Analyzing urbanization in Shanghai: from an ESG perspective
- Terry Qiu
- May 15
- 9 min read
Introduction
Shanghai, now one of the most crucial economic center in China, has an area of 6340.5 square kilometers. In recent decades, since the implementation of reform opening in China, Shanghai has transformed from a historical port city into one of the world's most dynamic urban centers. With a population surpassing 30 million, it stands as a symbol of China's rapid modernization. However, beneath the gleaming skyline and fast-paced growth lies a complex web of environmental, societal, and governance (ESG) challenges—and opportunities—that deserve a closer look.
Overview
Urbanization began in Shanghai in the 1980s, since the implementation of reform opening (1978) in China, bringing rapid technological, economical, and environmental change to the city and the region around. The original core of Shanghai, when reform opening policies were enacted, was along the huangpu river, mostly near downtown (shown in map), which is industry-intensive and the crucial economic center. However, the core of the city gradually shifted to Pudong district, featuring Lujiazui as economic center and Jinqiao, the northern part of Pudong, as technological center. Pudong was originally a countryside, but now Lujiazui contains some landmark buildings in Shanghai and the whole Pudong population is approaching 6 million.
According to NASA, Shanghai contained only 308 square kilometers of urban area in 1984, but the number increased rapidly to 1,302 square kilometers in 2014.
Besides the self-expanding of urban area, pictures taken by NASA satellites show that the urban area in Shanghai is "quickly merging" with the area of Suzhou and Wuxi, forming a closely connected system in Yangtze River Delta, which contain prosperous cities and provinces including Zhejiang, Shanghai, and Jiangsu. According to World Bank, in Yangtze River Delta, 7,734 kilometers of land is urbanized from 2000-2010.
E impact
When it comes to the impact of urbanization, the first topic brought up is usually the environmental impact. We will explore four main subtopics on the environmental impact of urbanization in Shanghai: pollution, land use, energy consumption, and urban heat island. We will also briefly discuss other ideas such as wetland loss and urban sprawl.
I. POLLUTION
The pollution in Shanghai amount has significantly increased since urbanization. The amount of garbage waste increased from 960 thousand tons in 1950 to 8,900 thousand tons in 2010, which is more than 9 times the amount of garbage in 1950. The amount of waste water increased by, shockingly, 41,915 million tons from only 1991 to 2010, with an increase of 67.7 million tons of residental waste sources annually. The amount of waste gas also increased by 44 billion cubic meters from 1991 to 2010.
The emission of waste garbage, water, and gas caused significant health impacts. Most solid garbage generated eventually ended up in landfill, which could contaminate groundwater. Waste water rich in organic matter will cause eutrophication in Huangpu River and its tributaries. Air pollutants such as ozone, particulate matter, and heavy metals may trigger asthma, heart attack, and respiratory diseases. Statistics show that the number of patients admitted in hospital in Shanghai has increased significantly since 2000.
However, we still see some positive trends towards pollution emissions and treatments. For waste water, Shanghai government has already adopted several methods to treat organic water pollution of Huangpu River and its tributaries. Before 1996, The Suzhou River, the major branch of Huangpu River, was filled with odorous, unpleasant river water; the river was a dead zone with no signs of life thanks to eutrophication. Some areas in Huangpu River also faced the same problem. However, since the start of the official program to treat Suzhou River in 1996 and later programs expanding the area of treatment to the whole Huangpu River, there has been a significant improvement in water quality in Huangpu River and Suzhou River. The treatment program required the movement of plants from Suzhou River to suburbs, which also decreased the amount of industrial waste water emitted. Statistics shows that the industrial waste water decreased by 56 million tons annually from 1991 to 2010.
Scholars found that there were 2 exceptions to common trends of increasing pollution in Shanghai. The first one was the increase in sulfur dioxide (SO2) in suburban areas. This was also due to the movement of plants from urban areas to suburbs. The second one was a decrease of nitrogen oxide (NOx) around 2001 in urban areas. This was due to the Clean Vehicle program issued by Shanghai government to control vehicle emissions. This two trends reflect the effectiveness of Shanghai government's policies to battle with negative environmental consequences of urbanization.
II. LAND USE
The change in land use is driven by policies. From 1990 to 2008, the amount of cultivated land decreased by 1497.8 square kilometers. However, the amount of cultivated land still take up more than 20% of the Shanghai's overall area. The amount of building land increased by 1,419.5 square meters from 1992 to 2010; meanwhile living space per capita increased from 6.9 square meters to 17.5 square meters. The increase of building area and paved roads significantly increased surface water runoff.
However, there are also some positive trends. First, the total area of forest and grassland increased slightly, each by about 100 square kilometers, due to the construction of artificial parks and grasslands. The constructions of parks and grasslands have multiple benefits: providing recreational services and combating the effect of urbanization. This also reflects Shanghai government's dedications to utilize land to its fullest purpose and its emphasis on high-quality cultivated lands.
Another trend is an increase in fresh water lands, such as lakes and streams, in Shanghai. This phonomenon mainly occurs in Fengxian, which is far away from center city and near the coastline. Fengxian's remote location from city center results in a relatively less population density, which allows for the construction of artificial lakes for aesthetic appreciation; and its closeness to sea provide chances for coastline and inland aquaculture, which supplies the livelihoods of a significant proportion of Fengxian residents.
III. ENERGY COMSUMPTION
Overall, the available resources are drying up at an unsustainable rate. From 1949 to 2010, the water supply increased from 180 million cubic meters to 3,090 million cubic meters, which is 16 times more. The tap water supply for living increased from 100 million cubic meters to 1864 million cubic meters, and the tap water supply for industries increased from 31 million cubic meters to 580 cubic meters. The power consumption, which is mainly generated by coal and oil, increased from 881 million kilowatt from 1950 to 129,587 million kilowatt in 2010 -- a 14700% increase! The sales of gas also increased from 30 million cubic meters in 1949 to 1,285 million cubic meters in 2010.
IV. URBAN HEAT ISLAND
The impervious surfaces, such as roads and building roofs, are mostly made of low-heat capacity meterials, such as asphalt and concrete. Those materials' temperature will greatly increase when absorbing heat, causing the temperature of urban areas to be higher than rural and suburban areas. According to NASA, in some urbanized area in Shanghai, the surface temperature increased by 81% from 1984 to 2014. The common temperature difference between urban and rural surface temperature in 8 degrees Celsius in summer and 3 degrees Celsius in winter, which is caused by different prevailing winds in different seasons.
V. OTHER IMPACTS
The effect of urbanization also concerns ecological system and transportation. Urbanization causes various, conflicting impacts on wetlands. The creation of coastal land creates new area for wetland, but erosion and sea level rise is slowly and gradually consuming existing wetlands in various regions, such as Chongming Island. Wetlands are crucial to the ecosystem, providing services such as various habitats and flooding buffer; thus it is important to take actions to protect wetlands for the security of embankment properties and biodiversity. Also, the surging population brought by urbanization caused urban sprawl, a phenomenon in which urban residential areas moves from the urban center to farther, suburban areas. However, the economic center still remained unchanged, so more people commuted for a longer time and a longer distances. Increased transportation, in this way, increased carbon footprint in Shanghai.
VI. SUMMARY
Urbanization brought significant impact to Shanghai. However, unlike public opinion, the environmental impact is not always negative. Despite obvious pollution, change of land use, energy consumption surge, and the impact on ecosystem, we witnessed Shanghai government’s efforts to neutralize the negative impact and create a clean and healthy urban area.
S impact
Although not a common topic, the societal impact of urbanization is equally significant in Shanghai. Despite government efforts, the problem still exists in Shanghai.
The population influx causes significant density increase in Shanghai. In 2010, Shanghai had 8.98 million floating population from Anhui, Zhejiang, Jiangsu, or even foreign countries. Only in 2024, the population in Shanghai increased by 614,200. Population density in most region in Shanghai increased dramatically, expect Chongming Island (as residents move closer to center city for more job opportunities, and it is difficult to commute if living on Chongming Island).
