between 2% and 3% of GDP (Serebrisky, 2014: Fay et
al., 2017). An increase of US$120–150 billion per year is required to achieve the region’s
development objectives (Serebrisky et al., 2015), with particular challenges in the urban context
(Bonilla-Roth and Zapparoli, 2017). Closing this investment gap will require mobilizing new
sources of long-term finance, including from institutional investors (Bielenberg et al., 2016).
Closing the infrastructure gap needs both spending more on roads, power plants, and water
sewage systems, but also spending differently transforming the way infrastructure is planned,
developed and operated. Infrastructure that is built now will determine our climate future. It is
estimated that globally, 60% of carbon emissions arise from the construction and operation of
the existing infrastructure stock and a further 35–60% of the future carbon budget will be taken
up by infrastructure (Müller et al., 2013; The New Climate Economy, 2016). Technological lock-
in and the inherent inertia of long-lived assets such as infrastructure underscore the need to
consider carefully the viability of new fossil fuel power generation, particularly coal, if the Paris
Agreement objective of maintaining the global temperature increase well below 2 degrees
Celsius is to be achieved (Hansen et al., 2013). Indeed, Pfeiffer et al. (2016) suggest that during
2017 we had already reached the “2°C capital stock” limit for fossil-fuel-based electricity
generation.
Delivering infrastructure in Latin America and the Caribbean is increasingly complex given
climate change, environmental concerns, and social challenges. At the same time, innovative
technologies will transform the way infrastructure is designed, constructed, and financed.
Innovative technologies and business models coupled with demographic and demand changes
may make certain types of infrastructure obsolete. The need to attract new sources of private
finance increases the legal and regulatory challenges faced by government agencies looking to
increase investment in sustainable infrastructure. The impacts of climate change or physical
climate risk are growing concerns, reducing the predictability of future infrastructure needs as
well as increasing the vulnerability of assets (Reyer et al., 2017). The region is one of the most
vulnerable to the impacts of a changing climate; in 2017 it experienced severe losses from
natural events, including floods in Peru that cost US$3.1 billion and floods in Colombia that
resulted in 329 fatalities (MunichRE NatCatService, 2017). Vergara et al. (2013) estimate that
climate change will cause damages costing US$100 billion a year across the region by 2050.
Loss of natural resources or ecosystem services, pollution, minimal local benefits in terms of
infrastructure services or job creation and reduced local access to resources are creating social
conflicts. Coupled with deficient planning, inadequate consultation, and poor levels of
transparency, conflict is leading to infrastructure project delays, cost overruns, and reputational
damage for governments, financiers, and the private sector (Watkins et al., 2017). Meeting the
demand for future infrastructure plays against the potential negative environmental and social
externalities that might ensue from these projects; this is a source of growing dispute between
local communities and project sponsors. The increasing power of civil society and social
connectivity through technologies adds to the complexity of delivering infrastructure projects
(Valenzuela et al., 2016; Watkins et al., 2017).

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Globally, virtually all countries have committed to multi-sector sustainability objectives through
the Sustainable Development Goals (SDGs). Countries throughout Latin America and the
Caribbean have ratified the Paris Agreement and presented Nationally Determined
Contributions setting out pledged mitigation and adaptation actions. The OECD suggests that
decisive actions taken now for low-carbon investments can deliver significant growth benefits in
the G20 countries (Organisation for Economic Co-operation and Development 2017c); climate-
compatible policy frameworks can increase long-term GDP by 2.8%. Yet the window for
achieving this is considered “uncomfortably narrow,” with less than five years to make this
decisive transition. Shifting infrastructure investments toward sustainable infrastructure that
addresses and meets stakeholder concerns and that is consistent with a low-carbon and
climate-resilient path of development is therefore critical to achieve the scale of investment
needed to meet sustainability and growth demands.
Growing attention to the likelihood of stranded assets as a result of climate risk, which may be
due to physical climate impacts, changing government regulations, technological change and
relative costs, as well as litigation, can also affect the valuation of infrastructure assets over their
long life cycles (Caldecott et al., 2016). The report of the FSB Task Force on Climate-related
Financial Disclosures (Task Force on Climate-related Financial Disclosures, 2017) has raised
the concerns of governments and investors alike over climate risk and stranded assets and for
the potential for this to lead to systematic risk within the financial sector (Bak et al., 2017).

What Is the Role of Private Capital?

Governments have historically planned, regulated, and financed the bulk of infrastructure off
their own balance sheets—whether directly through national development banks or indirectly
through utilities. In Latin America and the Caribbean, however, fiscal constraints and a focus on
deleveraging public sector balance sheets is placing greater emphasis on the role of the private
sector in providing infrastructure services (Serebrisky et al., 2015). In addition to reducing the
fiscal burden of public budgets, more private sector involvement may enhance performance and
increase efficiency of infrastructure services (Youssef and Nahas, 2017).
However, a growing trend for decentralized decision-making to subnational entities – particularly
in Latin America and the Caribbean, where 80% of people live in cities – makes it harder to
mobilize private capital at scale (Serebrisky et al., 2015). At the same time, regulatory changes
such as those proposed under Basel III which penalizes banks from holding assets for longer
than five years, have reduced the role of commercial banks in project finance. It seems clear
that governments alone applying approaches used in the past will not be able to meet projected
demand for investment in sustainable infrastructure.
Increasing access to long-term capital at adequate rates to support investments in sustainable
infrastructure will require enhanced participation from private actors (UN General Assembly,
2015: Bielenberg et al., 2016: Fay et al., 2017). To date, however, progress in engaging the
private capital in sustainable infrastructure investments has been relatively slow (Serebrisky et
al., 2015). Reforms undertaken since the mid-1990s have increased private sector investments
in infrastructure in Latin America and the Caribbean; however, the public sector still accounts for
almost two thirds of infrastructure investment, with the private sector more prominent in some
smaller economies such as Honduras and Nicaragua (Serebrisky et al., 2017).
Several key barriers reduce the likelihood of private investments in sustainable infrastructure:
the absence of an articulated vision, for example, through a national infrastructure strategy or
investment road maps; lack of well-articulated and transparent pipelines of bankable projects;
the lack of financing structures to effectively mitigate risks and align financing with sustainability
principles; and, opaque or confused market signals created by a growing number of sustainable

6
infrastructure and green standards and by the lack of a shared definition of sustainable
infrastructure. Additional barriers result from gaps in institutional arrangements leading to
uncertainty over revenue streams, weak competition frameworks, the lack of clear sustainability
criteria in upstream work and financing, and weak alignment between infrastructure planning
and countries' own objectives under the Paris Agreement (Organisation for Economic Co-
operation and Development, 2015a; Mercer and Inter-American Development Bank, 2016 and
2017). The way forward will be to create a more coherent set of signals to investors through a
more harmonized approach to delivering sustainable infrastructure, through the alignment of key
stakeholders, and through much greater collaboration to deliver sustainability across the whole
project cycle (Mercer and Inter-American Development Bank, 2016 and 2017).
Why Define Sustainable Infrastructure?
As noted earlier, the level of investment throughout the region and the quality of infrastructure
limit inclusive growth (International Monetary Fund, 2016). While support for sustainable
infrastructure is growing, current progress is underwhelming (Mercer and Inter-American
Development Bank, 2016 and 2017; Fay et al., 2017). The long time span and broad spatial
consequences of infrastructure assets mean that projects can generate both positive and
negative externalities that are difficult to capture and manage (Bak et al., 2017). The growing
complexity of infrastructure, particularly for economic and sectoral decision-makers, coupled
with the need to mobilize new sources of capital drives the need for a framework that promotes
a collective understanding.
Thus, the IDB Group defines sustainable infrastructure as infrastructure projects that are
planned, designed, constructed, operated, and decommissioned in a manner to ensure
economic and financial, social, environmental (including climate resilience), and institutional
sustainability over the entire life cycle of the project. The criteria that are the basis for this
definition are described in section 2 and drawn from existing tools and approaches to
sustainability.

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 Box 1: Why do we need a framework for investing in sustainable infrastructure?

