by Brianna Crandall — October 12, 2016 — GRESB, an investor-driven organization that is transforming the way the environmental, social and governance (ESG) performance of real assets are assessed globally, yesterday released the data of the inaugural 2016 GRESB Infrastructure Assessment.
The data in the report covers 185 infrastructure funds and assets from 53 countries across six continents. The high response rate and the data show that ESG is increasingly embedded in infrastructure investments, with more than 90 percent of participating funds having ESG policies and including ESG considerations in their investment processes. However, measuring and reporting of the environmental performance of infrastructure assets, including carbon emissions, energy and water consumption and waste and air pollutant emissions, are not yet common practice in the infrastructure investment industry, points out the report.
According to Patrick Kanters, managing director, Global Real Estate and Infrastructure at APG Asset Management:
Ensuring that infrastructure assets are managed sustainably is critical to their successful operation and ability to generate stable long-term cash flows. GRESB Infrastructure is an important step toward more coordination and alignment among the infrastructure investment community, which is reflected in the high number of participants in the first assessment. Ultimately, globally consistent standards for assessing sustainability performance should stimulate sustainability developments in the sector as a whole.
A total of 185 infrastructure entities, including 51 funds and 134 assets, reported to the 2016 Assessment. The infrastructure funds and assets in the database carry out a wide variety of business activities, such as operations of ports, airports, toll roads, conventional and renewable energy and social infrastructure.
The GRESB Infrastructure Assessment has two complementary components: a Fund Assessment and an Asset Assessment.
The Fund Assessment focuses on management and investment processes, addressing foundational ESG plans and policies, leadership and accountability, engagement strategies, communications processes and other factors. Fund performance results in 2016 are overall strong, with an average Fund Score of 54 (out of 100); however, there is room for improvement when it comes to the performance results of the underlying assets.
The Asset Assessment addresses asset-level plans and policies, implementation actions and operational performance, providing the information needed to understand efforts to maximize beneficial outputs, while minimizing social and environmental impacts. The average GRESB Asset Score for all participating assets is 28.
Emke Bus, managing director, ESG and Infrastructure at GRESB, commented:
With the high number of funds and assets participating in the inaugural GRESB Infrastructure Assessment, it is clear that the interest in sustainable infrastructure is high. The development and operation of infrastructure projects will play an important role in achieving the ambitious carbon reduction goals set out by the COP 21 agreement in Paris. 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.
2016 GRESB Infrastructure Assessment highlights:
- Fund performance results are overall strong at the fund level, with room for improvement in the performance results of the underlying assets.
- The average GRESB Asset Score for infrastructure assets is low, and scores show a wide dispersion across infrastructure types.
- The data for infrastructure assets demonstrates a strong variation in average GRESB Asset Scores per region. Assets that are diversified by region and assets in Australia and New Zealand both achieve relatively high scores as well.
- Managing environmental risks is key for most infrastructure business activities, as demonstrated by a high level of adoption of environmental policies.
- Reporting on environmental performance indicators is not yet common practice. This is reflected in relatively low average scores for this aspect.
- Aspect scores are on average highest for the Implementation aspect, and lowest for the aspect Certification and Awards.
The 2016 GRESB Infrastructure Assessment is available on the GRESB Web site.
