GIIA members putting the 'S' into ESG
As many will testify, ESG is not a new concept for investors in infrastructure. Pre-covid, not a day would go by without an invitation to attend a conference with an ESG session or the opportunity to read another ESG report.
One of the regular discussion points within GIIA’s ESG working group has been around the observation that the ‘S’ often seems the poor relation of the ESG triumvirate. Investors have adapted well to the challenge of managing and reporting on Environmental performance and Governance requirements, but many have struggled to demonstrate the same progress on their Social impacts. This is problematic, as it is the Social impacts of infrastructure that are most likely to help investors and their operating companies to earn their licence to operate.
However, as the world responds to the ongoing health and economic emergency of Covid-19, GIIA members around the world have been stepping up to the challenge by providing much needed support to their employees, communities, customers and supply chains. We have seen many great examples of positive social impact through the provision of much needed medical equipment, use of facilities for medical testing operations and production of critical supplies, upwards of $200 million in financial donations to good causes, care for employees and flexible payment terms for customers.
Could it also be the case that Covid has forced a deeper understanding of the stakeholder eco-system in which investors operate, and if so, could this become a game changer for the future in terms of focus on the ‘S’ in ESG?
GIIA is in active dialogue with policy makers in all our key markets in order to champion the role of private investment in infrastructure as a fundamental element of economic recovery plans. A vital part of that engagement is to be able to demonstrate the highest principles of responsible asset stewardship and corporate social responsibility. Through their response to Covid, private infrastructure investors are demonstrating their value to society beyond the provision of quality infrastructure and are helping to make the case for an increased role in the future.
GIIA has identified the following 20 examples from around the world to illustrate the range and extent of the support our members are providing to help mitigate the impacts of Covid-19:
APG - To combat the pandemic and its socio-economic impact, APG on behalf of its pension fund clients has now invested €554 million in Covid-19 response bonds. The proceeds of ‘corona bonds’ are earmarked for financing of a range of emergency measures, including expansion of healthcare services, support to SMEs, and a temporary increase in social security expenditures. In some cases, corona bonds also provide for financial help to local governments and medical equipment to healthcare companies facing unprecedented demand due to the pandemic. Oscar Jansen, Credit specialist at APG Asset Management said: “the societal and economic impact of the pandemic is huge and a lot of money is needed to fight the crisis. As a responsible investor, we want to play an active role in this.”
Aquila Capital - In May 2020, Aquila Capital joined the European Alliance for Green Recovery, launched following the pandemic. As a signatory of the pan-European initiative, Aquila Capital is committed to implementing investment strategies that are consistent with the European Green Deal's climate commitments to rebuild the economy after the crisis, while continuing the transition to carbon neutrality.
Aviva Investors - Aviva is donating £5m to NHS Charities Together, to support the welfare and wellbeing for NHS employees, volunteers and patients, assist patients leaving hospital and help fund long-term mental health support for NHS workers. The firm is also donating £10m to the British Red Cross, as well as supplying surplus stock of hand sanitisers, rubber gloves, antiseptic wipe pod refills and face masks to key worker organisations and charities.
British Columbia Investment Management Corporation - BCI contributed C$75,000 to the Rapid Relief Fund created by the Victoria foundation, which aims to support residents in Greater Victoria throughout the Covid-19 crisis. BCI staff also made individual donations, while the executive management team contributed an additional C$50,000.
Blackstone - Blackstone is contributing US $15m to relief efforts in New York. $10 million will go to the New York State COVID-19 First Responders Fund, which will deploy emergency aid and resources where they are needed most. The fund will also support food, transportation and housing assistance for healthcare workers on the frontline.
Brookfield - Brookfield Asset Management is launching a $5bn rescue fund for retailers that require urgent short-term liquidity during the pandemic. The $5bn fund will be drawn from Brookfield’s existing investment vehicles and its own balance sheet.
CDPQ - CDPQ is donating CA$300,000 among 5 selected charities while also deploying its financial and operational expertise to help companies in developing and structuring innovative financial solutions.