• Develop better projects: Having a clear shared understanding of sustainable infrastructure

ensures that we are heading towards the same objectives. This will allow us to measure
progress and get feedback from peers and will result in better-quality infrastructure investments
that are scalable.
• Support upstream institutional strengthening: The framework will help identify opportunities
for institutional (policy, legislation, regulation, and organizations) capacity building to ensure
systemic and long-lasting changes, leading to quality infrastructure project pipelines and better
delivery of infrastructure services.
• Establish clear financing ground rules: The framework will give clarity to private investors as
to investing in sustainable infrastructure. This will help align financial systems and incentivize
and mobilize finance to drive transformation and increase the scale of investments.
• Standardize tools and indicators: There are transactional costs associated with the
proliferation and fragmentation of tools and approaches to deliver sustainable infrastructure. The
framework will aid analysis and standardization of tools and approaches to accelerate adoption.
• Provide a conceptual base for change: Sustainable infrastructure is complex and
multifaceted, and the different dimensions of sustainability interact with each other, requiring
consideration of synergies and trade-offs. Defining the attributes of sustainable infrastructure will
clarify what we are trying to achieve across stakeholder groups and create space for
strengthening the business case.

Most existing tools and approaches incorporate 60 or more criteria to show if an infrastructure
project is sustainable. Many of these criteria are synergistic with others, driving the need for
trade-off considerations. Infrastructure when viewed from the perspective of different
disciplines—engineering, finance, economics, development, climate, social, and
environmental—looks very different; some of these differences are so pronounced that they
often create disagreement if not diverging approaches.
Consequently, there are many approaches to adding sustainability value to infrastructure
projects (Watkins, 2014; Mercer and Inter-American Development Bank, 2016; Georgoulias et
al., 2010). The proliferation of approaches creates confusion and hinders the ability to attract
new players (Mercer and Inter-American Development Bank, 2016 and 2017). Hence,
developing a common framework for understanding what constitutes sustainable infrastructure
will help clarify end goals and give a valuable basis for analysis to identify key actions, including
roles and responsibilities, at different stages across the whole project life cycle. In this regard,
an agreed framework will also help measure advances toward sustainability.
The multiple and different uses of the term “sustainable infrastructure” can create ambiguity;
evaluating and selecting any one of the many approaches can increase transaction costs,
discourage uptake, and lead to inconsistent system-level results (Mercer and Inter-American
Development Bank, 2016). The term “sustainable infrastructure” is also often confused with
terms such as “green infrastructure” or “smart infrastructure”1. The concept of sustainable

1
Green Infrastructure generally refers to a strategically planned network of high quality natural and semi-natural areas with other
environmental features, designed and managed to deliver a wide range of ecosystem services and protect biodiversity in both rural

8
infrastructure needs to help drive transformational change rather than becoming a trivial buzz
word to repackage old ways of preparing, constructing, operating, and investing in
infrastructure.
Given the temporal and spatial complexity of infrastructure projects, many different stakeholder
groups must be engaged in both defining and delivering sustainable infrastructure.
Improvements in upstream regulation and planning need to be accompanied by better project
preparation, design, construction, operations, and decommissioning. This will depend both on
the capacities of national and subnational governments and sector agencies as well as their
relations and ability to effectively engage with the private sector, including project developers,
construction and operations firms, sustainability standards setters, and private finance.
Multilateral development banks (MDBs) are well positioned to help tackle the barriers to
delivering sustainable infrastructure and mobilizing finance at scale. MDBs are already engaged
in developing the sustainable infrastructure agenda by supporting knowledge agendas,
strengthening national and subnational institutional capacities, supporting project preparation
and design, and accessing and delivering finance.
Stronger engagement with organizations such as the International Monetary Fund and the
Organisation for Economic Co-operation and Development will also be important in aiding
Governments with the institutional changes needed to regulate, plan, and attract financing for
pipelines of sustainable infrastructure projects.
An OECD summary of the Long-term Infrastructure Investors Association policy dialogue to
develop infrastructure as an asset class notes that “while investors are adopting a global
diversification of infrastructure portfolios, international infrastructure investment policy has to
maintain its flexibility to account for different approaches to sustainable infrastructure investment
across countries” (Organisation for Economic Co-operation and Development, 2017d). In a
forthcoming report, Breaking Silos: Actions to Develop Infrastructure as an Asset Class and
Address the Infrastructure Gap (unpublished), the OECD calls for promoting a definition of
sustainable and quality infrastructure to facilitate consistency of data collection and for
standardization and harmonization of project preparation as, for example, through SOURCE2 —
an online platform developed with the MDBs to present sustainable, bankable, and investment-
ready infrastructure projects and to improve project preparation. As this framework evolves it will
also be important to ensure coordination with other international initiatives such as the Global
Infrastructure Hub and the Infrastructure Data Initiative.

and urban settings (European Commission 2013). Smart infrastructure results from combining physical infrastructure with digital
information technologies (Bowers et al. 2017).
2
https://public.sif-source.org

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 2. A Definition of Sustainable Infrastructure

The Global Commission on the Economy and Climate defined Infrastructure as:
“structures and facilities that underpin power and other energy systems (including upstream
infrastructure, such as the fuel production sector), transport, telecommunications, water, and
waste management. It includes investments in systems that improve resource efficiency and
demand-side management, such as energy and water efficiency measures. Infrastructure
includes both traditional types of infrastructure (including energy to public transport, buildings,
water supply and sanitation) and, critically, also natural infrastructure (such as forest
landscapes, wetlands and watershed protection)” (Bhattacharya, Oppenheim, and Stern, 2015;
The New Climate Economy, 2016).
Thirty years earlier the World Commission on Environment and Development defined
sustainable development as:
"development that meets the needs of the present without compromising the ability of future
generations to meet their own needs” (World Commission on Environment and Development,
1987).
Combining these concepts provides a starting point for a definition of sustainable infrastructure
and subsequent higher-level frameworks for sustainability and sustainable infrastructure give
further guidance:
The UN Commission for Sustainable Development 2001 Framework for Sustainability
includes the following indicators (Wu and Wu, 2012):
• Social—equity, health, education, housing, security, population
• Environmental—atmosphere; land; oceans, seas, and coasts; freshwater; biodiversity
• Economic—economic structure; consumption and production
• Institutional —frameworks and capacities

The Wuppertal Sustainable Development Indicator Framework includes indicators covering

environmental, social, economic, and institutional dimensions (Singh et al., 2012).
The Sustainable Infrastructure Action Plan of the World Bank identifies economic and
financial sustainability, social sustainability, and environmental sustainability as key elements of
sustainable infrastructure—underlain by good governance (World Bank Group, 2008).
The G7 Ise-Shima Principles for Promoting Quality Infrastructure Investment of 2016
names five principles that cover governance, efficiency, resilience, job creation, capacity
building, social and environmental impacts, alignment with economic and development
strategies, and effective resource mobilization.

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 Box 2: Tools considered in developing the framework

• CEEQUAL (UK & Ireland • Sustainable Transportation Appraisal

Projects/International Projects) Rating System framework (STARS)
• ENVISION Rating System (ISI & Harvard • Hydropower Sustainability Assessment
University) Protocol
• IS Rating Scheme by Infrastructure • IDB Safeguards
Sustainability Council of Australia (ISCA) • IFC Performance Standards on
• Infrastructure Voluntary Evaluation Environmental and Social Sustainability
Sustainability Tool (INVEST) • World Bank Environmental and Social
• SuRe® Standard for Sustainable and Framework
Resilient Infrastructure

We also drew extensively on approaches and assessment tools for sustainable infrastructure
(see Box 2.) The framework builds on and complements these approaches and tools; we are
not creating another tool. Instead, the purpose of the framework is to help show gaps, ensure
consistent approaches, and improve the coverage of existing approaches and tools.
Considering the above-mentioned frameworks, principles, and standards the IDB Group defines
sustainable infrastructure as follows:
“Sustainable infrastructure refers to infrastructure projects that are planned, designed,
constructed, operated, and decommissioned in a manner to ensure economic and
financial, social, environmental (including climate resilience), and institutional
sustainability over the entire life cycle of the project.”
We formulated guiding principles for each of the dimensions of sustainability (see Figure 1).

