Aboitiz InfraCapital

Home / Blogs / The importance of developing ecologically responsive industrial parks

The importance of developing ecologically responsive industrial parks


August 22, 2023

The unprecedented rise of Asia’s economies is a watershed series of events that will be studied for centuries to come. From the ashes of colonialism and the Second World War, many Asian countries were able to completely transform into the economic and technological juggernauts we know today. In many cases, they even outperform their former colonial masters in GDP per capita and key human development metrics. Today, the collective dominance of Asia’s economies is so undeniable that there is virtually no major global supply chain that does not source labor, materials, or technology from at least one Asian country.

Throughout all this, it is impossible to separate industrial parks and similar mixed-use economic estates as key ingredients in Asia’s newfound prominence in global affairs. While similar developments had been built elsewhere, the first Asian industrial parks and estates are unique in that they are often as much products of state-directed policies as they are projects of private companies. And where the goal of earlier industrial zones was to provide scale and cost-efficiency, the emerging Asian industrial park models were also meant to support multiple long-term economic goals.

The rise of Asian industrial parks

For almost all of Asia’s major economies, fostering an export-oriented economy was, and continues to be an important goal. At the end of the Second World War, most Asian domestic markets were left devastated with most individuals having relatively little buying power. Because of this, selling to foreign markets became a preferred way to stimulate economic growth and drive industrialization. 

For a while, post-war industrial parks were mostly set up to meet the needs of domestic exporters. However, a different model would soon emerge. Starting in the 1970s, the People’s Republic of China, created a then-new model for industrial zones. The government would provide cost-saving perks and exemptions to export-oriented foreign investors working within specially designated areas. In exchange, foreign businesses would provide jobs and transfer key value-creating technologies to locals. 

This foreign direct investment (FDI)-centered approach proved to be a winning arrangement, particularly for disadvantaged economies that had a limited preexisting industrial base. Soon, similar pro-FDI industrial park policies were enacted in many other Asian countries, including the Philippines.

Ecological consequences of industrial park development

While a major driver of Asia’s economic rise, these earlier industrial parks did not come without their drawbacks. Concentrating the world’s industrial production in just a few key areas predictably resulted in highly concentrated environmental devastation. 

Before the spread of export-oriented parks, the resulting pollution from industrial production was more spread out across the world. Today, the countries where production has been largely offshored produce a disproportionate amount of environmentally damaging pollutants, effectively destroying land and water systems while also creating multi-generational health hazards. The ecosystems surrounding many former and extant industrial parks throughout Asia continue to be beleaguered by pollution, with some areas now unsuitable for long-term habitation.

More importantly, these parks have come to be recognized as a major contributor to climate change. For instance, in China, 72% of greenhouse (GHG) emissions are a result of industrial activity, much of it originating from special economic zones. With the global community now involved in a collective effort to combat climate change, much of the responsibility for reducing the production of GHGs falls upon policymakers and businesses tied to industrial parks and similar economic estates.

Ecologically responsive industrial parks: A new way forward

West Cebu Estate

Ever since the environmental fallout from earlier industrial parks and the unveiling of the climate change threat, forward-thinking real estate developers such as Aboitiz InfraCapital (AIC) have been looking for ways to do things better in the Philippines. For instance, AIC is in the process of transforming its 540-hectare mixed-use development West Cebu Estate (WCE) in Balamban, Cebu, into a “next-generation, smart, and sustainable Economic Estate”.

As part of this vision, AIC is running several initiatives that will allow WCE to meet and exceed global sustainability standards. Soon, several waste management solutions will also be implemented to prevent damage to the surrounding environment. As WCE is located directly next to the Tañon Strait, a global marine biodiversity hotspot, this initiative will help ensure that the area’s resources will be enjoyed by future generations of Filipinos.

Moreover, WCE’s power requirements will be augmented with solar panels to reduce its dependence on fossil fuels. As a major industrial site and the Shipbuilding Capital of the Philippines, this will be a serious undertaking, given the immense energy requirements associated with large-scale activities.