Statistics shows that Shanghai has the greatest amount of population influx in China. According to World Urbanization Prospects (UWP), as more land become urbanized, rural population may start to decline or remain constant, and the urban population is going to increase exponantially.
The population influx leads to many negative results. First, Shanghai faces systemic challenges due to the hukou (household registration) system. Floating residents usually lack access to or have more difficulties accessing healthcare, education, and social security. Although government has introduced policy reforms to ease the problem, the gap between immigrants and local residents remains significant. This causes social inequality, where those contributing to the city's economy are often excluded from the benefits of urban life.
Second, the surging population caused demand and competition for housing to increase, which further caused the increase of housing price. The skyrocketing cost of housing in Shanghai has made it increasingly difficult for lower- and middle-income residents to afford living in the city center, leading to a gentrification trend, where wealthier individuals move into traditionally lower-income areas, displacing long-time residents.
G impact
Urbanization created both challenges and opportunities to Shanghai.
I. MERGING TECHNOLOGY WITH SUSTAINABILITY
With the process of Shanghai's urbanization, substantial progress has been made in technological fields. Over the last decades, smart city technologies emerged and prospered in Shanghai. One prominent example is the city's use of big data to optimize traffic management. The integration of AI, sensors, and real-time data allows the city to monitor and control traffic flows, reduce congestion, and manage public transportation more efficiently. Additionally, the city's smart grid projects help manage energy use, improve efficiency, and reduce emissions.
II. GOVERNMENTAL TRANSPARENCY
Shanghai has taken significant steps to improve governance in terms of environmental monitoring and transparency. The Shanghai Environmental Monitoring Center publishes real-time data on air and water quality, allowing residents to stay informed about pollution levels. This transparency is part of a broader push for greater corporate and governmental accountability in addressing environmental challenges. Furthermore, the government has incentivized businesses to adopt greener practices by mandating sustainability reporting and setting specific environmental targets.
III. PUBLIC ENGAGEMENT
Shanghai has made strides in public engagement through forums and consultation processes that involve citizens in urban planning decisions. For example, when redesigning public spaces or constructing new infrastructure, the government often seeks public input through surveys, town halls, and online platforms. These efforts aim to enhance the inclusivity of governance and ensure that urban development reflects the needs of a diverse population.
IV. ANTI-CORRUPTION PROGRAMS
The Shanghai government has implemented strong anti-corruption measures in recent years, aligning with national efforts to root out corruption at all levels of government. The city has seen a significant push toward transparency, with increased audits and oversight of government projects. While corruption remains a concern in certain sectors, Shanghai's anti-corruption campaign has been instrumental in building public trust and improving governance standards.
V. CORPORATE SUSTAINABILITY PROMOTIONS
Shanghai is at the forefront of integrating ESG (Environmental, Social, Governance) practices in business governance. As China becomes more committed to sustainability, Shanghai has seen an increasing number of companies adopting ESG frameworks for reporting. For instance, Shanghai-listed companies are required to disclose their ESG performance, including their environmental impact, labor practices, and corporate governance policies. This move toward greater accountability in the private sector is helping to align business practices with broader societal goals.
Conclusion
Shanghai’s urbanization story offers a vivid illustration of how the ESG dimensions are deeply interconnected. Environmental sustainability, societal well-being, and sound governance must move forward hand-in-hand to ensure that urban growth benefits all stakeholders. As Shanghai continues to evolve, it holds valuable lessons for the world: that smart, inclusive, and sustainable urban development is not just a goal—but a necessity.
Sources:
Yin, J., Yin, Z., Zhong, H., Xu, S., Hu, X., Wang, J., et al, 2011. Monitoring urban expansion and land use/land cover changes of
Shanghai metropolitan area during the transitional economy (1979–2009) in China. Environmental Monitoring and
Assessment 177, 609–621.
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