Contracts for Sustainable Infrastructure

The document examines the role of infrastructure contracts in achieving sustainable development. It defines sustainable infrastructure as projects that are economically, socially, and environmentally sustainable, and argues that traditional project finance often ignores long-term risks and co-benefits. The author critiques the World Bank Group's 2017 Guidance on PPP Contractual Provisions for prioritizing private sector interests over public policy. To remedy this, the report provides a comprehensive framework of contractual approaches, including requirements for impact assessments, local content obligations, human rights safeguards, and the limitation of stabilization clauses, to ensure that infrastructure projects deliver genuine public value.

• Sustainable infrastructure is defined as projects that are economically, socially, and environmentally sustainable, requiring sustainability to be "embedded in all phases of infrastructure projects," including planning, construction, operation, and maintenance.
• Conventional project finance valuation often leads to underinvestment in sustainable infrastructure because it focuses on higher upfront capital costs and ignores long-term risks and co-benefits, whereas life-cycle assessment methodologies demonstrate that sustainable infrastructure "makes business sense".
• Integrating sustainability and cost criteria into PPP procurement could shift between USD 150 billion and USD 255 billion of private sector investment toward sustainable infrastructure over the 15-year period from 2015 to 2030.
• The World Bank Group's 2017 Guidance on PPP Contractual Provisions is criticized for prioritizing private sector preferences over public policy, potentially forcing governments to compensate investors for "good-faith and non-discriminatory regulation in the public interest" such as climate change measures.
• To ensure sustainability, contracts should include specific obligations such as requiring environmental and social impact assessments (ESIA), prioritizing local goods and services, and establishing human rights baselines before project commencement.
• The report warns against the use of stabilization clauses that freeze domestic laws, as they can undermine a government's ability to regulate in the public interest; it suggests that if included, they should explicitly exclude "public-purpose measures" related to health, environment, and human rights.

APA

Brauch, M. D. (2017). Contracts for Sustainable Infrastructure. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/contracts-sustainable-infrastructure.pdf

Chicago

Brauch, Martin Dietrich. Contracts for Sustainable Infrastructure. International Institute for Sustainable Development, 2017. https://www.iisd.org/system/files/publications/contracts-sustainable-infrastructure.pdf.

Wikipedia

{{cite report |last1=Brauch |first1=Martin Dietrich |title=Contracts for Sustainable Infrastructure |publisher=International Institute for Sustainable Development |date=December 2017 |url=https://www.iisd.org/system/files/publications/contracts-sustainable-infrastructure.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{brauch2017contracts, author = {Brauch, Martin Dietrich}, title = {{Contracts for Sustainable Infrastructure}}, institution = {International Institute for Sustainable Development}, year = {2017}, month = dec, url = {https://www.iisd.org/system/files/publications/contracts-sustainable-infrastructure.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }