Australia and New Zealand have the top performing infrastructure assets, the inaugural Global Real Estate Sustainability Benchmark Infrastructure Assessment has revealed, however there’s huge room for improvement in embedding ESG into infrastructure investment.
The 2016 GRESB Infrastructure Assessment included 51 infrastructure funds and 134 infrastructure assets from 53 countries across six continents, finding that more than 90 per cent of participating funds had ESG policies and included ESG considerations in their investment processes.
There was, however, less positive news around reporting performance of infrastructure assets – including carbon emissions, energy and water consumption, and waste and air pollutant emissions – which has not yet become common practice.
Patrick Kanters, managing director global real estate and infrastructure at APG Asset Management, said ensuring infrastructure assets were managed sustainably was “critical” to successful operation and the ability to generate stable, long-term cash flows.
“GRESB Infrastructure is an important step towards more coordination and alignment among the infrastructure investment community, which is reflected in the high number of participants in the first assessment,” he said. “Ultimately globally consistent standards for assessing sustainability performance should stimulate sustainability developments in the sector as a whole.”
The survey included two components: a fund assessment, focused on management and the investment processes; and an assessment of assets, which included scores on management, policy & disclosure, risks & opportunities, implementation, monitoring & environmental management systems, stakeholder engagement, performance indicators and certifications & awards.
The average score for the participating funds was 54 out of a possible 100. The average score for all assets reporting was 28, though for Australia and New Zealand the score was 35, the top region, though behind assets diversified by region on 45.
GRESB managing director, ESG & infrastructure Emke Bus said the high level of participation in the assessment showed there was definite interest in sustainable infrastructure.
“The development and operation of infrastructure projects will play an important role in achieving the ambitious carbon reductions goals set out by the COP21 agreement in Paris,” she said.
“The involvement and engagement of institutional investors, such as banks, insurance companies, pension funds and sovereign wealth funds, in infrastructure investments that are low carbon, climate resilient and socially inclusive is particularly important.”