Figure 1: The Four Dimensions of Infrastructure Sustainability

Economic and Financial Sustainability

Infrastructure is economically sustainable if it generates a positive net economic return,
considering all benefits and costs over the project life cycle, including positive and negative
externalities and spillovers. In addition, the infrastructure must generate an adequate risk-
adjusted rate of return for project investors. Sustainable infrastructure projects must therefore
generate a sound revenue stream based on adequate cost recovery and be supported, where
necessary, by well-targeted subsidies (to address affordability) or availability payments (when

11
users cannot be identified), or where there are large spillover effects. Sustainable infrastructure
must be designed to support inclusive and sustainable growth and boost productivity and to
deliver high-quality and affordable services. Risks must be fairly and transparently distributed to
the entities most able to control the risk or to absorb its impact on the investment outcomes over
the life cycle of the project.

Environmental Sustainability, including Climate Resilience

Sustainable infrastructure preserves, restores, and integrates the natural environment, including
biodiversity and ecosystems. It supports the sustainable and efficient use of natural resources,
including energy, water, and materials. It also limits all types of pollution over the life cycle of the
project and contributes to a low-carbon, resilient, and resource-efficient economy. Sustainable
infrastructure projects are (or should be) sited and designed to ensure resilience to climate and
natural disaster risks. Sustainable infrastructure often depends on national circumstances,
where the overall performance will need to be measured compared to what could have been
built or developed instead.

Social Sustainability
Sustainable infrastructure is inclusive and should have the broad support of affected
communities—it serves all stakeholders, including the poor—and contributes to enhanced
livelihoods and social well-being over the life cycle of the project. Projects must be constructed
according to good labor, health, and safety standards. Benefits generated by sustainable
infrastructure services should be shared equitably and transparently. Services provided by such
projects should promote gender equity, health, safety, and diversity while complying with human
and labor rights. Involuntary resettlement should be avoided to the extent possible and when
avoidance is not possible, displacement should be minimized by exploring alternative project
designs. Where economic displacement and relocation of people is unavoidable, it must be
managed in a consultative, fair, and equitable manner and must integrate cultural and heritage
preservation.

Institutional Sustainability
Institutionally, sustainable infrastructure is aligned with national and international commitments,
including the Paris Agreement, and is based on transparent and consistent governance systems
over the project cycle. Robust institutional capacity and clearly defined procedures for project
planning, procurement, and operation are enablers for institutional sustainability. The
development of local capacity—including mechanisms of knowledge transfer, promotion of
innovative thinking, and project management—is critical to enhance sustainability and promote
systemic change. Sustainable infrastructure must develop technical and engineering capacities
as well as systems for data collection, monitoring, and evaluation, to generate empirical
evidence and quantify impacts or benefits.

12
 3. Delivering Sustainable Infrastructure

To operationalize infrastructure sustainability, the definition and principles should be translated

into practical and measurable criteria. The criteria across all four sustainability dimensions and
across the project cycle must be consistent with the delivery of sustainability in infrastructure
projects. Notably, addressing some sustainability aspects upstream could be much more cost-
effective than trying to address sustainability when projects are designed or in operation
(Georgoulias, Arrasate, and Georgoulias 2016). There are many publications that provide
insights into how to deliver sustainable infrastructure (see references)— the most easily
analyzed are approaches to sustainability assessment and to ensuring environmental and social
sustainability during project preparation and design. Consequently, this document begins with
an examination of how to deliver sustainability during project preparation and, then—with this as
a basis—describes actions that can be taken earlier in the project cycle and during financing to
help to deliver sustainability.

Criteria for Project Preparation and Design

Based on the framework, we identified 66 criteria that should be addressed during project
preparation and design to ensure that we “do projects right.” These criteria are relatively easy to
identify because of the consistency among the different approaches to sustainability, to
sustainability assessment, and to environmental, social, and governance (ESG) standards.
Tables 1–4 present sustainability criteria across the four principles at the project preparation
and design phase. These criteria apply to all project components including elements such as
access roads, transmission lines, raw material extraction areas that are necessary for delivering
the project. Appendix 1 gives more detailed descriptions for each criterion.

13
Table 1: Sustainability criteria under the economic and financial sustainability principle
for project preparation and design.

Economic and Financial Sustainability

1 Project design for optimal economic growth
and Social
Economic

2 Economic and social return over project life cycle

Returns

3 Increase of local investment

4 Service access and affordability
5 Service efficiency, quality, and reliability
6 Infrastructure asset maintenance and optimal use
7 Positive net present asset value
8 Adequate risk-adjusted rate of return
Sustainability

9 Clarity on revenue streams

Financial

10 Operating profitability
11 Asset profitability
12 Debt and fiscal sustainability
13 Liquidity ratios
14 Solvency ratios
Efficient risk allocation
Attributes

15
Policy

Commercial and regulatory incentives for sustainability

16

14
Table 2: Sustainability criteria under the environmental sustainability (including climate
resilience) principle for project preparation and design.

Environmental Sustainability, including Climate Resilience

1 Project design for low GHG emissions
Disasters
Climate

Natural

2 Assessment of climate risks and project-resilient design

and

3 Project design and systems optimization for disaster risk management

Durability, flexibility, and recovery of design elements and technological
4
systems
5 Project design and systems optimization to minimize air pollutant emissions
Pollution

6 Project design and systems optimization to minimize water contamination

7 Project design and systems optimization to minimize soil and other pollution
8 Environmental assessment of project impacts
Environment
Preservation

9 Project design for maximum ecological connectivity

Natural
of the

10 Preserve natural areas, areas with high ecological values, and farmlands
11 Project design and technology to minimize invasive species
12 Project design and technology to optimize soils management
13 Efficient use of water resources
of Resources
Efficient Use

14 Material use and recycling

Project design to minimize energy consumption and maximize use of
15
renewable
16 Waste management and recycling
17 Hazardous materials

15
 Table 3: Sustainability criteria under the social sustainability principle for project
preparation and design.

Social Sustainability
1 Social impact assessment of project
Poverty, Social Impact,

2 Social sustainability and development plan

and Community

3 Stakeholder engagement process

Engagement

4 Community consultation and participation

Project design for fair benefit sharing and compensation to project-affected
5
communities
Project design to minimize impacts of resettlement and economic
6
displacement
7 Provision of public amenities within project's area of influence
8 Project design to maximize community mobility and connectivity
9 Universally accessible project design and technologies
and Labor
Human

10 Community health, safety, and security, and crime prevention

Rights

11 Occupational health, safety, and labor standards throughout the project

12 Project design that preserves the rights of vulnerable groups
13 Gender-inclusive project design
Project design that does not limit communities' access to resources
Preservation

14
Cultural

15 Cultural resources and heritage

16 Indigenous and traditional peoples

16
Table 4: Sustainability criteria under the institutional sustainability principle for project
preparation and design

Institutional Sustainability
Project contribution to national and international commitments for
Strategies

1
National

sustainable development
Global
and

2 Project alignment with national and sectoral infrastructure plans

3 Land use and urban planning integration
4 Project alignment with economic, territorial, and urban strategies
Systemic Change
Governance and

5 Project alignment with natural, environment, and social strategies

6 Establishment of corporate governance structures
7 Environmental management systems
Social management systems and grievance redress mechanisms for
8
external stakeholders and for workers, including contractors
9 Project design and systems selection in alignment with certified providers
10 Anti-corruption and transparency framework
11 Project design and systems for engineering and technological feasibility
Accountability
Management
Systems,

12 Project organization to ensure accountability, collaboration, and innovation

13 Project design and planning to ensure optimal implementation
14 Project information sustainability monitoring and tracking

