Sustainable development through quality infrastructure: emerging focus on quality over quantity

Abstract

This is an advocacy rather than scientific paper that offers a narrative on the process of shaping the G20 Principles on Quality Infrastructure, announced at the G20 Leaders’ Summit in Osaka in June 2019. Caught between a rock and a hard place – the rock being the United States with its sphere of influence in which Japan has historically thrived, and the hard place being China with its global reach that forces Japan to constantly seek new ways of coexistence – Japan used its G7 platform in 2016, and recently its prestigious G20 presidency, to secure a unique space for itself by offering its vision on quality infrastructure. While hitting the mark on economic governance, social sustainability and inclusivity aspects, the Principles fall short when it comes to addressing environmental considerations and the key issue of climate change. Nonetheless, in a world lacking universal and authoritative standards on quality infrastructure, the Principles could still have significant impact in developing countries. The paper offers observations on ways to keep the Principles both relevant and practicable, including through collaboration between China and Japan in their infrastructure endeavours across Asia, Africa, and beyond.

Keywords:

• Sustainable infrastructure
• G20
• quality infrastructure investment

1. Introduction

At Argentina’s handover of the G20 leadership to Japan in late 2018, the Japanese Prime Minister, Abe Shinzo, designated quality infrastructure for enhanced connectivity as one of the priority topics of the forthcoming Japanese presidency of the G20. Japan took up this leadership role at a pivotal time when renewed efforts are being made to address the persistent disparities in infrastructure access: around 2.2 billion people lack access to safe drinking water, 4.2 billion lack access to sanitation, 940 million lack electricity, and 1 billion lack access to all-weather roads (United Nations Children’s Fund and World Health Organization 2019). Vulnerable groups, such as women, people with disabilities or economic disadvantage, older persons, indigenous peoples, and other excluded groups are often unserved or underserved by essential infrastructure. Such needs point to an infrastructure financing gap estimated at US$90 trillion between now and 2030 (The Global Commission on the Economy and Climate 2017).

With the Sustainable Development Goals (SDGs) in 2015 came a renewed appreciation of the importance of infrastructure as an enabler that would either directly or indirectly influence the attainment of all the SDGs, including 92% of the overall targets (Thacker et al. 2018).¹ This appreciation spurred a seemingly convenient moral imperative for new infrastructure investment by the private sector, especially institutional investors (United Nations Office of the High Commissioner for Human Rights 2019, 115–145). But despite the euphoric enthusiasm within the investment community, much of the needed and planned infrastructure in the developing world is yet to be built. Current infrastructure investment in developing countries is a mere trickle (The World Bank 2018),² much of it financing business-as-usual infrastructure without fully incorporating climate change or human rights considerations, or the lessons from past failed mega infrastructure projects (United Nations Office of the High Commissioner for Human Rights 2019). The fragmented nature of existing normative standards and initiatives for sustainable infrastructure – there are over 30 initiatives that are designed to drive investments in sustainable infrastructure (Mercer and Inter-American Development Bank 2017) - means all infrastructure projects currently operate in a kind of standards vacuum. Japan’s decision to stress investment in quality infrastructure was a potentially perfect antidote for all the real and perceived infrastructure ills around the world, including (but by no means limited to) those spread by China’s Belt and Road Initiative (BRI).

The term ‘quality infrastructure’ (QI) in the G20 lexicon is not new. It first appeared in the communiqué of the G20 Leaders’ Summit in Brisbane in November 2014, in which the Leaders committed to ‘lift quality public and private infrastructure investment’ (G20 2014). Two years later, the G7 under the Japanese leadership agreed to the Ise-Shima Principles for Quality Infrastructure Investment, spelling out five quality elements (see Box 1). These compact and high-level principles are significant for explicitly addressing the quality aspects of infrastructure, for the emphasis on economic governance, and for clearly affirming the importance of addressing environmental and social impacts of infrastructure investment. A few months later, the 2016 Hangzhou Declaration on the occasion of the Chinese presidency of the G20 briefly mentioned quality infrastructure (G20 2016), whereas the leaders at the G20 summit in Argentina was content to pass the baton to Japan, only saying ‘we look forward to progress in 2019 on quality infrastructure’ (G20 2018).

Box 1. G7 Ise-Shima Principles for Promoting Quality Infrastructure Investment.