Corsair - Yorkshire Water has made a commitment not to use the Government’s furlough scheme for any of its employees and will retain all staff during the Covid-19 pandemic. Yorkshire Water is also continuing to offer support to customers who are facing financial difficulties as a result of the crisis, including special tariffs and payment holidays.
DWS Group - DWS Group have donated EUR 1 million to various charities and foodbanks across Italy, Spain, the UK, Germany and the US. They have also set up part of their website for other donations as part of a collective effort to fight Covid-19. Hamish Mackenzie, Head of Infrastructure at DWS said “A huge effort was made by the DWS team to support management as they worked to ensure the continuity of operations whilst protecting the safety of employees. Clear and regular communication, early engagement with employees and other stakeholders and the ability to draw on the experiences of the Global Financial Crisis were all essential tools to navigate the crisis.”
Goldman Sachs - Goldman Sachs has pledged US $25 million as part of the Goldman Sachs Covid-19 Relief Fund to support communities in most urgent need globally, with the firm contributing to match employee donations up to an additional $5 million. $1 million of this is being deployed to Barts Charity, which funds Barts Health NHS Trust, the organisation behind the new NHS Nightingale Hospital at the ExCeL convention centre in East London.
IFC Asset Management - IFC is increasing the amount of financing for companies to help fight the outbreak, approving an additional $2 billion in fast-track financing, bringing the total to $8 billion in support to help sustain economies and protect jobs.
IFM Investors - IFM is demonstrating its appreciation of healthcare workers on the front-line of the pandemic and supporting local restaurants in the process. It is buying food from restaurants, such as Outback Steakhouse, which is delivered to frontline healthcare workers.
John Laing - The John Laing Charitable Trust (JLCT) is a signatory to the Covid-19 Funders Programme, which enables John Laing Group plc and its subsidiaries to make charitable donations and provide welfare support to existing and former employees.
KKR - KKR & Co. has created a $50 million fund dedicated to supporting frontline workers and mitigating the financial hardship created by the pandemic. The fund will be used to help first responders and health workers, and in various financial relief efforts aimed workers and small businesses in the communities where it invests.
Macquarie Group - Macquarie Group is allocating $A20 million in charitable donations to the Macquarie Group Foundation to support a select number of non-profit organisations working to combat Covid-19 and provide relief to affected communities. The first organisation to receive $A2 million of the allocated funds will be The Global Foodbanking Network, which is providing vital hunger relief to vulnerable populations in places of active Covid-19 outbreaks around the world.
Marguerite - Fraport Greece and Copelouzos Group are actively participating in the Covid-19 support effort by donating 500,000 surgical facemasks in support of the health system with needed medical supplies.
Morgan Stanley - Morgan Stanley has so far announced $25 million in new funds designed to support coronavirus relief efforts. $15 million will be allocated to support charitable organisations that are providing food, disease control and caring services and the remaining $10 million will be allocated to frontline medical responders and community workers. The first three grants of $2 million each were announced for Feeding America, the CDC Foundation, and the World Health Organization’s Covid-19 Solidarity Health Fund.
PGGM - PGGM has invested more than €20 million in the Nordic Investment Bank’s €1 billion Response Bond with proceeds of the bond helping to finance projects that help alleviate the social and economic effects of the pandemic in NIB’s eight member countries: Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden.
Swiss Life Asset Managers - Nortegas, a natural gas distribution company in Spain which Swiss Life has a stake in, have donated the equivalent of 52 tonnes of food to regional food banks in Spain while also extending payment terms to customers and small businesses. Chris Manser, Head of Infrastructure Equity at Swiss Life Asset Managers said: “we are fully aware of the obligation that we particularly have as an infrastructure investor to incorporate and promote sustainability and ESG practices, both within our platform and at the companies we hold in our portfolio. The pandemic has, once again, demonstrated the need for this push towards a responsible business environment and we will continue to support the effort now, and in the future”.
UBS - UBS is contributing $30 million to aid and local projects within communities around the world. UBS’s corporate commitments will match employee and client donations to the UBS Optimus Foundation COVID-19 Response Fund, and regional community appeals. In addition, they have given employees the opportunity to donate or volunteer with select Community Affairs partners in their local communities.