Urban Transformation

Intelligent cities, inclusive cities?

'The inclusive city is also a city that provides jobs for the people who live there'

Antoine Frérot
Chairman of the board, Veolia
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Cities and Urbanization

This article is part of: World Economic Forum Annual Meeting

Increasingly populated, increasingly spread out, increasingly in competition with each other, cities are facing unprecedented challenges. The digital revolution is one of the huge challenges that they must face, but so is the fight against social exclusion: being centres of wealth, cities also attract the poor. Can both these challenges be dealt with at the same time? In other words, can the intelligent city be more inclusive?

If a city wishes to be inclusive and to ensure that its citizens benefit from the promises of urban life, it must first facilitate everyone’s access to essential services.

In developing countries, public authorities are engaged in a race against time with population growth. By optimizing the operation of existing infrastructures and better managing periods of peak demand, digital technology allows cities – at least to a certain extent – to serve more people without building new drinking water production plants or new thermal power stations.

However, digital technology can never make up for the lack of basic facilities. We should remember that in Sub-Saharan Africa, only a third of the population has access to electricity, though electricity is one of the keys to development.

In developed countries, poverty is becoming more widespread. It forces cities to invent solutions to maintain access to essential services for people who already have such access but are in danger of losing it due to insufficient financial resources. In Europe, 13% of homes are in a situation of energy insecurity. By equipping the public networks of Prague and Warsaw with sensors and expert systems to collect and process data, we have optimized urban heating, which has made it possible to keep prices under control; this is tangible progress for people on low incomes. Information management – and thus digital technology – are central to energy efficiency. Cities combat energy insecurity through energy efficiency, and the digital revolution provides them with additional weapons to fight this battle.

In addition to public network initiatives, deploying intelligent technologies in homes helps private individuals to control their expenses. In Nice, which was voted the fourth smartest city in the world in 2015, we have equipped apartments with sensors to monitor consumption of water, heating and electricity. This has led to bills being reduced by between 10% and 15%. This gain might appear to be small, but it means a lot to families on modest incomes! The inhabitants can thus reduce their bills and landlords of social housing can reduce their bad debts.

The number one priority for beating inequality

The inclusive city is also a city that provides jobs for the people who live there. Somehow, it has to find a way to integrate or re-integrate the unemployed into the world of work.

Digital technology can help cities with this task, through original partnerships between local councils, companies and associations specializing in getting people back to work. In 2015, Veolia joined up with Ashoka, the world’s leading network of social entrepreneurs, to stimulate the creation of financially viable outreach organizations dealing with subjects such as the intelligent city, the environment and eco-communities.

In the social entrepreneurship incubators of Mexico, Lyons and Toulouse, promising start-ups whose businesses are based on digital technologies have already been launched. They focus on extremely diverse objectives, such as training young people without qualifications how to code apps, educating people so as to prevent families on low incomes getting into debt, and so on.

Thanks to digital innovation, local authorities can promote new kinds of cooperation with and between their citizens. This is vital where inclusion is concerned, because poverty in assets and poverty of connections usually go hand in hand. By facilitating the process of putting the population in touch with the life of the city, and participating in it, digital technology stimulates collaborative activities and strengthens every connection: among the population itself, and between the population and local councils, urban service operators, associations and companies.

By making cities more resilient, digital technology also contributes to making them more inclusive. When a natural disaster or major industrial accident occurs, vulnerable populations are at risk of sliding into poverty or unemployment. In 2005, New Orleans was ravaged by floods. In 2016, in partnership with Swiss Re, the world’s second largest reinsurer, and the Rockefeller Foundation, our Group carried out an audit of the electrical supply for this city’s water and sanitation network; its purpose was to limit the risks of interruption of those vital services and to speed up their restoration in the event of an incident. Due to their power and their flexibility, digital technologies are great assets for managing crises, reducing their impacts on the population and avoiding the aggravation of social divisions.

When technology takes the jobs

Accessibility of essential services, proximity, extension of relationship networks, professional training, and protection of vital infrastructures, the environment and public health, in all these areas which make a city a supportive city, digital technology provides solutions. On the face of it, the intelligent city and the inclusive city can therefore be combined in a harmonious whole.

The only problem is that in a number of industries, the increasing power of digital technology results in a huge loss of jobs, which are replaced by computers, automation and robots. On the one hand, digital start-ups stimulate economic growth and create high added value services and thus jobs, many of which are at a high level; on the other, by improving productivity, re-configuring production circuits from top to bottom and reducing the role of intermediaries in commercial relations, digital technology can undermine entire business sectors. There are various forecasts that assess the number of jobs that could be lost due to the fourth industrial revolution, from a few million to several tens of millions. Whatever uncertainties remain, these figures demand an active response in order to supplement digital innovation with social innovation, because the latter can mitigate the impact of the former on jobs.

This is where political and economic leaders must step in, to promote the adoption of business models that support job creation. What is important is not the technology in itself, but the more effective solutions that it can provide to the challenges encountered by cities. It is the duty of city Mayors, acting together with business leaders and civil society, to refocus digital technologies on their region’s priority needs, and in particular on employment and the reduction of inequalities, whenever necessary. Otherwise, “digital disruption” could well be accompanied by “social disruption”.

Digital technology provides cities with an opportunity to reinvent themselves. It makes large cities more attractive to investors, and thus better placed in the inter-urban competition. Nevertheless, while these economic and cultural changes take place, politicians must make inclusion a priority. They have a key role in managing the digital transition and introducing systems of governance to compensate for the failings of digital technology. For example, tender procedures launched by cities relating to smart cities should take more account of social criteria such as the net creation of jobs, training or apprenticeships. Selection of the lowest bidder, which still happens all too often, is incompatible with an ambitious social policy.

Have you read?
From economic leadership to social leadership

Thanks to digital technologies, information becomes knowledge, and knowledge becomes the power to act more and to be more useful: the power to improve the quality of urban services and to lower their costs, which makes them more affordable; the power to respond more rapidly and effectively when incidents occur, and thus to strengthen urban resilience; the power to better inform and better train; the power to increase the interactions among the population and reduce the phenomena of social marginalization… Digital technology is not opposed to inclusion, but does not automatically promote it; it is both the solution and the problem. Everything depends on the social support that is provided, on the policy choices made, and on the economic decisions taken. This is also how one can recognize cities and businesses that are leading the way, ahead of the rest: in their capacity to pursue ambitious social targets in a difficult competitive context.

Because just like cities, businesses cannot escape issues of solidarity. No business can prosper for long in a city that excludes. Businesses must also mobilize on the subject of inclusion, and many of them are making great efforts to do so. To contribute, within their capabilities, to respond to the urgent appeals received from the cities where they operate – even if doing so diverts them from their traditional activities – is one of the conditions of leadership.

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Urban TransformationLeadershipEconomic Growth
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