Green City-Regions: The Role of the Foundational Economy in Sustainability Transitions

The UK is making progress to achieve net zero, with the latest findings indicating that UK emissions in 2021 fell below 2019 levels. These efforts, however, are still identified as insufficient for fulfilling the Paris Agreement.

Regional and urban areas are leading the way and developing ambitious strategies to reduce emissions and improve social conditions. In this article, Mr Usman Aziz, Professor Elvira Uyarra and Dr Josephine Mylan from The University of Manchester analyse international best practice of sustainability policies in city-regions and the lessons that can be drawn from them.

  • Regional economic policies must promote sustainability innovations in foundational, “everyday” sectors.
  • These sectors, such as food, health and social care, housing and education, yield significant social and environmental impacts.
  • Innovation in the foundational sectors can play a significant role in climate mitigation and economic improvement.

The recent COP27 summit was lacking in serious commitments to phase out fossil fuels and reduce carbon emissions, prompting Alok Sharma’s comment that the Paris Agreement is now ‘on life support’. But apathy for tackling climate change at the global level contrasts with the city-region level. Newcastle, for example, has committed to achieving carbon neutrality by 2030; Greater Manchester (GM) by 2038; and New York, Tokyo and others by 2050. Such ambitions are often framed in terms of green and just policymaking, especially in the aftermath of COVID-19, and they follow a core principle of the academic literature on sustainability transitions: that such transformations must benefit both society and the environment. A growing number of academics and policy networks (such as C40 cities) are exploring the potential for local, place-based initiatives towards green and just objectives, independent of global politics.

Balancing green and social objectives can be challenging, as some initiatives are unrelated to social equity, and at worst can compromise social conditions. Therefore, a priority is to create policy mixes that promote both climate mitigation and social improvements while managing trade-offs between them. Such policy mixes are likely to engage with welfare-critical sectors that also impact the environmental, such as food, health and social care, housing, education, and basic utilities. In a 2013 publication from the CRESC research centre at The University of Manchester, such sectors were grouped under the umbrella term ‘foundational economy’ (FE). This encompasses public and private organisations involved in the production of everyday necessities, which are often overlooked in regional development policies in favour of high-technology industries.

The importance of the foundational economy

The Greater Manchester Combined Authority (GMCA) has made the FE a key aspect of regional policymaking, and the Welsh government has included the FE in its Economic Action Plan. But there are several issues with the concept. For instance, there is no universal definition of what can be considered foundational, as ‘everyday’ services can range from place to place. Plus, the original articulation of the FE referred to primarily low-technology sectors, which has been evidenced in recent policy publications such as the GM Local Industrial Strategy, but this categorisation is not robust. Everyday utility infrastructures are becoming increasingly high-technology (consider nuclear-powered generators and 5G services), as are services such as education and food (consider EdTech startups and blockchain applications in food supply chains).

Despite current theoretical limitations, a growing evidence base suggests that ‘foundational’ infrastructures and services are significant for sustainability policymaking. Data shows that the food sector, for example, contributes one-third of global greenhouse gas emissions and 30% of total UK territorial emissions. At the local level, city-regions such as Greater Manchester yield significant consumption-based carbon emissions from food purchasing and procurement activities. Socially, the food industry contributes to both an oversupply of unhealthy foods and food scarcity, with 261 food support providers in GM in 2021. The negative environmental and social impacts from foundational sectors highlight their importance for sustainability transitions.

Lessons from city-regions

On behalf of the GMCA, our project analysed best practice of sustainability initiatives involving the foundational economy in city-regions, using three international case studies and one case involving Manchester.

Amsterdam is the world’s first city to adopt Doughnut Economics as a guiding framework for local policymaking. Popularised by Kate Raworth from Oxford University, Doughnut Economics argues that economic activity must serve social needs, while never exceeding the earth’s ecological thresholds or planetary boundaries. Amsterdam used this framework to develop a city-wide GAP-analysis, comparing the city’s current position with its desired sustainability outcomes.

The Basque Country in Spain’s 2021 Competitiveness Report argued that foundational sectors impact population wellbeing directly, and that wellbeing in turn impacts economic performance. Economic outcomes are contingent on sustainable, equitable and effective foundational services that enhance living conditions.

Washington, D.C.’s Sustainable DC 2.0 addresses both climate change and local socio-economic conditions. It has a rigorous agenda for policy implementation, taking thirteen priority areas and disaggregating them into goals, targets, and actions with specific delivery timeframes.

Returning to Manchester, the concluding case analysed Vector Homes, a clean-tech startup aiming to produce sustainable modular homes from nanomaterial technologies. The case indicated that foundational sectors can serve as large target markets for emerging green technologies, and further research could unlock new pathways for technology diffusion and regional development.

Green City-Regions: The Role of the Foundational Economy in Sustainability Transitions

Our recommendations

We suggest that it is necessary to reframe the role of foundational sectors within the local economy. Attention should be given to the potential for technology adoption within foundational sectors, especially green technologies.

We recommend further exploration of the ways in which the FE can enhance overall productivity and economic competitiveness. Rather than looking exclusively at the productivity of FE organisations, the aim is to chart the indirect ways in which foundational services may affect economic output, for example by influencing population health. Emulating this at the regional level in the UK would be beneficial and could unlock new pathways for levelling up and local sustainability transitions.

More Information:

You can read the original article here, and access the Policy@Manchester website here.

Public Sector Focus