Redefining infrastructure investment

On the face of it, infrastructure and sustainability are natural bedfellows.
After all, infrastructure investments are, by definition, long term. Therefore, ensuring they are done sustainably seems essential to making sure those long lives are lived successfully.
Makes sense, right? It does, but unfortunately, it’s not that simple.

The trouble is that sustainability is a tricky concept, one that, somewhat paradoxically, manages to engender nods of approval even when the people doing the nodding often have different ideas about what it actually means. It’s also a fluid concept, one that encompasses – but is not limited to – ESG and, for some, borders impact investment.

ESG is, of course, at the very heart of sustainable investment, and in that sense the work being done by GRESB Infrastructure to benchmark the industry is absolutely critical.
GRESB’s importance is easily recognised by the participants in our debut sustainable-investment roundtable for the much-needed standardisation it brings. Even if those around the table are all sold on the importance of ESG and sustainable investment, our participants provide invaluable insights of what it’s like to be on the frontlines of a changing approach to infrastructure investment. One, encouragingly, that is being driven by LPs and not just mangers.

For, make no mistake, changing how the industry approaches infrastructure investment is as much an obstacle as standardising what sustainability actually means. As Hermes head of infrastructure Peter Hofbauer puts it “infrastructure has a social purpose”. That isn’t incompatible with making a fair return, but that social contract is, in his opinion, increasingly incompatible with a private-equity-style return.

Pioneers in the field are incorporating sustainability into their investment mindset and the practical benefits they are reaping from it. And there are benefits to be had, have no doubt about that.

As Whitehelm Capital chief executive Graham Matthews and Thibault Richon, investment director at SWEN Capital Partners, convincingly demonstrate, a sustainable approach is one of the best ways to future-proof your portfolio.

With cybersecurity also becoming critical to the ESG agenda, sustainable investing is certainly a hot topic in the infrastructure space and one that should not be ignored.