Principle 1: Ensuring effective governance, reliable operation and economic efficiency in view of life-cycle cost as well as safety and resilience against natural disaster, terrorism and cyber-attack risks

Principle 2: Ensuring job creation, capacity building and transfer of expertise and know-how for local communities

Principle 3: Addressing social and environmental impacts

Principle 4: Ensuring alignment with economic and development strategies including aspect of climate change and environment at the national and regional levels

Principle 5: Enhancing effective resource mobilisation including through PPP

The Financing for Development’s Addis Ababa Agenda for Action in 2015 used QI in the format that is oft-quoted (‘sustainable, accessible and resilient quality infrastructure’), whereas the 2030 Agenda for Sustainable Development used a slightly different formulation (‘universal access to affordable, reliable, sustainable and modern energy services; sustainable transport systems; and quality and resilient infrastructure’), but in each case without elaboration on what constitutes quality.

2. What quality means and why it matters

The Oxford English Dictionary defines quality as ‘the standard of something as measured against other things of a similar kind; the degree of excellence of something’ (Oxford University Press 2019). According to ISO 9000, the quality management systems standards set by the International Organization for Standardization (ISO), quality is the ‘totality of characteristics of an entity that bear upon its ability to satisfy stated and implied needs’ (International Standards Organization n.d.).³ According to one quality expert, that suggests an entity’s drive to improve the characteristics of its processes, products, and people in order to eventually satisfy the stated and implied needs of its stakeholders, including the customer, the workforce, and ultimately the society (Radziwill 2009). Grasping what stakeholders need today and anticipating their needs tomorrow drives innovation.

Borrowing from these and other abundant academic and trade literature on quality control, quality management, quality assurance, customer service and the like, it can be deduced that quality in the infrastructure sector means a degree of excellence and innovation in infrastructure service provision, gauged from the stakeholders’ point of view. Given the public nature of infrastructure provision, it is not just about corporate production units performing routine processes well and meeting the basic expectations of customers, but it is also about economic decision makers, planners, designers, contractors and investors anticipating implied societal expectations and exceeding them through innovation. Whether provided by the public sector or private operator, quality infrastructure should be measured from the perspective of stakeholders, including those without access due to vulnerability or marginalisation, and ultimately by the taxpayers and society as a whole.

Public officials should not rely on the presumed intrinsic benefits of public service but deliberately and systematically seek to enhance the economic, environmental and social co-benefits of a project (Brauch 2017). The flipside of benefits would be cost – or a risk or a perception of risk of incurring a cost or experiencing harm. Quality infrastructure should also entail excellence in terms of risk management to ensure no harm to the host state, and the population at large and the environment, from project selection, design, construction, implementation to winding down stages.

Quality is further ensured by people’s active participation the infrastructure decision making and project monitoring processes. Therefore, ex-ante and ex-post transparency of information to people, their voice in decision making, accountability of decision makers, including accountability or grievance mechanisms, and provision of remedy for any harm caused are fundamental aspects of good governance and the bedrock of quality. These aspects of quality infrastructure are underpinned by human rights principles that can be extracted from international human rights instruments.

Our desire for quality infrastructure services is so universal and deep that it is captured in the International Covenant on Economic, Social and Cultural Rights (CESCR), which is part of the International Bill of Human Rights. The CESCR, in reference to the right to health, is understood to specify the following four elements: (i) availability (of services in sufficient quantity); (ii) accessibility (of services to everyone without discrimination, and with physical accessibility and economic accessibility (affordability) and information accessibility); (iii) acceptability (in terms of medical ethics and cultural appropriateness); and (vi) quality (scientifically and medically appropriate services and of good quality) (Committee on Economic and Social and Cultural Rights 2000). With respect to education, the following four ‘A’s were emphasised: availability, accessibility, acceptability, and adoptability. The idea of quality is built into acceptability of educational services: relevant, culturally appropriate and of good quality (Committee on Economic and Social and Cultural Rights 1999). While there is no human right to infrastructure, per se, the foregoing ‘A’s and the built-in notion of quality should guide a comprehensive approach to provision of good quality infrastructure services.

These fundamental human rights concepts apply to all people, with prioritisation for those who are most vulnerable and disadvantaged. Such a human dimension of infrastructure is sorely lacking in the current discourse on maximising private investment in infrastructure, especially by institutional investors, and often through ‘infrastructure as an asset class’ (United Nations Office of the High Commissioner for Human Rights 2019).

Quality in infrastructure is not a luxury but a political necessity. Proponents for economic growth through more infrastructure should anticipate the needs of the fast growing demographic – the rising ‘global middle class’ who are the would-be users of all types of infrastructure services. This group will increase from 1.8 billion in 2009 to 4.9 billion by 2030, the bulk of growth coming from Asia, and by 2030 Asia will represent 66% of the global middle-class population: ‘They are no longer satisfied with simply having access to public services; they are increasingly concerned with their quality. Providing the quality services that the middle-class demands are far more complicated than simply providing access to them and can be a source of friction, conflicts and political upheaval’ (Pezzini 2012). Decision makers should be guided by the expectations of these users, who will demand not more services but quality services and will vote to express their preferences.

