In late May, Baku hosted the 13th World Urban Forum, bringing together policymakers, researchers, urban planners, and development practitioners to examine some of the most pressing challenges facing cities today. I was privileged to participate in an important discussion on the transition to a circular and green economy and its relevance to sustainable urban development.

The timing could hardly be more appropriate. Cities now sit at the centre of debates about climate change, economic development, and social inequality. They consume the majority of the world’s energy, generate enormous volumes of waste, and serve simultaneously as engines of opportunity and focal points of vulnerability. The future of sustainable development will therefore be shaped, to a significant extent, by what happens within urban spaces.

The discussion also resonated strongly with my doctoral research on inclusive economic growth. A central component of that research examines the transition toward sustainable development through the lens of Azerbaijan’s evolving green economy strategy. My study, “Transitioning to Sustainable Development: The Role of Green Economy in Azerbaijan,” argues that the country’s green transition should not be viewed merely as an environmental aspiration. Rather, it represents a strategic development choice with broad economic implications, offering a pathway toward diversification, resilience, greater efficiency, and more inclusive forms of long-term growth.

For Azerbaijan, the significance of this transition is particularly pronounced. For decades, the country has benefited from substantial oil and gas revenues. Those resources have financed infrastructure projects, strengthened state institutions, and contributed to economic development. Yet the very success of the hydrocarbon sector has also highlighted the importance of diversification.

Reducing dependence on a single source of economic strength has become a strategic national objective. This is reflected in Azerbaijan 2030: National Priorities for Socio-Economic Development, the country’s long-term development framework. Among its five priorities is the ambition of becoming a nation characterized by a clean environment and green growth. Green growth is no longer treated as a peripheral concern. It has become an integral component of Azerbaijan’s broader development model.

Azerbaijan’s approach also aligns with broader international sustainability frameworks, including the Paris climate agenda and the United Nations Sustainable Development Goals, particularly Goal 12 on responsible consumption and production. For cities, where consumption and waste generation occur at scale, this objective carries particular importance.

This is where the concept of the circular economy becomes essential. Too often, the term is reduced to discussions about recycling. In reality, a circular economy represents a broader transformation in how societies produce, consume, and manage resources. It seeks to keep materials in use for longer, reduce waste, and preserve value throughout the lifecycle of goods and services. Applied to urban development, this means more effective waste management systems, energy-efficient buildings, durable infrastructure, smarter transportation networks, and stronger connections between local production and consumption.

Several policy directions within Azerbaijan support this transition. One important area involves the modernization of outdated technologies, particularly within industrial sectors and waste management systems. Upgrading these systems can generate both environmental and economic benefits. Another key initiative involves the establishment of industrial parks and technological zones capable of attracting investment, encouraging innovation, and supporting greener forms of production.

These initiatives matter because the green economy is not solely about environmental protection. It is equally about constructing the economic infrastructure that will underpin future prosperity. Investments made today in cleaner technologies and more efficient systems can shape competitiveness for decades to come.

The role of small businesses and innovators should not be overlooked. In many countries, successful green transitions are driven not only by government initiatives but also by entrepreneurs, startups, and local innovators who develop practical solutions in renewable energy, sustainable construction, recycling technologies, smart logistics, and environmental monitoring.

If policymakers are serious about building a circular economy, they must also be serious about fostering innovation ecosystems that allow new ideas to flourish. Encouraging entrepreneurship, supporting research and development, and creating opportunities for experimentation remain critical components of a successful transition.

Another dimension that is particularly significant for Azerbaijan is the development of the liberated territories. These areas present a rare opportunity to rethink urban development from the ground up. Rather than replicating older models characterized by high emissions and intensive resource consumption, development can be guided by principles of energy efficiency, integrated transportation, low-carbon construction, and environmentally responsible urban planning. In this sense, the liberated territories are not only a reconstruction challenge but also a potential showcase for sustainable urban development.

My research argues that a successful green economy depends on four interconnected forms of capital: physical capital in the form of infrastructure; human capital through skills and education; social capital through partnerships among government, business, academia, and communities; and natural capital through the protection of environmental resources. Together, these forms of capital demonstrate that sustainability is not solely an environmental issue. It is also a development issue requiring coordinated investment across multiple sectors.

This perspective also helps explain why the green transition should be viewed as a matter of urban justice. A sustainable city is not merely a cleaner city. It is a fairer city as well. Environmental improvements should not be concentrated in affluent districts while other communities continue to face pollution, inadequate housing, weak infrastructure, or limited access to essential services. Genuine sustainability requires that the benefits of development be shared across society and that vulnerable populations are not left behind.

Of course, the transition is not without challenges. Continued dependence on oil and gas revenues can make diversification politically and economically difficult in the short term. Institutional capacity remains important, particularly the ability to enforce environmental regulations and coordinate policy implementation. Public awareness is equally critical because circular economy reforms require behavioural change alongside policy change.

Yet these challenges should not be viewed solely as barriers. They also reveal where opportunities exist. Azerbaijan possesses considerable potential in renewable energy, green construction, sustainable agriculture, waste valorization, and environmentally friendly urban infrastructure. The country is also well positioned to expand international cooperation with development partners, multilateral institutions, and private investors seeking to support sustainable growth initiatives.

While the initial costs of green transition can be substantial, the long-term benefits are equally significant. Greater resilience, improved competitiveness, enhanced environmental quality, and stronger social stability all represent potential returns on those investments.

Like many countries navigating similar transitions, Azerbaijan faces important choices about the direction of its future development. The move toward a green economy should be understood not as an isolated environmental project but as a strategic pathway toward sustainable development. Cities stand at the centre of that journey.

If urban development is to become truly circular, resilient, and inclusive, policymakers must look beyond short-term growth metrics and focus on long-term transformation. This requires investing in efficient systems, supporting innovation, strengthening human capital, and embedding sustainability into everyday urban life. Ultimately, the green economy is about far more than protecting nature. It is about building a stronger economy, a more resilient society, and a more liveable urban future for generations to come.