15 Project design and systems to promote institutional capacity building

Capacity
Building

16 Local capacities and awareness

17 Project design and engineering studies for sustainability performance

17
Upstream Institutional Actions to Enable Delivery of Sustainable Infrastructure
The upstream institutional context includes the policies, plans, legislation, regulations, and
organizational capacities that enable projects to be sustainable. A robust institutional context
ensures selection of the “right” projects, incentivizes private sector investment in sustainable
infrastructure, and promotes sustainability from policy to planning to procurement. There is a
substantive literature describing approaches to ensure sustainability in projects through
changes in institutional contexts, portfolio planning, and procurement (See Rajaram et al., 2010;
Corfee-Morlot et al., 2012; Qureshi, 2015; Morrison-Saunders, Pope, and Bond, 2015;
Bhattacharya et al., 2016; Schwab, 2017; Organisation for Economic Co-operation and
Development, 2017c, a, b; World Bank Group, 2017; PPIAF, 2017; Alexander et al., 2017;
Banerjee et al., 2017; Bak et al., 2017). We cross-referenced the recommendations from these
studies with the sustainability criteria for project preparation and design just described to derive
ideas of the issues to be considered upstream in the project cycle to deliver sustainable
infrastructure projects.
For economic and financial sustainability: National and sectoral productivity growth
strategies should establish the need for individual infrastructure projects to support sustainable
and inclusive growth. National and sectoral institutional frameworks should provide incentives to
ensure institutional, social, and environmental returns from infrastructure. Job creation must be
factored into infrastructure investment strategies and plans. Trade institutions should incentivize
sustainability transformation. Taxation and pricing should also incentivize sustainability and
address perverse subsidies and price distortions. Procurement processes should ensure level
playing fields for public and private enterprises. Finally, governments should develop and apply
sustainability certification schemes for infrastructure providers. (See Inter-American
Development Bank, 2006a; International Hydropower Association, 2010; World Bank Group,
2014; Serebrisky, 2014; Organisation for Economic Co-operation and Development, 2015b;
Organisation for Economic Co-operation and Development et al., 2015; Bhattacharya et al.,
2016; Qureshi, 2016; Egler and Frazao, 2016; The New Climate Economy, 2016; Organisation
for Economic Co-operation and Development, 2017c; EU High Level Expert Group on
Sustainable Finance, 2017.)
Aligned with long-term investment plans, infrastructure projects should be delivered in the
context of multi-year public sector budgets. Through institutional measures, governments should
ensure sustainability risk analysis and management in infrastructure investment evaluations.
Similarly, governments should ensure life-cycle costing of infrastructure assets, including
addressing present and expected externalities. National and subnational government
infrastructure procurement and public-private partnership processes should be transparent and
incorporate sustainability as well as ensure allocation of risks fairly between the private and
public sectors. Procurement bids should be evaluated holistically across all dimensions of
sustainability and incentivize inclusion of optimal sustainability features in project designs.
Institutional frameworks for private investment in infrastructure should focus on risk distribution
and management.
Governments should look to mobilize local capital markets for long-term infrastructure
investments, matching project finance requirements (maturities, currency, and risks) to investor
appetite. They should establish clear standards for sustainable finance that are fully coherent
with sustainability and should consider carbon pricing as a mechanism for both removing
perverse subsidies and providing funding to drive transformation. (See Inter-American
Development Bank, 2006a; International Hydropower Association, 2010; Serebrisky, 2014;
World Bank Group, 2014; Organisation for Economic Co-operation and Development et al.,
2015; Bhattacharya et al., 2016; Egler and Frazao, 2016; Qureshi, 2016; Organisation for

18
Economic Co-operation and Development, 2017c; EU High Level Expert Group on Sustainable
Finance, 2017.)
For environmental sustainability, including climate resilience: Projects should be
consistent with national and sectoral infrastructure strategies and incentives designed for
decarbonization. Governments should establish national, regional, and sectoral plans for climate
resilience and adaptation. They should also establish national, regional, and sectoral
institutional frameworks and strategies for disaster risk management and for managing air
pollutant emissions. Governments should establish standards and strategies for durability,
flexibility, and recovery of infrastructure systems. National requirements for project design
should include systems optimization to minimize water contamination. Governments should
establish and implement national and subnational soil and other pollution management systems.
They should develop national and regional plans for biodiversity and ecosystem services
management and ecological connectivity while also establishing institutional mechanisms to
preserve natural areas, areas with high ecological values, and farmlands.
National institutional frameworks should effectively manage soils and water resources. National,
regional, and sectoral plans should address the management of invasive species and the
efficient use of material resources, should drive the sustainable use of energy resources, and
should ensure sustainable waste management. (See International Hydropower Association,
2010; Quintero, 2012; Institute for Sustainable Infrastructure and Zofnass Program for
Sustainable Infrastructure of the Graduate School of Design Harvard University, 2012; World
Bank Group, 2014; Serebrisky, 2014; Organisation for Economic Co-operation and
Development et al,. 2015; Bhattacharya et al., 2016; Egler and Frazao, 2016; Qureshi, 2016;
US Department of Transportation: Federal Highway Administration, 2017; Global Infrastructure
Basel, 2017; CEEQUAL Ltd, 2017; EU High Level Expert Group on Sustainable Finance, 2017;
Organisation for Economic Co-operation and Development, 2017c; Infrastructure Sustainability
Council of Australia, 2017.)
For social sustainability: Governments should establish institutional understanding and
monitor social needs and trends. They should ensure decision making based on updated and
reliable demographic and demand data and should ensure formal and functioning frameworks
for effective stakeholder engagement and community consultation. Governments should
establish an institutional framework for fair benefit sharing and compensation to project affected
communities. They should establish standards and processes for fair resettlement and
displacement of affected people, along with regional strategies and municipal plans for public
amenities, community mobility, and connectivity.
Governments should ensure adoption of universal accessibility standards and codes for non-
discrimination because of disabilities. Similarly, they should establish standards and capacities
to ensure community health, safety, and security. Governments should also demonstrate
commitment and capacities to ensure adherence to occupational health, safety, and labor
standards as well as standards and capacities for the protection of vulnerable groups. They
should ensure institutional commitment and capacities to ensure gender inclusion, adequate
community access to resources, the efficient management of cultural resources and heritage,
and the engagement of indigenous and traditional peoples. (See Inter-American Development
Bank, 2006b; International Hydropower Association, 2010; Institute for Sustainable
Infrastructure and Zofnass Program for Sustainable Infrastructure of the Graduate School of
Design Harvard University, 2012; Bhattacharya et al., 2016; CEEQUAL Ltd, 2017; US
Department of Transportation: Federal Highway Administration, 2017; Infrastructure
Sustainability Council of Australia, 2017; Global Infrastructure Basel, 2017.)

19
For institutional sustainability: Ensuring the rule of law, transparency, and stability over time
is critical to both engaging the private sector and delivering sustainable infrastructure. National
and subnational infrastructure policies and plans are needed to scale up infrastructure services.
Government commitment and capacities are critical to ensure effective sector planning;
integrated planning for economic, territorial, and urban development; and integrated planning for
natural, environmental, and social development. Governments should also ensure national
frameworks exist to regulate and incentivize good corporate governance and transparency.
Similarly, country system capacities for environmental and social management system
regulation, supervision, and enforcement are critical to driving sustainability in operations.
Governments need to establish a clear institutional framework that incentivizes sustainable
procurement.
Governments also need to ensure capacities and policies for anti-corruption and good public
governance. They should establish enabling institutional contexts to drive sustainability
innovation. They need to ensure support to project preparation that incorporates sustainability,
project design, and planning to ensure optimal implementation and the commitment and
capacities to ensure project feasibility. Governments can also establish national and sectoral
frameworks to standardize project agreements. Finally, capacities for data collection,
management, and analysis are key to support infrastructure investments, as are ensuring
capacities for project design and engineering analyzes for sustainability performance. (See
Inter-American Development Bank, 2006a; International Hydropower Association, 2010;
Institute for Sustainable Infrastructure and Zofnass Program for Sustainable Infrastructure of the
Graduate School of Design Harvard University, 2012; World Bank Group, 2014; Serebrisky,
2014; Organisation for Economic Co-operation and Development et al., 2015; Bhattacharya et
al., 2016; Egler and Frazao, 2016; Qureshi, 2016; The New Climate Economy, 2016;
Organisation for Economic Co-operation and Development, 2017c; US Department of
Transportation: Federal Highway Administration, 2017; EU High Level Expert Group on
Sustainable Finance, 2017.)