And quality infrastructure is not an exclusive property of developed nations. For example, the finance ministers of Francophone low-income countries have articulated their needs in infrastructure public-private partnerships (PPPs), making it clear that they will not accept just any PPP – they want public investment projects which target universal access to services, in sectors such as education, health, water and energy, with reduced costs and risks to the host country (Organisation Internationale de La Francophonie 2017).

3. Quality infrastructure investment – Japan’s way

Some joke that Japan sees quality infrastructure as anything not built by the Chinese, referring to the ongoing competition between Japan and China to dominate infrastructure in Asia and elsewhere, and the Japanese insistence on quality as a key differentiator. The joke rings true because of the rivalry between the two nations, as demonstrated by their ongoing high-speed rail competition (Aizawa 2019). But obviously this is no joking matter. Quality infrastructure as conceived by Japan transcends the quest for dominance in infrastructure in Asia. It is a precious key that opens geopolitical relationships. It provides an important underpinning to Japan’s Free and Open Indo-Pacific Strategy, as well as the Asia-Africa Growth Corridor, both involving India. It was also featured in Japan’s 2017 promise to facilitate the Association of Southeast Asian Nations (ASEAN) cooperation with the Organization for Economic Cooperation and Development (OECD). This promise is predicated on the importance of these countries making investment in quality infrastructure for economic growth, which presumably Japan was going to facilitate. The ultimate goal of this solicitation appears to be ASEAN countries’ membership in the OECD. Although it eschews focussing on China, Japanese media rightly observed the Japanese government's repeated emphasis on the quality, openness and transparency of infrastructure projects reflects its desire to counter the influence of China's massive infrastructure investment in the region, including the BRI (Kyodo News, March 8, 2018). For avoidance of doubt, the article makes clear that China is not an OECD member.

Ultimately, infrastructure is part of Japan’s strategy to ensure security in the Asia-Pacific region in the face of an increasingly bellicose Chinese presence. For example, the Australia-India-Japan-US Consultations on the Indo-Pacific, also known as the quadrilateral security dialogue or the Quad, is said to focus on ‘upholding the rules-based order in the Indo-Pacific, including freedom of navigation and overflight, respect for international law, and the peaceful resolution of disputes; increasing connectivity consistent with international law and standards, based on prudent financing; coordinating on counterterrorism and maritime security efforts in the Indo-Pacific…’ (US State Department 2017) (Author’s italics.)

Caught between a rock and a hard place – the rock being the United States with its sphere of influence in which Japan has historically thrived, and the hard place being China with its global reach that forces Japan to constantly seek new ways of coexistence – Japan used its G7 platform in 2016, and was now planning to use its prestigious G20 presidency to secure a unique space for itself. Could Japan make a potential contribution to the world in the process?

As avid practitioners of the quality control circle movement of the 1960’s and 70’s (Ishikawa 1985), Japan’s emphatic claim for leadership in quality infrastructure was not entirely baseless. After all, it was the Japanese companies that launched the quality revolution era following the conclusion of World War II by institutionalising quality control programmes that would yield continuous quality improvement from product design to production to testing, an innovation that eluded western companies at the time (Washington Post, August 15, 1993). Japan could have easily built its modern definition of quality infrastructure based on this proud achievement that turned quality into its national identity.

Of course, the whole point about the current discourse on quality is that it is no longer an enterprise or micro-level matter but must encompass macro-level challenges in relation to the economic, social, environmental and governance aspects of sustainability. To update its definition on quality infrastructure, Japan had access to multiple ready reference points, such as the current professional literature on quality management, as described above, and this could have been married with the growing literature on sustainable infrastructure, including those directed to the investment community (such as Bennon and Sharma 2018). Instead, Japan went about its business in an indirect and inductive manner. After the five Ise-Shima Principles, which have been the only formal attempt at setting some principled statements, Japan allowed an information vacuum to persist, offering only an official list of types of projects eligible for financing under a quality infrastructure platform, and some case studies with shared quality elements. In effect, it sought to base its initiative on past projects and those that would come under consideration in the near future, from which a picture of quality infrastructure would emerge gradually. Naturally, these official attempts at describing rather than defining led to inconsistencies.

