Jannika Aalto, program manager for sustainable circular cities and built environment at the Green Digital Finance Alliance, will be speaking on the panel session: ‘As cities transform, what is the role of behavioural science to inform the change and ensure a ‘just transition’?’.

Touching on one of the key themes and strategies of Sustainable Finance Live 2023, Aalto emphasised how examining the structure and application of a sustainable city is key in the current climate: “When it comes to our work, the keywords are in the name: green, digital, and finance. My focus particularly is the built environment and cities. Therefore, when I think about sustainability, I think about the real world; walls and roofs and windows, how we heat and cool our homes, and the necessary physical transformation that must happen.”

Aalto explained that the intelligent usage of data and AI will enable decision-making processes within a sustainable city by mapping out layered data points on socioeconomics, weather, and buildings on a city level which can point to flooding and heating risks. These datasets will allow for an understanding of economic inequality and facilitate a path towards equity and progress on climate action and the just transition.

“Thinking about cities, we must make sure that the benefits and demands are equally distributed throughout the cities and not just in affluent neighbourhoods or parts of the population,” stated Aalto. “Data analytics and AI allow for scale and speed in a way that human or manual effort does not. For example, using remote sensing data and sophisticated computer modelling that combines various data points and provides ‘pre-screening’ of homes for energy efficiency renovations, allows focusing efforts on renovating the leakiest homes. You would be surprised at how much of that is still done through on-site visits and on paper.”

She continued that the Internet of Things and AI’s automation processes can aid with sustainable reporting. However, Aalto clarified that we must keep in mind an underlying understanding of analytics, that the available data is always incomplete and often can reveal human bias in its collection.

Aalto posited that new EU regulation will drive forward action on net zero goals that companies have laid out, enforcing more effort on the Scope 3 front.

“The expected upgrade of the Energy Performance of Buildings Directive and the future extension of the block’s carbon markets to cover building are both a challenge and an opportunity to the industry. In the built environment, the investment needed to decarbonise the EU's buildings through renovation is estimated at €3.5 trillion by 2030, but the absence of innovative financing models poses a significant barrier. Traditional financing options often fail to address the unique challenges and requirements of a variety of building owners, resulting in limited access to affordable and flexible funding.”

She furthered that energy prices and inflation threaten customers seeking to invest in climate-friendly renovations and more cooperation is required between financial organisations, their customers, and mortgage lenders to encourage clean energy practices on a wider scale.

Remarking on trends that are to emerge in the sustainable finance sector, Aalto noted an industry shift towards net zero and nature initiatives to focus on biodiversity loss and how to initiate growth more creatively.

When asked what she is looking most forward to as Sustainable Finance Live this year, Aalto responded: “It is great to see the focus of the agenda on ‘just transition’. I look forward to learning and sharing about ways to connect social equity and the climate and nature positivity, and imagining what that means for the future of cities!”

Learn more and register for Finextra's annual Sustainable Finance Live conference, that will bring together industry experts to examine strategies to build a sustainable city on 10 October 2023.