Urban sustainability may be a hot topic, but is there a direct material benefit for cities that make an extra effort? Researchers at the University of Amsterdam Business School say there is. The international business scholars note that air quality improvement measures and good waste water treatment practices appear to make cities more attractive destinations when it comes to foreign direct investment.
Clean Air, Water Boosts Foreign Investment
To arrive at its finding, the team examined seven years of data from 185 Chinese cities to see whether improvements in air quality and waste water treatment appeared to affect foreign direct investment. The research found that there appeared to be a direct correlation between cleaner air and waste water and the amount of foreign investment going into cities.
Figures cited include a $1billion per annum increase in foreign direct investment when a large city like Shanghai achieves significant air quality improvements and potential for as much as $750 million per annum in extra investment for a city like Beijing when waste water treatment percentages rise.
The finding is specifically interesting because it indicates the possibility of a greater commitment to corporate responsibility than in the past. In commentary, the study’s authors refer to a “race to the bottom,” in which multinationals invest in other countries because they hope to be subjected to laxer environmental regulations appearing to be replaced, at least at city level, by a “race to the top,” in which multinationals strive to associate themselves with green cities.