We can only speculate as to why Japan preferred such an inductive approach. First, it could have been motivated by a desire not to alienate its private sector. Government officials in private meetings explained that they wanted to avoid a theoretical approach at all costs and to promote pragmatism. They may have surmised that pointing to actual and potential future projects, without saying exactly what the quality attributes are or should be, would make it easier for companies to rally behind the idea of quality infrastructure. It is also likely that a loosely described approach was preferred in order to preserve maximum flexibility for public financing institutions with the task of supporting Japanese industries. Second, the fact that multiple Japanese ministries and agencies shared the responsibility for QII implementation, with no central and permanent locus for the initiative, other than the cabinet and the Prime Minister’s office, meant achieving a tight consensus among government agencies was too ambitious. And finally, given the geopolitical anxieties and ambitions of Japan, it would be expedient to keep quality infrastructure as a high-level concept that is not too tightly defined so as to enable the Government to push for specific projects with geopolitical importance (but potentially of less than exemplary quality). Regardless of the Japanese motives and circumstances, official information on quality infrastructure was limited.

The first practical attempt at shaping quality infrastructure can be found in the 2015 Partnership for Quality Infrastructure (PQI), said to derive from the Japan Revitalisation Strategy of 2015. Prime Minister Abe made it clear that the PQI was meant to differentiate itself from the Asian Infrastructure Investment Bank (the AIIB is majority controlled by China and without Japanese participation) by focussing on quality (Abe 2015). One year later, the PQI became the Extended Partnership for Quality Infrastructure (EPQI), a geopolitically ambitious platform to finance infrastructure projects of approximately US$200 billion across the Indo-Pacific over five years (2017–21) (Ministry of Economy, Trade and Industry 2016).

As the latest embodiment of the EPQI, Japan Bank for International Cooperation (JBIC) announced a US$50 billion financing window called Global Facility to Promote Quality Infrastructure Investment for Environmental Preservation and Sustainable Growth (QI-ESG) (Japan Bank for International Cooperation 2018). JBIC’s presentation of this facility contains five broad criteria of quality; namely, economic efficiency; safety; disaster resilience; environmental and social considerations; and local contributions (by way of skills transfer and human resources development). These five criteria are similar but not identical to the five principles in the Ise-Shima Principles. And despite the letters ‘ESG’ in the acronym of the Facility, they do not stand for ‘environmental, social and governance’ aspects of sustainability but for ‘environmental preservation and sustainable growth’. In fact, the Facility’s objective is exclusively focussed on enhancing JBIC’s support for the preservation of the environment through quality infrastructure, including greenhouse gasses emissions reduction. As such, it is all the more incongruous that JBIC designated high quality coal fired power plants (defined as ultra-supercritical (USC) or above) alongside renewable energy projects as quality infrastructure projects eligible for support under this Facility. It’s instructive that in 2017, Japan’s climate change performance was ranked second from last among the OECD member countries and the last among the G7 (NRDC and Kiko Network 2017).

In a separate attempt to promote quality infrastructure investment and help the international community develop a common understanding of the concept, the Government of Japan also published a ‘Quality Infrastructure Investment Casebook’ (Casebook). It set out nine elements of quality infrastructure investment with a brief explanation for each, followed by case studies to illustrate how these elements are implemented. It showcased 25 past overseas projects in multiple sectors that received Japanese assistance, and in addition, 18 examples of ‘quality infrastructure technology’ (Government of Japan n.d.).

The nine elements in the Casebook were yet another variation on the theme of quality infrastructure. They included new elements not present in the Ise-Shima Principles, such as inclusiveness, and convenience and amenities. The explicit mention of poverty, disability and gender issues as well as focus on burden and benefits to infrastructure users was a welcome starting point in ensuring greater attention to the human dimensions of infrastructure. On the negative side, however, the nine elements failed to mention several indispensable concepts that appear in the Ise-Shima Principles, such as governance, transparency, debt sustainability and fiscal outlook, climate change, energy security, conservation of biodiversity, and so on.

The four projects with the ‘inclusiveness’ element were an Indian transport project that included women only rail cars; a Cambodian bridge project that offered inexpensive ferry service for the poor; a local airport that balanced urban and rural development in the Philippines; and an energy project that enabled the part of Bangladesh traditionally lacking energy to have access. Although these seemed to give a more granular sense of how inclusivity can be achieved in various infrastructure projects, the examples only served to highlight the absence of inclusivity elements in the other 21 projects.

As for these 21 projects, they ranged from railway, road and bridge, airport and port, to energy projects, spread over Asia and Africa. The portfolio included a high-efficiency coal-fired power project in Morocco, described as the first USC project in Africa. Each project appeared to fulfil a number of quality elements, though none of the projects fulfilled all nine. The most frequently mentioned element is contribution to local society and economy, followed by economic efficiency, then sustainability (however, it should be noted that ‘sustainability’ in the Casebook referred to environmental and operational sustainability only). Project descriptions also boasted strange quality attributes, such as ‘managerial competence’ and ‘Japanese style of management and doing business’.