Using Financing to Drive the Sustainable Infrastructure Transformation

Financing and financial systems are critical to driving the transformation toward sustainable
infrastructure (Yuan and Gallagher, 2015; Berensmann et al., 2017; EU High Level Expert
Group on Sustainable Finance, 2017). The EU High Level Expert Group on Sustainable Finance
(2017) identified three complementary action areas to improve delivery of sustainable
infrastructure:
• Ensure that projects adhere to sustainability standards through the adoption of IFC
Performance Standards or the incorporation of ESG requirements.
• Provide targeted finance for key subsectors that meet sustainability objectives—for
example, toward delivering on SDGs or the Paris Agreement.
• Align financial system institutions to deliver finance that addresses key sustainability
risks and provides long-term support for infrastructure.
Investor interest in “green financing”—targeted investments toward climate mitigation, climate
resilience/adaptation, and environmental sustainability—is growing, as evidenced by rapid
growth in the green bond market. Continued growth will depend on standardizing green finance
practices, enhancing transparency and disclosure standards for risks, enhancing markets for
green investments, and supporting developing-country sustainable finance roadmaps
(Berensmann et al., 2017).
For economic and financial sustainability: Governments and financiers should ensure that
projects are supported by explicit plans describing how the project supports productivity and
maximizes sustainability co-benefits. All projects should be based on an infrastructure service

20
provision agreement and on concession agreements that incorporate and incentivize
sustainability requirements, quantify usage and demand forecasts as part of project viability,
and allocate risks to ensure alignment of interests among parties and to optimize risk
management. Project sponsors should incorporate monetized analysis of ESG liabilities and
analysis of environmental, technological, institutional, supply, and demand risks. Projects should
show how they increase access to affordable, quality, and reliable services.
Projects should present analysis of financial structuring and evidence of comprehensive
financial due diligence. The due diligence should include evaluating creditworthiness of project
participants, modeling operational net revenues against external risks, and evaluating
competitive, construction, termination, political, and macroeconomic risks, including as these
relate to suppliers, customers, and competitors. (See Inter-American Development Bank, 2006a
and 2010; International Hydropower Association, 2010; International Finance Corporation, 2012;
Institute for Sustainable Infrastructure and Zofnass Program for Sustainable Infrastructure of the
Graduate School of Design Harvard University, 2012; Véron-Okamoto and Sakamoto, 2014;
Bhattacharya et al., 2016; Global Infrastructure Basel, 2017; CEEQUAL Ltd, 2017; International
Bank for Reconstruction and Development/The World Bank, 2017; Infrastructure Sustainability
Council of Australia, 2017; US Department of Transportation: Federal Highway Administration,
2017.)
For environmental sustainability, including climate resilience: Projects to be financed
should include life-cycle carbon assessment and a management plan for net reduction of
greenhouse gas emissions. Projects should assess climate change and disaster risks
systematically. They should include a durability, flexibility, and recovery plan. Projects should
include management plans for air pollution, for adverse impacts on human health and the
environment, for adverse impacts from pollution and contamination, for accident prevention, and
for environmental management—including pre-existing liabilities, soils, water resources,
materials use, energy use, waste, and hazardous materials. (See Inter-American Development
Bank, 2006a and 2007; Institute for Sustainable Infrastructure and Zofnass Program for
Sustainable Infrastructure of the Graduate School of Design Harvard University, 2012;
International Finance Corporation, 2012; Véron-Okamoto and Sakamoto, 2014; Bhattacharya et
al., 2016; Infrastructure Sustainability Council of Australia, 2017; US Department of
Transportation: Federal Highway Administration, 2017; International Bank for Reconstruction
and Development/The World Bank, 2017; International Finance Corporation, 2017.)
For social sustainability: Infrastructure projects should include a comprehensive social impact
management plan and document how benefits and compensations will be shared with project-
affected communities and how they would be delivered, how grievances and social liabilities are
managed, and how stakeholders will be engaged. Projects should include final local community
agreements based on free, prior, and informed consent. They should avoid resettlement and
displacement or include a resettlement and displacement management plan. They should
include management plans to ensure preservation or enhancement of public amenities,
maintain urban connectivity, and avoid mobility disruptions.
Projects should ensure that services are fully accessible to disabled and disadvantaged users.
They should include plans to manage impacts on community health and safety and to ensure
compliance with healthy working conditions and occupational health and safety standards,
adherence to human rights agreements, and gender inclusion. Projects should include
agreements with local communities that protect community access to food, land, and water
resources and that manage tangible and non-tangible cultural heritage and any potential
impacts and risks to indigenous and traditional peoples from project activities. (See Inter-
American Development Bank, 2006a, 2007 and 2010; Institute for Sustainable Infrastructure
and Zofnass Program for Sustainable Infrastructure of the Graduate School of Design Harvard

21
University, 2012; International Finance Corporation, 2012; Véron-Okamoto and Sakamoto,
2014; Bhattacharya et al., 2016; Infrastructure Sustainability Council of Australia, 2017; US
Department of Transportation: Federal Highway Administration, 2017; International Bank for
Reconstruction and Development/The World Bank, 2017; International Finance Corporation,
2017.)
For institutional sustainability: Projects should have all relevant parliamentary, sectoral,
environmental, social, and planning approvals and permits allowing development and
construction works to commence. Risks emanating from potential changes in laws and
regulations should be assessed and managed. Similarly, risks associated with project and
organizational structure with a focus on governance systems (executive and board) should be
assessed and managed. Projects should have completed environmental and social
assessments and management plans along with demonstrated human and financial resources
to execute plans. They should establish and implement a comprehensive sustainable
procurement program and should include commitments to anti-bribery and measures that
promote integrity and increase transparency, including grievance redress mechanisms.
Projects should have mechanisms driving organizational collaboration, teamwork, knowledge
sharing, and internal capacity building as well as improving local capacities and broadening
understanding of the importance of sustainability. They should demonstrate integrated project
delivery approaches and a comprehensive project procurement and technology management
plan. Project contracts and subcontracts must be aligned with sustainability performance
requirements through specific clauses and requirements. Projects should document the
establishment of data collection and management systems and should demonstrate reporting
and disclosure transparency and accountability on organizational and project sustainability.
(See Inter-American Development Bank 2006a, 2007, 2010, Institute for Sustainable
Infrastructure and Zofnass Program for Sustainable Infrastructure of the Graduate School of
Design Harvard University 2012, International Finance Corporation 2012, Véron-Okamoto and
Sakamoto 2014, Infrastructure Sustainability Council of Australia 2017, International Bank for
Reconstruction and Development/The World Bank 2017)

Delivering the 2030 Agenda for Sustainable Development

The framework explicitly and directly supports progress toward over 70% of the 169 SDG
targets. This includes all the targets under Goals 6 (ensure availability and sustainable
management of water and sanitation for all), 7 (ensure access to affordable, reliable,
sustainable, and modern energy for all), 9 (build resilient infrastructure, promote inclusive and
sustainable industrialization, and foster innovation), 11 (make cities and human settlements
inclusive, safe, resilient, and sustainable), and 13 (take urgent action to combat climate change
and its impacts). Some SDG targets are outside of the sectoral scope of sustainable
infrastructure; similar frameworks for sustainable cities, sustainable islands, and sustainable
landscapes would ensure complete coverage of all SDG targets.

