Alternative asset manager Morrison & Co and the Clean Energy Finance Corporation (CEFC) have announced a new $1 billion green fund targeting social and economic infrastructure.
The fund will invest in “essential” infrastructure such as data centres, hospitals, aged care facilities, student housing and renewable energy.
The CEFC will contribute $150 million, with the fund acquiring and developing assets with potential to excel in energy efficiency and carbon reduction. The fund’s long-term intention is to introduce science-based emissions targets in order to build a zero-emissions infrastructure asset portfolio.
It will also use infrastructure rating tools like the Infrastructure Sustainability Council of Australia’s IS tool, and building rating tools such as NABERS and NatHERS to set “best-practice” sustainability standards in applicable assets.
In regards to built environment assets, CEFC investment funds lead Rory Lonergan told The Fifth Estate the corporation would seek to have NABERS and NatHERS targets set based on specific experience it had gained already in sectors such as student and social housing, however over time the targets are expected to strengthen.
“We expect that these will be dynamic targets as technology develops in the sector,” he said.
The fund will look to adopt ISCA ratings on a case-by-case basis, with Mr Lonergan saying the ratings were “expected to apply to economic infrastructure type assets rather than social infrastructure assets that are more prevalent in the built environment”.
This is the CEFC’s third foray into the infrastructure space, following a $150 million deal with IFM Investors’ Australian Infrastructure Fund to target airports, ports and electricity infrastructure assets; and $150 million in debt finance to Moorebank Logistics Park to remove emissions-intensive trucks from roads.
CEFC chief executive Ian Learmonth said high sustainability standards would have long-term benefits for asset owners and users, and provide a model for other infrastructure investors and developers looking to lower emissions.
“This investment is about showing how we can readily improve the way we build and operate our essential economic and social infrastructure,” Mr Learmonth said.
“These assets are central to our economy and our wellbeing, and they are built for the long term. We see it as critical that new infrastructure assets are built to the highest possible clean energy standards, and that existing assets are updated with proven technologies that can lower emissions and cut energy use.”
Mr Lonergan said the scale of the infrastructure sector meant that it wasn’t feasible for a discrete investor to finance the sustainability measures needed to make a meaningful impact on overall emissions.
“That’s why it is critical that investors such as Morrison & Co take the lead in establishing specialist clean energy focused investable products,” he said.
“By investing in this fund we are providing other sustainability-focused institutional investors with a new way to tap into this market while also delivering on their own sustainability goals.”
Currently, Morrison & Co has about $15 billion in infrastructure assets under management, investing on behalf of sovereign wealth funds, pension funds and other public and private pools of capital. Assets include Melbourne, Perth, Townsville and Gold Coast airports; TransGrid and ElectraNet; UOW Student Accommodation and Southern East Queensland Schools; and the New Royal Adelaide Hospital.
Morrison & Co chief investment officer Paul Newfield said the asset manager had a “fundamental belief” in decarbonisation as an investment strategy.
“Morrison & Co has been investing in renewable energy for over 20 years and we are convinced that applying the decarbonisation and energy efficiency lens to a broader set of infrastructure assets will generate better long-term investment outcomes.”