The quality infrastructure technology section of the Casebook included an assortment of technology applied in energy, traffic, disaster management and other projects. The first in the list of 18 technological examples was USC technology. A note explained that ‘USC can be supplied by only a handful of companies in the world, such as MHPS [Mitsubishi Hitachi Power Systems, Ltd.], IHI [formerly known as Ishikawajima-Harima Heavy Industries Co., Ltd.], and Siemens’.

As a whole, the Casebook turned out to be a miscellany of promising ideas, peculiar assertions, and some downright unsustainable practices and technology, triggering more questions than answers. It was not at all clear whether assertion of quality was verified especially by the intended beneficiaries and other stakeholders. Above all, it underscored the challenging political environment in which the Government of Japan was operating, having to appease the private sector, and showcasing projects that served the national interest while appealing to the G20 for their assent or acquiescence.

4. Views of stakeholders

In private meetings taking place shortly after Japan assumed the G20 presidency, representatives of the Government of Japan signalled that a drafting team was busy at work, that as soon as they finished drafting, the Government was to begin an intense process of consultation with other G20 members, and that the short lead time to the Leaders’ Summit in June of 2019 would allow little public engagement. The drafting and negotiation would happen mostly behind closed doors.

Meanwhile, the business community and civil society organisations (CSOs) knew what they wanted and were not shy in voicing their opinions. At the Seminar on Quality Infrastructure Investment organised jointly by the Japanese Ministry of Finance, the OECD and the World Bank in September 2018, a panellist from the investment community stated that quality in infrastructure meant quality through ESG due diligence, and that investment in quality infrastructure would contribute towards the attainment of the SDGs. Implicit in this statement was an expectation that investment in QI would help investors demonstrate benefit to society and ultimately benefit their business. ESG due diligence in infrastructure investment is not universally practiced at this time, and due diligence methodology varies from investor to investor. It is also problematic that among ESG the weakest is ‘S’ or the social factor, which tends to focus on labour and diversity issues at the level of the enterprise, but not enough on broader social issues and conflict. Moreover, too many infrastructure projects assert contributions towards SDGs, even if claims of SDG fulfilment may be short-lived or unsubstantiated. And yet the idea was appealing in its simplicity, and likely to resonate with many responsible investors who already applied ESG screens or frameworks to their investments.

By March of 2019, the B20 (Business 20), the business network that provides policy advice to the G20, issued its Joint Recommendations at the B20 summit. Under the heading of Quality Infrastructure for All, the B20 urged bridging of the infrastructure gap through effective mobilisation of financial resources backed by relevant policies, including allocation of public budget to incentivise private investment and official development assistance (B20 2019). Its idea of quality was lifted straight out of the 2018 version of the Guidebook on Quality Infrastructure Development and Investment (Revision) by APEC (Asia-Pacific Economic Cooperation) and referred to the five elements of quality infrastructure:

• Alignment with Development Strategy/Openness/Transparency/Fiscal Soundness

• Stability/Safety/Resiliency

• Economic and Financial Soundness (Cost-effectiveness including LCC [life-cycle cost] and utilisation of markets)

• Social and Environmental Sustainability; and

• Local High-quality Development (Job creation/capacity building and transfer of technologies) (APEC 2018)

At about the same time, Keidanren, or the Japan Business Federation, also spoke in support of quality infrastructure investment, to be supported through JBIC, JICA and NEXI, and mentioned the same five quality elements in the APEC Guidebook.

As for CSOs, Japanese and international organisations used the C20, or Civil Society 20 platform, to voice their views on priority areas. They organised themselves into ten working groups, one of which was on infrastructure. Its policy brief (C20 2019) stressed the importance of access to services by all, environmental, social and human rights considerations and adequate anti-corruption measures in infrastructure projects. C20 held its summit in April and invited Japanese government officials to hear their recommendations. Other working groups campaigned for related issues, notably against Japan’s use of coal for power generation.

One month later, the T20 (Think20, the research and policy advice network of the G20), convened the T20 Summit in Tokyo. In their sweeping vision for a sustainable, inclusive and resilient society, the Japanese and international think tanks stressed the importance of investment in human capital and financial capital that in turn invests in important quality physical infrastructure, as part of society’s decarbonisation transition (T20 2019).

Meanwhile, the G20 officials were already travelling to different fora to seek feedback and endorsement from their counterparts in G20 member countries on the draft principles.

