GIIA has published the following response to Brad Cornell’s opinion piece in The Financial Times (16th July, 2020) titled ‘The ESG concept has been overhyped and oversold’.
Infrastructure investors increasingly believe that key to their commercial success is a focus on the principles of ESG investing, to manage risk, improve the performance of assets under management, and enhance their corporate reputation. It is not just a question of doing the ‘right’ thing, although in today’s society that is pretty fundamental to maintain your ‘social licence’; investing through the ESG lens for the long term also makes good business sense. A way to look at ESG investing is through the 7 R’s model (credit to Wayne Visser, Professor of Integrated Value and Chair in Sustainable Transformation at Antwerp Management School), in the way that it lowers risk, improves reputation, fosters resilience, increases resource efficiency, anticipates regulation, supports recruitment and increases revenues.
Good ESG performance should not be seen as a one-off. Companies that improve their ESG performance go on a journey that results in continued improvement, adding value year after year. Making decisions without ESG information is also risky and, in some cases, could be seen to constitute a disregard for fiduciary duty.
Investors that have embedded ESG into their decision making should not be “called on to make judgments on social issues that they are not empowered to make, nor equipped to handle”. Effective executive decision making is actually informed and empowered by the extent to which an organisation is engaged with the societies within which it operates. Companies that have enhanced engagement with their stakeholders are likely to make better informed, well-rounded decisions.
Infrastructure investors are consciously choosing to invest for the long-term with ESG at the core of their investing strategies, because they know it is the way to build long term value for stakeholders and shareholders.
GIIA, in partnership with Alvarez & Marsal, is pleased to launch the new GIIA Infrastructure Pulse Survey for both the European and Americas markets. This quarterly survey aims to provide a regular temperature check of sentiment in the sector and to monitor emerging trends.
Click here to view the results of the Europe Infrastructure Pulse Survey
Click here to view the results of the Americas Infrastructure Pulse Survey
Speaking on the release of the Survey, CEO Lawrence Slade said:
“We are excited to work with Alvarez & Marsal on the Infrastructure Pulse Survey which will monitor some of the key trends and issues affecting the infrastructure investment space in both Europe and the Americas. We are confident this will become a valuable market tool in understanding what is happening in the sector.”
Against a backdrop of Covid-19, a number of interesting common themes emerged from the first survey:
- Most respondents raising capital expressed a neutral or marginally positive view of the
fundraising environment. For those investing new capital, almost three quarters of respondents indicated that infra debt markets remain favourable for funding of new infrastructure deals in both geographies.
- In terms of general outlook and views of the impact of Covid-19, respondents highlighted the only positive impact of Covid-19 was in communications infrastructure (due to the increased criticality of connectivity as more work from home), which continued the overall positive outlook for the sector. Unsurprisingly, the most negative outlook was noted for airport transactions and oil & gas related midstream assets.
- Respondents indicated that the most positive outlook in Europe was for the Nordics, Iberia and Germany, whilst in the Americas the most positive outlook was in the USA. The most negative sentiment was reserved for Greece/Cyprus, Eastern Europe, and Mexico.
- ESG is emerging as an important consideration for investors and their LP’s across both the Americas and Europe. Covid-19 and other events in 2020 are likely to accelerate the ESG agenda with a flow through to investment criteria.
Results from the next quarter’s survey are anticipated in mid-October.
We have launched a new resource on our website, looking at GIIA member case studies from around the World that are delivering real societal benefits.
Compiled with support from KPMG, and using the framework of the UN Sustainable Development Goals, these case studies demonstrate the way in which infrastructure can be a positive force in local communities across the globe.
View case studies here
From renewables projects in India that are supporting local health clinics, to the world’s first electric ferry in Norway to an innovative system of fish ladders in New York, these are just a few of the examples of GIIA members helping to tackle sustainability challenges.
Speaking on the launch of the case studies resource, GIIA CEO Lawrence Slade said:
“Around the World, GIIA members are rising to the challenge of creating and delivering sustainable, innovative and environmentally friendly infrastructure that is needed for future generations.”
Richard Threlfall, Global Head of Impact and Global Head of Infrastructure at KPMG, commented:
“The success or failure of nearly three-quarters of the Sustainable Development Goals depend on infrastructure. Governments and global capital markets need to take quicker actions and work in greater collaboration in a way that is environmentally sustainable, socially impactful and resilient.”
GIIA will continue to add further case studies in coming weeks. Members interested in submitting a new case study should email email@example.com