22
 4. The Role of IDB and Partners

This document provides an initial framework definition of sustainable infrastructure for project
preparation and design along with criteria that could be considered upstream and in the
financing stage to support delivery of sustainable infrastructure. Within the IDB Group (IDBG),
we began through using ENVISION to evaluate private sector operations (INFRA 360),
developing an initial definition in 2014 (Watkins, 2014), lessons learned from case studies (Boltz
et al., 2016; Calixter et al., 2016; Perivier et al, 2016; Picón et al., 2016), and an evaluation of
the contribution of safeguards to sustainability (Georgoulias, Arrasate, and Georgoulias, 2016).
The definition also draws on the body of work by sustainability assessment tool providers and
on environmental and social standards. The framework has benefited from initial discussions
with sectors and disciplines within the IDBG, Harvard University, and the Brookings Institution.
This document is a first step to establishing a vision and approach to what we want to achieve
through delivering sustainable infrastructure.
Sustainability in infrastructure operations within the IDBG is delivered both through proactive
actions within infrastructure divisions and through the application of environmental and social
standards. The focus for operational Divisions is to ensure economic, financial, and institutional
sustainability in operations. In addition, the Transport Division reports annually on portfolio-level
sustainability performance through application of STARS. The Division has also worked
extensively on road safety, climate resilience, and gender inclusion. The Water and Sanitation
Division works on climate resilience, watershed management, and green infrastructure. The
Energy Division delivers renewable energy solutions and energy efficiency and through this has
analyzed and supported change in the institutional contexts for delivering sustainable
infrastructure.
The Infrastructure Department has begun pilot activities to advance sustainable infrastructure
with the Ministry of Transport in Paraguay, the Ministry of Public Works in Chile, and the
Ministry of Public Works and Mendoza Municipality in Argentina. In addition, the Department is
evaluating the use of the Sustainable Infrastructure Foundation online platform SOURCE to
provide accessible information for infrastructure projects—potentially leading to a standardized
approach to documenting quality and sustainability. The IDB Environmental and Social
Safeguards Unit has continued to improve interpretation and application of environmental and
social standards in operations, supported the application of the Hydropower Sustainability
Assessment Protocol, and worked with the Climate Change Division to address disaster and
climate risks in operations. Gender and climate change issues are actively mainstreamed
throughout the IDBG. These efforts should be evaluated, expanded, and standardized as a
basis for establishing effective cross-sectoral approaches to ensuring sustainability in
operations across the Bank and with our clients.
During 2017, the IDBG established a cross-sectoral Sustainable Infrastructure Working Group
that at both the management level and the technical level creates the context for ongoing
dialogue and action. The management group will play an increasingly key role in guiding the
actions within the Bank to enhance sustainability in operations. The technical working group will
examine existing tools (ENVISION, STARS, and SOURCE) considering the definition and will
adapt and expand the application of these tools across infrastructure operations. The technical
group will continue to support piloting within the Divisions of the use of sustainability
assessment approaches with country clients. This support will include new and innovative
financial instruments such as the NDC Pipeline Accelerator and the UK Infrastructure Fund,
designed to support sustainability across the project cycle. The knowledge work on sustainable
infrastructure will focus on providing a better understanding of the effectiveness of upstream
and financing actions in delivering sustainable infrastructure.

23
Beyond the IDBG, development of the definition and its application to address sustainability
challenges requires engagement of those who work directly with sustainable infrastructure in the
region. These stakeholders include government planners, government regulators, national
development banks, project advisors, policy makers, private sector investors, construction and
operations firms, think tanks and tool providers, academia, civil society, public and private
donors, and operational specialists in financial institutions. The IDBG, Brookings Institution,
Harvard University, and the Public-Private Infrastructure Advisory Facility will work with these
stakeholders to further develop and finalize the framework across the project cycle before the
Global Infrastructure Forum meeting in Bali in October 2018. The IDBG will continue to work
particularly with client governments, civil society partners, and private sector investors to better
understand and embrace the imperative of sustainable infrastructure and to accelerate the
development and standardization of frameworks and tools.
Despite the high-level commitment to the Paris Agreement and the SDGs made by
governments and MDBs, and despite the efforts under way to leverage private sector finance,
there is still a lack of engagement by stakeholders. This document serves as an additional call
to action. Mercer and Inter-American Development Bank (2017) recommended that the Bank
help to convene all the stakeholders, align MDBs and other partners, and encourage
collaboration across all stakeholders. The Paris Agreement and the 2030 Agenda for
Sustainable Development provide a long-term signal to investors to allocate capital to
infrastructure that is consistent with low-carbon and climate-resilient development. But the
signal only illuminates the path. This framework for sustainable infrastructure can hopefully help
develop the vehicle to drive progress along that path.

24
Acknowledgments

We would like to thank the following people for their valuable contribution to this technical note:

Catalina Aguiar Parera Gabriela Martínez

Claudio Alatorre Hilen Meirovich
Amal-Lee Amin Angela Miller
Amar Bhattacharya Hendrik Meller
Stefan Buss Ernesto Monter
Ophelie Chevalier Sven-Uwe Mueller
Cristina Contreras Chiemi Nakano
Iván Corbacho Morales Mauro Nalesso
Ricardo De Vecchi Galindo Stephanie Oueda Cruz
Maricarmen Esquivel Gallegos Juan Carlos Paez Zamora
Jaime García Alba Juan Paredes
Matteo Grazzi Maria Cecilia Ramírez
Alfred Grünwaldt Laura Rojas
Gianleo Frisari Tomás Serebrisky
Andreas Georgoulias Alejandro Taddia
Luis Hernando Hintze Chiara Trabacchi
Zachary Hurwitz Graham Watkins
Benoit Jean Marie Lefevre

25
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Appendix 1: Project Design and Preparation Criteria Descriptions

CRITERION DESCRIPTION
1. Economic and Financial Sustainability
Infrastructure projects should be planned, designed, and operated to
address specific bottlenecks, promote inclusive and sustainable
1.1. Project design
growth, and boost productivity. Sustainable infrastructure should seek
for optimal
to maximize co-benefits, create quality employment opportunities
development
particularly for local communities, and identify, assess, and minimize
growth
negative spillovers, especially for disadvantaged and vulnerable
groups—thus supporting social equity and inclusion.
1.2. Economic and Infrastructure projects should apply cost-benefit analysis techniques
social return that adequately evaluate all externalities (positive and negative) to
over project life ensure holistic cost-effectiveness and the highest possible social
cycle return.
Infrastructure projects should, where possible, use innovative financial
1.3. Increase of structures that address sustainability risks to increase investments
local investment locally and mobilize local sources of finance, such as pension and
insurance funds.
Infrastructure projects should broaden access to infrastructure
1.4. Service access
services, especially for disadvantaged and vulnerable groups—thus
and affordability
supporting social equality and inclusion.
1.5. Service
efficiency, Infrastructure projects should broaden access to high-quality, efficient,
quality, and and reliable infrastructure services.
reliability
1.6. Infrastructure Infrastructure projects should include adequate design and operation
asset standards and action plans to ensure optimal asset utilization and
maintenance service provision and to discourage overuse and abnormal
and optimal use deterioration.
Infrastructure projects should be financially structured such that the
present value of cash inflows is greater than the present value of cash
1.7. Positive net
outflows—both discounted at the weighted average cost of capital.
present asset
Infrastructure project financial assessments should be conducted in
value
accord with international good practices and evaluated by independent
entities.
1.8. Adequate risk- Infrastructure projects—in addition to a net positive economic return—
adjusted rate of should generate an adequate risk-adjusted rate of return by identifying
return and assessing relevant project risks to attract commercial investment.
Infrastructure projects should provide clarity on the ultimate source of
1.9. Clarity on
revenue that would cover operating costs, to mitigate risks and ensure
revenue streams
financial viability.
Infrastructure projects should be financially structured such that
1.10. Operating revenues cover running costs and operations turn out profits, before
profitability deduction of taxes, interest, amortization, and depreciation of capital
investments (and remuneration of capital).
Infrastructure projects should be financially structured such that asset
1.11. Asset
profitably (return on assets; return on equity) is sufficient to attract
profitability
private capital.