In the absence of sufficient official information about the direction of the drafters, interested stakeholders and pundits engaged in reading the tea leaves. Some worried that Japan is not all that interested in the environmental and social sustainability perspective and certainly not enough in climate change. Many were in favour of debt sustainability of host nations, reacting to reports of ‘debt trap’ of Chinese investments in BRI countries (Gerstel 2018). The press reported that Japan planned to push both lenders and borrowers to disclose more information regarding debt in emerging economies in order to help countries avoid unsustainable debt (Nikkei Asian Review, November 18, 2018). Although it was not clear whether this push would be part of Japan’s quality infrastructure initiative, the Ise-Shima Principles rightly referred to debt sustainability (Principle 4). This author urged Japan not to squander the precious opportunity that comes with its first presidency of the G20 – an opportunity that comes around only once in two decades – to facilitate an authoritative standard on quality infrastructure (Nikkei Asian review, May 8, 2019).

Guesswork continued while rumours flew. China was said to be opposed in principle to the notion of quality infrastructure and the G20’s focus on it. It was assumed that Japan would be amenable to guidance and direction from the United States, though it was difficult to gauge the position of the U.S. government on the topic of quality infrastructure.

5. The principles for quality infrastructure investment

The unusually short preparation period that Japan allowed for its G20 presidency concluded with the Leaders’ Summit in Osaka at the end of June 2019. Leading up to the Summit, in early June, the G20 finance ministers and central bank governors – in the world of G20, infrastructure matters belong to the financing track (as opposed to the development track) – had unanimously approved the Principles for Quality Infrastructure Investment (Principles or QII Principles) proposed by Japan (see Box 2). This output was endorsed by the heads of state in the Osaka Leaders’ Declaration, and with it came an abrupt end to the frenzied six months of advocacy and dialogue. In the Principles, stakeholders found many things they campaigned for, but not everything.

Box 2: G20 Principles for Quality Infrastructure Investment

Principle 1: Maximising the positive impact of infrastructure to achieve sustainable growth and development

Principle 2: Raising Economic Efficiency in View of Life-Cycle Cost

Principle 3: Integrating Environmental Considerations in Infrastructure Investments

Principle 4: Building Resilience against Natural Disasters and Other Risks

Principle 5: Integrating Social Considerations in Infrastructure Investment

Principle 6: Strengthening Infrastructure Governance

The fact that the QII Principles were endorsed by all the G20 Leaders, including China’s Xi Jinping, alone makes the Osaka Declaration and the Principles unique. This political significance cannot be read between the lines of the Declaration, since G20 speak has a way of making any topic sound harmonious and dull. Perusing the Osaka Declaration, squarely placing QII in the context of economic growth, spurred by increased investment in infrastructure, which is the traditional way that G20 understands the role of infrastructure, it is reasonable to assume the G20 was merely repeating its usual mantra with no internal squabble or backstabbing. As it turned out, China must have had its own reasons for deciding to associate itself with the Osaka communique, and this not only boosted the standing of the Japanese G20 leadership but may also have raised the prospect of the QII Principles remaining relevant beyond the Osaka G20, as will be discussed below.

Apart from this political feat, the Principles are noteworthy for offering an authoritative narrative on what should matter in infrastructure development and investment that is yet to come. The QII Principles arrived at this narrative by managing to improve on the Ise-Shima Principles, using more broadly accepted ideas of economic, environmental, social and governance aspects of sustainability, which provided a more streamlined structure. There are no hints of the peculiar boasting found in the inductive experiments by the government, including the Casebook. In fact, it appears that the Casebook exercise turned out to be of only marginal importance in the final analysis. Whether this outcome was the direct effect of close negotiations between the Japanese drafters and their G20 colleagues will probably never be known.

The notable features of the Principles are described below:

• ‘In infrastructure, quantity and quality can be complementary’. This preamble statement bridges the traditional G20 obsession on quantity and the emerging consensus that quality can attract more private investment in infrastructure. It placates those G20 countries that lean more towards business-as-usual infrastructure, while affirming the type of responsible investors who insist on ESG due diligence to ensure they are investing in quality. The emphasis on maximising positive economic, environmental, social and development impact of infrastructure is also a welcome change, considering many infrastructure projects routinely fall short of delivery of societal benefits.

• The mix of topics addressed under the six principles are well balanced: They are better organised than the Ise-Shima Principles, move away from the slightly awkward language of the APEC Guidebook, and use internationally accepted and more encompassing terminology. This is particularly the case with the governance principle (Principle 6): it contains governance issues, such as open and transparent processes, and debt and fiscal sustainability, while also addressing anti-corruption and responsible business conduct (a nod to the OECD’s work on responsible business conduct through the Guidelines for Multinational Enterprises). This Principle repeatedly refers to transparency and disclosure of information, emphasises the importance of data collection for decision making, project management and evaluation, and also manages to underscore the importance of the views of users, local population, and CSOs. The drafters, however, failed to deliver on climate change, which is truly unfortunate because this renders the overall Principles less balanced than they initially appear, and for the climate advocates, almost useless.

