The Ethical Investor: Smart cities are a $30 trillion ESG opportunity – these ASX stocks are in the midst of it
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For most of human history, people across the world lived in small communities on rural farms, but a dramatic shift has happened over the past few centuries.
There has been a mass migration from rural towards urban areas and by 2050, it’s estimated that around 70% of the world population will have moved to large cities.
At present, cities are responsible for 70% of all greenhouse gas (GHG) emissions. But with over 90% of the world’s largest cities situated on coasts, this shift could present major challenges.
The UN has said that “smart cities” are going to be the only way forward to combat the likely impact caused by this massive migration.
Smart urban infrastructure, ranging from technology-driven or natural, will have to build on a massive scale which could represent a $30 trillion ESG investment opportunity.
This may involve the building of climate-smart cities that can include a vast range of measures from flood defences, to electrified transport, as well as smart green buildings.
It’s predicted that building floor space around the world will double by 2060, equivalent to adding an extra New York City to the world every month for the next 40 years.
But the International Energy Agency (IEA) estimates that 50% of the energy currently used by the buildings is being wasted.
To solve this problem, smart buildings of the future will have to build a monitoring system to collect energy usage data more efficiently.
The Edge, an office building in Amsterdam, is a modern blueprint of what all future smart buildings could look like.
Called the greenest building in the world, The Edge uses 70% less electricity than the typical office building, and was given a sustainability score of 98.4% by British rating agency BREE, the highest score ever recorded.
On the ASX, smart building tech company ClearVue Technologies (ASX:CPV) has a product that could produce near or net zero energy for buildings.
The company’s patented glass technology sits within an activated interlayer between two panes of glass, and reduces energy use in a building.
It uses nano and micro particle technology to internally diffuse, redistribute, and reflect elements of the incoming light towards the edges of the glass panel, where it is collected by monocrystalline silicon-based PV modules.
The PV modules are placed into a circuit, which is optimised to harvest energy rays coming from multiple directions (even when cloudy).
The company has been granted 230+ patents across for the world for the technology.
Intelligent public safety systems will also be a key feature of smart cities in the future.
Singapore’s Smart Nation is said to be one of the best smart city monitoring programs which digitally collects information using sensors from all over the city.
According to the Singapore government, data collected on pedestrian activity is being sent to the appropriate governmental agencies for analysis and action in delivering services.
By this year, the Singaporean government also plans to implement energy-efficient lighting for all public roads, as well as having solar panels installed on rooftops of 6,000 buildings.
Back home, Aussie company Spectur (ASX:SP3) provides remote-sensing surveillance cameras for public and remote places such as beaches, parks, bushlands and other isolated facilities.
Spectur’s artificial (AI) technology can process complex scenarios very quickly with a high degree of accuracy, with features including facial and object recognition.
Spectur’s CEO Gerard Dyson told Stockhead that Spectur’s technology ticks all the boxes for the environment, customers, investors and the broader community.
“Utilising the power of the sun and battery storage means that there is no load on the grid and any fossil power that may go into that. The power for Spectur solutions is green,” Dyson said.
In addition, Spectur’s technology is totally wireless, which means that land is not unnecessarily dug up and disturbed. This allows their cameras to be installed in pristine environments with a physical footprint as small as 10cm by 10cm.
Dyson also says Spectur is leading the battle against illegal dumping.
“Whether it is household, building or other waste, Spectur solutions are increasingly being used to deter, identify, fine and ultimately reduce the amount of illegal dumping that occurs in our country and the impact on groundwater, flora and fauna that goes with it.”
Whilst smaller ASX listed companies don’t always get the attention from ESG focused investors, Dyson believes Spectur is a good opportunity for astute ESG investors.
“Spectur provides an opportunity for savvy investors keen to make a positive difference, and share in the high growth rates that come from small cap markets,” Dyson told Stockhead.
Smart Parking (ASX:SPZ) is bringing its intelligent parking system and integrated smart parking solutions to the world.
The company’s app, Smartparking, shows motorists real-time guidance around space availabilty which allows drivers to pre-plan their journey.
A key part of the technology and service it provides is to deliver information to motorists, parking operators and land owners on how to locate, manage and monetise parking spaces as quickly and efficiently as possible.
“In all markets that we operate, we are seeing a growth in car ownership. And with more cars on the road, the need for technology and management expertise is growing,” SmartParking CEO, Paul Gillespie, told Stockhead.
“If we can make the parking experience quick and easy then there are fewer motorists circling the streets looking for empty spots, which in turn will reduce carbon emissions.”
Traffic Technologies (ASX:TTI) meanwhile, designs and manufactures low energy consumption streetlights and traffic lights where the saving in power on average for streetlights is 55% compared to conventional ones.
For traffic lights, (switching from red to amber to green) the reduction is even greater where power consumption has been reduced from 60 watts down to 7 watts on average with over 80% saving.
The carbon footprint across these savings is enormous, with over 3 million streetlights and half a million traffic lights across Australia.
TTI CEO, Con Liosatos, told Stockhead that his company brings ESG qualities to the table for investors.
“TTI represents an investment proposition in the ESG area due to its focus on energy saving and reducing the environmental impact of traffic management infrastructure,” he said.
“Our products have a beneficial impact in reducing the impact of climate change, as well as improving road safety and reducing the human, societal and financial impact of road trauma.”
TTI has also just signed a contract with the Qatari government to provide traffic management and IoT (internet of things) solutions in time for the FIFA World Cup in November.
Resources management will increasingly be top of mind for most municipal governments around the world.
Demand for water is projected to increase by 55% by 2050 and as a result, people living in cities and urban industries are increasingly competing with each other for water.
If not properly managed, this competition can have undesirable social, environmental and economic consequences.
In South Korea for instance, population density and water scarcity are both the highest among OECD countries.
Water in river basins is fully, or close to fully, allocated and this poses a problem for an increasing population.
An Australian company that has been working with the South Korean government to alleviate this problem is X2M Connect (ASX:X2M).
X2M owns a patented technology that can be connected with water and gas meters, enabling utlities to obtain live data from the one platform.
The company is retrofitting water meters in South Korean cities to make them “smart” and communicate with X2M’s IoT platform.
For the household, the technology can provides accurate real time data on usage, increasing the accuracy of billing. For the local government, X2M’s technology can detect leaks and inform social welfare services when there are cases of non-usage.
The platform is currently servicing 22 local South Korean municipalities.
“X2M has a really unique platform, to the extent that it can connect any device on the one platform and have any device talk to each other, and that’s the patent that we’ve got,” X2M CEO, Mohan Jesudason, told Stockhead.
At Stockhead we tell it like it is. While Spectur is a Stockhead advertiser, it did not sponsor this article.