Additionally, AIC is now taking steps to ensure that WCE is recognized by the Philippine Green Building Council (PHILGBC) as a green estate under the Building for Ecologically Responsive Design Excellence (BERDE) rating system. The BERDE certification system measures how much developments excel beyond the existing local environmental regulations. AIC’s LIMA Estate in Batangas recently became the first industrial park to achieve the pilot BERDE District Certification with a 5-star rating, the highest rating awarded by PhilGBC to real estate developments.

AIC has learned from the lessons of earlier industrial parks to offer a new type of ecologically sound mixed-use estates to investors. By showing the way forward with its economic estates, AIC may yet pioneer a better, less environmentally impactful way of doing business.

Reasons to push for greener industrial parks

Despite the clear environmental costs, there is still some hesitation in some sectors about transitioning to more ecologically sound industrial park models. Here are some of the reasons why policymakers, investors, and communities should switch to greener models such as those used by AIC:

1) Drive sustainable growth

Operating older industrial park models exacts human and long-term economic costs. Workers and members of surrounding communities who become sick because of pollution create burdens on healthcare systems, creating additional costs for taxpayers. Workers with poor health also take more sick days and tend to have poorer output, causing productivity losses for businesses. Additionally, sick individuals have to be cared for by healthy family members, further reducing the economic output of their household. Lastly, restoring land that has been damaged by pollution can be exceedingly expensive, possibly turning off future investors.

Greener industrial park models promise to remove or, at least, mitigate many of these burdens. By pushing for greener ways of doing business now, park stakeholders can be assured of continued growth and profits for years to come.

2) Preserve dwindling resources

Ecologically responsive industrial parks adopt technologies and practices that minimize resource consumption. With the Philippines now facing threats to its water and energy security, practices such as those currently being implemented by AIC in its WCE and LIMA estates may serve to mitigate the impact of these challenges.

Initiatives like implementing energy-efficient systems, adopting more efficient water infrastructure, and using renewable energy sources are some of the ways industrial parks can reduce their ecological footprint. Park developers can also prioritize recycling and waste reduction to minimize the extraction of virgin materials from the environment.

3) Improve regulatory compliance

By investing in greener industrial parks, foreign investors can ensure better compliance with increasingly stringent environmental laws. Industrial parks like AIC’s economic estates are developed on newer environmentally conscious models that are designed to adhere to and exceed regulatory standards, reducing investors’ financial, legal, and reputational risks. 

4) Enhance brand value

Consumers are increasingly conscious of environmental issues and tend to favor companies that consistently demonstrate a commitment to greener ways of doing business. Investing in newer, environmentally sustainable economic estates allows foreign investors to align their businesses with sustainability principles, thereby enhancing their brands’ value.

5) Contribute to local communities’ well-being

Activities that are harmful to the environment inevitably cause harm to the communities that depend on it. And as the climate change threat shows, many of our actions have a truly global impact.

By investing in developments like AIC’s, investors can not only prevent damage to the environment but also contribute to the economic development, job creation, and social well-being of the communities where their investments are located. 

A better, greener, more humane way of doing business

group of business people looking for natural resources

Green economic estates represent a logical next step from the earlier industrial parks that helped bring Asia’s economies to their current levels of prosperity. By learning from the mistakes of the past, Aboitiz InfraCapital and other like-minded developers are now helping investors and communities succeed without reneging on their responsibilities to the planet. Moreover, this is all being done without negatively impacting the profits that made industrial parks profitable to begin with.

As the world continues to fight climate change and prioritize sustainability, the significance of industrial park developments, like AIC’s economic estates, is becoming increasingly evident. These innovative models of industrial development exemplify the harmonious coexistence of economic progress and environmental preservation. Given the Philippines’ current challenges concerning water and energy security, the implementation of sustainable practices as demonstrated by AIC in its LIMA Estate, offers a promising path forward.

More Blogs

Back to Top