• Principle 5 on social consideration is surprisingly progressive. It packs three important statements on inclusive infrastructure, with references to open access to services without discrimination, special attention to vulnerable groups, and labour and working conditions. The section even manages to mention the need to respect human rights of all people, a rare and unexpected reference in G20 documents (some credit this reference to the Japanese Ministry of Foreign Affairs, which is said to have long felt the obligation to do so), as well as women’s rights and empowerment. But it falls short of affordable and accessible infrastructure for all.

• The biggest disappointment is in Principle 3 on environmental considerations, which is meant to be inclusive of climate change issues. Reflecting the current U.S. position on this topic, the words ‘climate, weather’ appear in the list of environmental considerations exactly once and no more. The section has two subsections, one on life-cycle assessment and another on disclosure of information. These are prefaced by the lead-in paragraph on internalisation of positive and negative environmental impacts, which simultaneously warns the reader to be mindful of country circumstances. In this aspect, the Casebook foretold the limp position that the Japanese government would take on climate change. Climate groups around the world squarely condemned the Principles. However, Principle 3 mentions ecosystems and biodiversity.

The Principles are an expression of an imperfect political compromise of the G20 in 2019. The document takes pains to deny upfront any sense of compulsion by explicitly mentioning its voluntary and non-binding nature. Consistent with G20 practice, such compromise could potentially be short-lived with little or no effect. Since each G20 host is under considerable pressure to put its stamp on its own G20 initiatives, only to stand by idly while the next host announces yet another package of ambitious while the prior initiatives are quickly forgotten, the Principles could simply wither away. Worse, any G20 member can fragrantly act against its commitment with no adverse repercussions whatsoever.

6. Concluding observations

Early incorporation of normative standards on quality infrastructure can help projects avoid costly mistakes that may turn into irreversible burdens on the host country, the population at large, or the environment, while facilitating a more purposeful and systematic focus on designing projects that yield significant benefits and public good. A challenge of a different nature lies further downstream in the project cycle, when tools are needed to help with substantiation of claims for quality infrastructure. Performance indicators and ex-post data collection on quality metrics will help with such substantiation. If these upstream and downstream practices become standard operating procedure in infrastructure development and investment, developing countries stand to benefit tangibly from future infrastructure projects. If quality and quantity are complementary, as asserted by the QII Principles, investment that seeks quality infrastructure and can demonstrate success will stimulate more investment in quality infrastructure, creating a virtuous circle of responsibility and reward.

In spite of the serious deficiencies on climate change and environmental matters, the Principles do have redeeming characteristics that are not necessarily well-recognised. This is particularly the case with the governance and social aspects. Against this backdrop, and considering the global vacuum of universally accepted QII standards, the QII Principles are beginning to be perceived as a touchstone for sustainable infrastructure, especially if the gaping hole left by the absence of anything meaningful on climate change can be filled.

Saudi Arabia, which hosts the next G20 in 2020, has already announced its priority areas. So far, there are few outward signs of the Saudis explicitly picking up the baton of QII challenge from Japan. However, the Global Infrastructure Hub (a G20 initiative intended to facilitate delivery of G20 members’ economic, social and environmental outcomes through infrastructure), has reported that the G20 are working on operationalising the QII Principles (Global Infrastructure Hub 2019).⁴

This article concludes by making the following observations with a view to ensuring that the QII Principles may have a life beyond Osaka and can contribute meaningfully to enhancing investments in quality infrastructure.

• First, the climate change deficiency should be addressed appropriately. In view of the current political climate of some G20 member countries, it is unrealistic to expect that the Principles could be amended. Perhaps a compromise could be found by supplementing the Principles through other means, potentially at the guidance, tools and indicators levels.

• Second, Japan could seek to build and nurture an open, broad-based and multidisciplinary coalition that supports quality infrastructure investment by all investors, public and private, and CSOs, through an open and consultative process. This coalition, which could also involve the OECD, ASEAN, UN agencies, multilateral and bilateral development banks, and others, should build a QII standards system, complete with guidelines or guidance, indicators, and other necessary tools for implementation. To its credit, Japan acknowledged in the Osaka Declaration that a set of QII indictors will be needed. Japan should pursue this commitment though a consultative process.

• Third, Japan could promote training, especially peer learning, and reflect appropriate lessons in the QII standards system. In a post-Osaka event on the G20 achievements, a Japanese official expressed interest in providing QII capacity building for developing countries. This is a modest but practical aspiration, consistent with the origin of QII, and would undoubtedly benefit developing countries as they race to attract infrastructure investment. As Japan extends its vision beyond the Quad, and sets its sights on Africa, where an additional $20 billion of Japanese investments will be directed (CNN MarketPlace Africa, August 30, 2019), such capacity building programmes may become a necessity rather than an option.