31
 Infrastructure projects should ensure that service provision costs are
1.12. Debt and
covered through carefully designed user fee schemes and, when
fiscal
determined non-viable, should incorporate transparent, predictable,
sustainability
and well-targeted availability payments.
Infrastructure projects should be financially structured such that the
investment can pay off both its current liabilities as they become due
1.13. Liquidity ratios
as well as its long-term liabilities as they become current, at any given
time.
Infrastructure projects should ensure adequate cash flows to be able
to make payments and pay off long-term obligations to creditors,
1.14. Solvency
bondholders, and banks across the life of the asset. Infrastructure
ratios
project financial assessments should transparently indicate solvency
ratios, in accord with international good practices.
Infrastructure projects should be structured such that project-related
risks (technical, social, environmental, political) are allocated to the
1.15. Efficient risk
party most able to control the likelihood of the risk occurring and best
allocation
able to control the impact of the risk on the project outcome, by
assessing and anticipating a risk well and responding to it.
Infrastructure projects should be designed and implemented to align
1.16. Commercial
with and use commercial and regulatory incentives for incorporating
and regulator
sustainability during construction and operations, such as using
incentives for
energy-efficient equipment or materials with lower embodied energy
sustainability
and water content or priority dispatch in grids for renewable energy.
2. Environmental Sustainability, including Climate Resilience
Infrastructure projects should result in the net reduction of GHG
emissions during construction, operations, and decommissioning, thus
2.1. Project design contributing to the realization of the 2015 Paris Agreement GHG
for low GHG reduction commitments. Project developer should calculate the
emissions anticipated amount of GHG emissions through a life-cycle carbon
assessment and implement clearly defined action plans to reduce or
minimize them.
Infrastructure projects should be designed to be resilient to climate
change and contribute to enhancing adaptation. Project developer
2.2. Understanding
should systematically assess and manage climate change risks
of climate risks
through a climate impact assessment and adaptation plan.
and project
Infrastructure projects should ensure that they do not introduce risks
resilient design
that jeopardize climate change resiliency, such as increasing flooding
risks in the case of water reservoir projects.
Infrastructure projects should systematically assess and manage
potential disaster risks that may affect the project and stakeholders
2.3. Project design
such as workers and potentially affected local communities, following
and systems
national disaster management frameworks. In addition to specifying
optimization for
mitigation and adaptation measures to address disaster risks,
disaster risk
infrastructure projects should include sound disaster risk monitoring
management
and management as well as recovery plans indicating the actions to
be taken in the case of natural disasters.
2.4. Durability,
Infrastructure projects should be designed to be durable and flexible,
flexibility, and
allowing easy reconfiguration, deconstruction, and recycling of project
recovery of
components to extend project useful life and improve resiliency.
design elements

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 and
technological
systems
Project developer should monitor air quality and air emissions and
2.5. Project design
should minimize adverse impacts from pollution from project activities
and systems
during construction, operations, and decommissioning. Infrastructure
optimization to
projects should include comprehensive air pollutant emissions
minimize air
management plans that define actions to be taken to avoid air
pollutant
emissions, as well as to minimize emissions in case regulatory
emissions
thresholds are exceeded.
2.6. Project design
Project developer should assess, evaluate, and manage adverse
and systems
impacts on human health and the environment from excess use of
optimization to
water or water pollution resulting from project activities or storm water
minimize water
runoff.
contamination
Infrastructure projects should assess, evaluate, and manage adverse
impacts from pollution and contamination on land, ocean, seas, water
2.7. Project design
courses, and in the air, including noise and vibration, light, dust, visual
and systems
effects, and particulate matter among other anthropogenic effects.
optimization to
Infrastructure projects should avoid risks of soil pollution—or other
minimize soil
kinds of pollution, such as of seabeds—due to spills, use of chemicals,
and other
or bad practices. Remediation procedures and cleanup programs
pollution
should be put in place in case the land being developed was
previously contaminated.
Infrastructure projects should include a comprehensive environmental
impact assessment that identifies, assesses, and proposes actions for
mitigation of all relevant environmental impacts. Relevant public
2.8. Environmental
authorities should approve the environmental impact assessment.
assessment of
Infrastructure projects should avoid negative impacts on biodiversity
project impacts
and assess and manage any unavoidable impacts to ensure
maintenance of biodiversity functions and ecosystem services,
seeking net positive gain.
2.9. Project design Infrastructure projects should assess and avoid negative impacts on
for maximum habitats, wildlife corridors, and sediment transport and should include
ecological clearly-defined action plans to manage unavoidable impacts, to ensure
connectivity maintenance of ecological connectivity.
2.10. Preserve
Project developer should avoid greenfield development where possible
natural areas,
and favor development on previously developed greyfield sites and
areas with high
brownfield sites. Infrastructure projects should avoid impacts on
ecological
farmland and, where possible, restore previously degraded farmland to
values, and
productive state.
farmlands
2.11. Project design Project developer should use locally appropriate and noninvasive
and technology species to avoid the introduction of invasive species and ensure that
to minimize invasive species would be properly managed and/or eliminated during
invasive species construction, operations, and decommissioning.
2.12. Project design Infrastructure projects should avoid disturbance of soils and, where not
and technology possible, restore disturbed topsoil and subsoil during construction,
to optimize soils operations, and decommissioning. Infrastructure projects should also
management aim to restore soils disturbed during previous development.

33
 Infrastructure projects should monitor and promote the sustainable use
of water resources, including maximizing water reuse or efficiency and
2.13. Efficient use of minimizing use of critical water resources or consumption of potable
water resources water during the life cycle of the project. Infrastructure projects should
utilize storm water, greywater, or recycled water to cover project water
needs.
Infrastructure project should monitor and promote the efficient use of
materials, including materials with a recycled content and materials
with lower energy and water content, and should incentivize the
2.14. Material use
integration of recycling practices during the life cycle of the project.
and recycling
Evaluation of embodied water and embodied energy should be
considered when selecting the optimal materials for the project. The
use of local materials should be incentivized when possible.
2.15. Project design
Infrastructure projects should monitor energy use and promote energy
to minimize
efficiency and the use of renewable energy to minimize energy
energy
consumption, thus avoiding the use of more-polluting non-renewable
consumption
energy sources and the generation of GHG emissions. Infrastructure
and maximize
projects should aim to reduce annual project energy needs following
use of
applicable industry norms.
renewables
Project developer should implement a waste management plan to
2.16. Waste monitor and minimize wastes through recycling and, where possible,
management avoid generation of hazardous wastes. A waste management
and recycling hierarchy should be established that considers prevention, reduction,
reuse, recovery, recycling, removal, and final disposal of wastes.
Infrastructure projects should avoid the use of chemicals and, where
2.17. Hazardous possible and necessary, apply integrated pest management
materials approaches and monitoring during the life cycle of the project to avoid
the use of pesticides, fertilizers, and herbicides.
3. Social Sustainability
Infrastructure projects should assess and ensure that negative social
impacts are avoided or minimized. Infrastructure projects should
3.1. Social impact
include a comprehensive social impact assessment that identifies,
assessment of
assesses, and proposes actions for mitigation of all relevant social
project
impacts. Relevant public authorities should approve the social impact
assessment.
Infrastructure projects should be planned, designed, executed, and
3.2. Social
operated for maximum benefit inclusion for disadvantaged groups
sustainability
including, but not limited to, women and the poor, thus improving
and
social cohesion. A social sustainability and development plan should
development
specify social sustainability and development initiatives to help local
plan
communities develop sustainably.
Infrastructure projects should identify and effectively engage with
3.3. Stakeholder stakeholders throughout the project cycle to ensure public support.
engagement Stakeholder engagement should be pursued through a clearly-defined
process stakeholder engagement plan that includes provisions for soliciting
stakeholder feedback and grievances.
3.4. Community Potentially affected communities should be effectively consulted on
consultation and project developments and engaged during the project development
participation process through official public consultations and targeted initiatives to

