Meridiam’s Thierry Déau: ‘We must rebuild in a resilient and sustainable way’

On the broadest existential level, covid-19 has highlighted the critical importance of infrastructure to the future of societies and economies. The crisis created by the pandemic has governments across the globe moving rapidly to devise roadmaps from lockdown to recovery that address immense social and economic challenges. Some of these are new, while the evidence for other, existing challenges has become undeniable.

What happens next will be nothing short of a decisive moment for the future of societies and governments: in sum, a phase of deep socioeconomic rebuilding during which we’ll be called upon to clearly express our values through the choices we make. Crisis brings devastation. It also creates an opportunity to re-evaluate the kind of a society we want to create and to integrate our responses to that question into our business practices. One thing is certain: we must rebuild in a resilient and sustainable way.

Most governments have called for stimulus plans involving infrastructure. In Europe, a combination of the Green Deal investment focus (already the key part of the EU budget), the need for resilient social infrastructure tested by the crisis and the already relaxed Maastricht rules for budgetary policy are likely to create a real acceleration in sustainable infrastructure investment.

It is likely that once governments have had time to take stock of system failures during the pandemic, they will note the lack of resiliency in healthcare. There is a massive need to invest in capacity and training of medical personnel, and for a broader re-evaluation of health facility investment on the scale of what Meridiam has done in Turkey and Chile. The UK, though no longer in the EU, had already started pushing for more infrastructure to mitigate any economic downturn due to Brexit.

In Africa, the pipeline is rather abundant and the crisis may be a catalyst for governments to focus on delivery, as seen in Kenya and Ethiopia. In the US, though big announcements are likely to be made, the lack of capacity of local and state administrations, combined with short elective mandates, may trigger a more reasonable
acceleration.

Testing the portfolio

During this period of confinement, we have run stress tests on our entire portfolio of long-term investments. Our assets have been successfully resistant to this crisis period: more than 75 percent of our investments comprise essential public services and, as such, are not necessarily correlated to short-term economic growth trends.

Last year saw Meridiam’s transition into a certified benefit corporation under French law. We are now reporting the impact of our activities across all of our investment funds against environmental, social and governance and UN sustainable development goal targets and performance indicators, using a purpose-built impact evaluation system that we believe is unique in our field.

Through the lens of the pandemic, infrastructure is now viewed as a ‘safer’ haven and a critical element in the rebuilding paradigm. Calls for consistent, inherent resiliency and sustainability are multiplying. We see this interest as a validation of our model. Our goal has always been to create strong emulation across a new asset class in which resiliency and sustainability are considered implicit risk-mitigation factors. The road has turned to meet us and we hope many others will join us on this path.