Global Summit: Investors bet on community engagement to counter rising populism threat

Panellists debated whether foreign investment in infrastructure posed credible security risks or whether governments were exaggerating the threats.

During the second day of Infrastructure Investor’s Global Summit in Berlin, a panel of investors agreed that engagement with local communities was key to countering the risks posed by populism in developed markets. The risks discussed by the panel range from restrictions on foreign direct investment to threats of renationalisation.

“As an industry, we are not winning the debate,” said Tom Maher, head of business development at Whitehelm Capital, during a discussion about the increasing political pressure on the infrastructure market.

He argued that it was necessary to find examples of infra investment that were contributing to the public good and for investors to explain the benefits.

He also reminded the audience that political risk in infrastructure would not be going away any time soon: “Government will always be involved in infrastructure, and it is necessary to analyse and understand that risk.”

Echoing Maher’s comments, Gregory Smith, president and chief executive of InstarAGF Asset Management, said that while around 60 percent of Canadians support private investment in infrastructure, 49 percent oppose FDI. “It’s a wake-up call, and we have to do more as owners of infrastructure assets [to engage with the community],” he said.

Rosheen McGuckian, chief executive of renewables-focused company NTR, said firms needed to adapt their public message to the particular “strand of populism” present in a community. “While left-leaning populism is more worried about climate change, right-leaning populism is focused on issues like nationalism, security of energy supply and retention of jobs”, she said.

The panellists also questioned lobbying strategies employed by many infrastructure investors. “When you start the argument saying that you need to lobby the government, you’ve already lost the debate,” said Smith. “You have to go back and get the community on your side.”

There was no clear consensus on whether governments were overstating the security risks to FDI in infrastructure, or whether they were voicing legitimate concerns.

Andreas Koettering, partner at CBRE Caledon, said: “Governments should be concerned about security matters, but FDI and private ownership of assets don’t pose a threat. What might be a threat is what you do with the assets, but they are regulated and supervised by the government.”

Maher disagreed, saying it was “rational and logical” for governments to be concerned about infrastructure ownership. He said problems arose when security becomes “a catch-all justification” for not doing a project or not allowing foreign entities to participate.