34
 avoid conflicts and ensure community support. In the case of high-
impact projects that affect the natural resources and territory of local
communities, project developers should obtain the free, prior, and
informed consent of the community. Community consultation efforts
should be continuous and include provisions for soliciting community
feedback and grievances during operations and decommissioning.
3.5. Project design
Infrastructure projects should be designed to provide fair and
for fair benefit
adequate benefits beyond one-time compensation to project-affected
sharing and
communities, as specified through a clearly-defined community social
compensation to
development plan, implemented in consultation with affected
project-affected
communities.
communities
Infrastructure projects should be designed and implemented to avoid
3.6. Project design
or minimize the need for resettlement or economic displacement of
to minimize
people because of the project, ensuring that where displacement does
impacts of
occur, people are treated equitably. Alternative project designs that
resettlement and
minimize resettlement and displacement should be evaluated.
economic
Resettlement and displacement should be managed through sound
displacement
and clearly-defined displacement management plans.
Project developer should ensure the preservation, or enhancement, of
3.7. Provision of critical public amenities, including public spaces or recreational spaces
public amenities to improve quality of life and help local communities develop
within project's sustainably. Where possible, infrastructure projects should aim to
area of influence restore existing degraded public space or consider initiatives that
expand public access to private space.
3.8. Project design
Infrastructure projects should enhance connectivity, prevent urban
to maximize
sprawl, and avoid mobility disruption. When possible, the project
community
should improve walkability and encourage the use of public transport
mobility and
and other alternative non-motorized forms of transportation.
connectivity
Infrastructure project should ensure that infrastructure services are
3.9. Universally fully accessible to disabled and disadvantaged users. Infrastructure
accessible projects should be designed and implemented following universal
project design accessibility norms and regulations and include provisions to ask for
and technologies feedback from disabled and disadvantaged users during construction
and operations.
3.10. Community Project developer should assess, evaluate, and manage project
health, safety, impacts on community health and safety, including exacerbation of
and security, existing climate or natural disaster risks. Project developer should
and crime ensure that project activities do not increase security risks for local
prevention populations during construction and operations.
3.11. Occupational
Project developer should promote healthy working conditions and
health and
adherence to occupational health and safety standards. Core labor
safety and labor
standards should be respected, and workers protected through fair
standards
treatment, nondiscrimination, and equal opportunity, avoiding under
throughout the
any circumstances forced and child labor.
project
3.12. Project design Infrastructure project should comply with human rights agreements,
that preserves preventing and mitigating adverse impacts over the life cycle of the
the rights of infrastructure assets. Such prevention should address vulnerabilities

35
 vulnerable or any kind of discrimination against vulnerable groups—indigenous
groups peoples, women, and children.
Project developer should prevent, or mitigate against, adverse impacts
due to gender resulting from project activities. Infrastructure projects
3.13. Gender-
should provide equal opportunities to both women and men and
inclusive project
include initiatives to promote women's economic empowerment
design
beyond the provision of temporary jobs as specified through a clearly
defined social development plan.
3.14. Project design Infrastructure projects should be designed and implemented to not
that does not jeopardize community access to food, land, and water resources.
limit Infrastructure projects should ensure that the resource needs of local
communities' communities are considered while calculating resources required for
access to project activities during construction, operations, maintenance, and
resources decommissioning.
3.15. Cultural Infrastructure projects should assess, evaluate, and preserve tangible
resources and and non-tangible cultural heritage that may be affected by project
heritage activities.
3.16. Indigenous Project developer should, in consultation with potentially affected
and traditional indigenous and traditional peoples, assess, evaluate, and manage any
peoples potential impacts and risks from project activities.
4. Institutional Sustainability
4.1. Project
Infrastructure projects should evaluate the extent to which the
contribution to
development is aligned with national and global commitments and
national and
obligations. These may includeratified multilateral environmental
international
agreements including the 2015 Paris Agreement, Sustainable
commitments for
Development Goals, and robust sector strategies or national climate
sustainable
change actions pursuant to the Paris Agreement.
development
4.2. Project Infrastructure projects, as designed, should be optimal and effective
alignment with solutions to meet demonstrated development needs identified through
national and national and sectoral development and infrastructure plans.
sectoral Infrastructure projects should transparently indicate the contribution(s)
infrastructure to national and sectoral infrastructure plans, such as expanding
plans access to potable water services.
Infrastructure projects should be shown to be integrated with existing
4.3. Land use and and planned infrastructure and land use across different jurisdictional
urban planning scales. Infrastructure projects should pursue synergies with adjacent
integration infrastructure systems or facilities to improve efficiencies and reduce
waste and costs.
4.4. Project Infrastructure projects should be shown to be in alignment with
alignment with national and regional economic, territorial, and urban strategies,
economic, ensuring that infrastructure assets are effective solutions for achieving
territorial, and national goals to promote economic empowerment and inclusive,
urban strategies sustainable territorial and urban development.
4.5. Project
Infrastructure projects should be shown to be in alignment with natural,
alignment with
environment, and social strategies, ensuring that projects are aligned
natural,
with environmental restoration or enhancement efforts, as well as
environment,
social strategies to enhance community quality of life and reduce
and social
poverty and inequality.
strategies

36
 Infrastructure projects should comply with national corporate
governance regulations, ensuring appropriate corporate governance,
4.6. Establishment
including separation of policy and executive roles, effective
of corporate
participation of stakeholders, and clearly defined organizational
governance
sustainability roles. This is intended to ensure that the infrastructure
structures
asset is well planned, designed, executed, and monitored over the
project life cycle.
Infrastructure projects should ensure development of environmental
management plans that address the environmental impacts identified
4.7. Environmental
through the environmental impact assessment and their
management
implementation during construction, operations, and decommissioning.
systems
The resources—human and economic capital—to achieve this target
should be identified.
4.8. Social
management
Infrastructure projects should ensure development of social
systems and
management plans that address the social impacts identified through
grievance
the social impact assessment and their implementation during
redress
construction, operations, and decommissioning. The resources—
mechanisms for
human and economic capital—to achieve this target should be
external
identified. Infrastructure projects should provide project-affected
stakeholders
parties with accessible and inclusive access to raise issues and
and for workers,
grievances for these to be managed.
including
contractors
4.9. Project design Infrastructure projects should establish open and transparent
and systems procurement processes for the efficient and sustainable procurement
selection in of materials for construction, operations, and maintenance.
alignment with Infrastructure projects should use certified suppliers that implement
certified sustainability practices in the context of a public sustainable
providers procurement certification scheme.
4.10. Anti-corruption Infrastructure projects should develop and implement an anti-bribery
and management system for the project throughout the life cycle and other
transparency measures that promote integrity and increase transparency in the
framework infrastructure development process.
4.11. Project design
and systems for Infrastructure projects should ensure the feasibility of project design,
engineering and engineering, and technological systems, as transparently evaluated by
technological independent entities.
feasibility
4.12. Project
Infrastructure projects should establish mechanisms for organizational
organization to
collaboration, teamwork, knowledge sharing, and internal capacity
ensure
building including sufficient engineering knowledge and skills for
accountability,
efficient design, preparation, construction, operation, and maintenance
collaboration,
of infrastructure assets.
and innovation
Infrastructure projects should ensure that institutional, organizational,
4.13. Project design
and individual capabilities for infrastructure planning and design are
and planning to
enough to ensure sufficient management of technical, project
ensure optimal
management, contractual, financial, environmental, social,
implementation
governance, and climate change–related aspects and risks.

37
4.14. Project Infrastructure projects should establish a sustainability management
information system with a clearly defined strategy, policy, targets, metrics,
monitoring, and monitoring, evaluation, and independent verification, appropriate to the
sustainability nature and scale of the project and commensurate with the level of
tracking social and environmental risks and impacts.
4.15. Project design
and systems to Infrastructure projects should include opportunities to improve
promote institutional capacity to plan and implement sustainable projects and
institutional manage environmental and social impacts effectively.
capacity building
Infrastructure projects should include opportunities to improve local
4.16. Local capacities and broaden understanding of the importance of
capacities and sustainable use of infrastructure assets and of properly evaluating
awareness sustainability risks and impacts in the context of a comprehensive
socioeconomic analysis.
4.17. Project design
and engineering Infrastructure projects should establish mechanisms to build and
studies for maintain capacities for design, engineering, and technological
sustainability innovation that can lead to exceeding sustainability requirements.
performance

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