• Fourth, whether Japan manages to engage in some or all of the foregoing suggested activities or not, it should as a minimum explore ways to continue to push the QII Principles for the infrastructure projects it supports. Preferably this should be done in collaboration with key partners. For example, Tokyo could work with Beijing to make the Principles a de facto set of standards for their respective infrastructure endeavours. Despite the animosity and differences between the two countries, the rivals must weigh the political and practical imperatives of such collaboration. For instance, no host state can afford to side exclusively with one or the other for political, economic and technological reasons. On the ground, ample practical opportunities for collaboration exist and, in fact, various kinds of collaboration initiatives are already starting to take shape (for example, see: South China Morning Post, April 26, 2018 and The Japan Times, March 23, 2019).

China is no stranger to sustainability standards for its infrastructure investment, especially in connection with the BRI. For example, it is already bound to greening the BRI through the Green Investment Principles, a collaboration with the City of London launched in 2018. It has 27 signatories from financial institutions in 12 countries, including Japan (Green Finance Leadership Program 2019). These Principles address both environmental and social sustainability, but are especially focussed on the environmental aspects. The UN and others are backing the nascent Belt and Road International Green Development Coalition, which aims to align the BRI with the SDGs (UN Environment n.d.), and are in the process of setting up working groups. If implemented even incrementally, they can have considerable impact on the ground. The QII Principles, which overlap some thematic areas covered in the above initiatives related to the BRI, can complement these ongoing greening efforts of China.

The truth is that both Japan and China need the full spectrum of sustainability requirements to ensure that their infrastructure competition becomes a race to the top that yields long-term sustainable development benefits for the host country, people, and the environment. In fact, it is high time for the two duelling nations, and the rest of the G20, to join hands to show, in principle and practice, what it means to deliver quality infrastructure that contributes to sustainable development and to achieving the SDGs, whether in Asia, Africa or elsewhere. Any diffusion of tension within the G20 would bode well for the success of the QII initiative, whether in the context of the BRI, or in Africa where the BRI and the investments under the Quad will come to an important intersection, and a kind of terminus. Infrastructure projects in Africa are potentially prime beneficiaries of excellent implementation of the Principles.

Soon after the G20 baton passed to Japan, the United Nations High Commissioner for Human Rights, echoing the high expectation of the international community, called on Japan and the G20 to commit to an infrastructure investment framework with a human dimension that respects individual’s and communities’ human rights. She called this ‘a framework that is not only economically efficient and resilient, but safe, socially and environmentally sustainable, and aimed explicitly at achieving global emissions reduction targets’ (Bachelet 2018). Japan has delivered some of what was expected. Now, if it wants to fulfil the global expectation, the hard work must begin.

Abbreviations
AIIB	=	Asian Infrastructure Investment Bank
ASEAN	=	Association of Southeast Asian Nations
CESCR	=	International Covenant on Economic, Social and Cultural Rights
CSO	=	Civil Society Organisation
EPQI	=	Extended Partnership for Quality Infrastructure
ESG	=	Environmental, social and governance
G20	=	Group of Twenty
ISO	=	International Organization for Standardization
LCC	=	Life-cycle cost
OECD	=	Organisation for Economic Co-operation and Development
PQI	=	Partnership for Quality Infrastructure
QI	=	Quality infrastructure
QI-ESG	=	Global Facility to Promote Quality Infrastructure Investment for Environmental Preservation and Sustainable Growth
QII	=	Quality infrastructure investment

Acknowledgments

I would like to thank the two anonymous reviewers for taking time to carefully read a previous draft and offer helpful feedback. I would also like to acknowledge Brian Field for his encouragement and advice.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1 While some NGOs from developing countries hailed the SDGs for explicitly embracing the contributing role of infrastructure in sustainable development, others worried that they could trigger a renewed trend for increased private sector participation in infrastructure projects. See, for example, Weber (2017) in reference to water and sanitation service provision.

2 According to the World Bank’s Private Participation in Infrastructure database, in 2018, private investment commitments in energy; transport; information and communications technology; and water infrastructure in low- and middle-income countries totaled $90 billion across 335 projects in 41 countries. Although this represents a slight decline of three percent compared to 2017 levels, the total investment for 2018 nevertheless shows a recovery from the 10-year low of $71 billion in 2016.

3 Note that the term quality infrastructure in the quality discipline refers to tools and processes used to create, maintain and enhance quality of an entity’s performance. ISO9000 refers to “process equipment,” which is not in reference to tangible equipment used in the infrastructure sector.

4 The GI Hub continues to support QII. It recently released a Reference Guide on Output Specifications for Quality Infrastructure, a guide intended to help governments operationalize the concept of QII.