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Colonial First State Global Asset Management (including First State Investments)

PRI reporting framework 2016

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You are in Direct - Infrastructure » Post-investment (monitoring and active ownership)

Post-investment (monitoring and active ownership)

Overview

INF 14. ESG issues in post-investment activities

14.1. 組織のインフラ資産の投資後の活動に関連して、組織やオペレーターがESG問題を考慮しているかどうかを記載してください。

14.2. 組織のインフラ資産の投資後の以下の活動に関連して、組織やオペレーターがESG問題をどのように考慮しているかどうかを記載してください。

14.3. 組織のインフラ投資の投資後の活動において組織やオペレーターがESG問題をどのように検討しているかどうかを説明してください。 [任意]

The boards of our infrastructure investments govern and require management to set meaningful and appropriate ESG targets for their annual performance scorecards. These targets are monitored on an ongoing basis and form part of board reporting. Management compensation may be impacted by the achievement of the ESG targets.

As owner of a portfolio of companies in similar sectors we encourage and facilitate the exchange of experience and best practice by organising workshops, site visits exchange of documents amongst the management teams of our portfolio companies. This has already let to operational improvement for the prevention of electricity outages caused by trees falling on electricity lines during storm events, and thus improved power outage statistics.

Further examples include:

  • the replacement of current fuel sources by alternative fuel with lower environmental impact in our ferry business
  • improvement of customer satisfaction , measured on a monthly basis
  • encouraging local university research projects to take place on the premises of our portfolio companies to encourage a sharing of knowledge and strong relationships with the local community
  • setting specific targets for the reduction of embedded carbon in all new installed hardware. This forced the supply team and chain to think of innovative ways to reduce embedded carbon (in a cost effective way) and led to a significant fall in the level of embedded carbon in new hardware
  • setting ESG reporting standards for our airport business. As a result the business implemented improved, measurable goals that were tracked. The results of the measurement were presented to shareholders and new goals were set

14.4. 補足情報。 [任意]

Please also refer to the attached ESG report for EDIF which contains examples for each portfolio company.


Infrastructure monitoring and operations

INF 15. Proportion of assets with ESG performance targets

15.1. 報告年度のインフラ資産の中で、組織またはオペレーターが投資のモニタリングにESG実績を組み入れた割合を記載してください。

(インフラ資産の件数)

15.2. 組織またはオペレーターが通常目標(KPIなど)を設定し、さらにモニタリングしているESG問題を記載し、問題別に例を挙げてください。

問題別に例を3つまで挙げてください

          Resource use and reuse
        
          Pollution and contamination
        
          Carbon targets (including embedded carbon)
        

問題別に例を3つまで挙げてください

          Community engagement (e.g. complaints)
        
          Procurement targets (local procurement)
        
          Success of education programs
        

問題別に例を3つまで挙げてください

          Performance incentives
        
          Board structure (diversity, independence)
        
          Reporting and transparency
        

15.3. 補足情報。 [任意]

Typically, board meetings are held monthly or quarterly. Board includes scorecards with ESG components.

Industry standards in Europe and OECD countries tend to be fairly well developed. These are then monitored by the board and independent bodies or associations that certify or grant licences for the operation of the business. We aim for all of our portfolio companies to be industry leaders and to implement best practice standards and procedures into their operations.

Ongoing management of ESG issues, as with all risks and opportunities that go to value, are considered by our investment team on an ongoing basis. Where changes are required, this can involve action plans for exploiting an opportunity, remedial work to mitigate a risk, or ultimately a divestment if exit is considered the most valuable option.


INF 16. Proportion of portfolio companies with ESG/sustainability policy

16.1. 組織がESG/サステナビリティに関連するポリシー(または同様のガイドライン)を有するインフラ投資先の割合を追跡しているかどうかを記載してください。

16.2. 組織がESG/サステナビリティに関連するポリシー(または同様のガイドライン)を有するインフラ投資先の割合を記載してください。

(インフラ投資先の件数)

16.3. 組織またはオペレーターがインフラ投資先のESG問題の管理にどのように貢献しているかを説明してください。 [任意]

We are taking a very pro-active role in engaging in various activities to promote and contribute to development of ESG initiatives.

After each acquisition we design an individual asset management plan to aid and improve the businesses ESG standards within a given timeline. Apart from a good corporate governance structure and process, we seek to implement at our portfolio companies minimum standards, such as ISO 9001, ISO 14001, ISO 50001 and OHAS 18001 or similar accreditations.

Our primary method of contributing to our portfolio companies' ESG management is at Board level. Our nominee board directors will progress management to an ESG-focused approach. This is typically achieved through strategic direction, business case approvals, setting of Key Performance Indicators and Company Scorecards. The Board will also typically demand regular reporting against measurable metrics. Our team members are involved in various governance bodies at each portfolio company and push for ESG targets to be aligned with management scorecards and incentive KPIs.

The list below highlights a few key elements of how we manage ESG at a company level:

Governance

  • Board level committees and risk workshops
  • Reporting of ESG issues at every board meeting
  • Risk registers including safety, environment and carbon management

Environmental and Safety

  • Program to retain ISO 9001, 14001, 50001, 55001 and OHSAS 18001 and other sector relevant accreditations
  • Dedicated safety managers to implement and share best practice
  • All safety issues are escalated to boards on the same day as the incident occurs and reviewed at the highest level

Scorecard and reporting

  • Executive and company scorecard aligned to achievement of safety, environment and customer targets
  • Reporting and monitoring of operating statistics including safety and environmental impacts

In addition, and were appropriate, regular workshops between the management teams of different portfolio businesses are organised in order to share new ideas and best management practices.

For example, a sustainable tree cutting program implemented in our UK electricity distribution business was successfully transferred to our electricity distribution business in Finland.

16.4. 補足情報。 [任意]


INF 17. Type and frequency of reports received from investees

17.1. 報告書の種類

書類の添付後に保存

報告頻度の種類

報告頻度の種類

17.2. 補足情報。

By having board representation on the portfolio companies we invest in we receive board information that contains significant ESG information, including performance data for ESG targets. This is typically part of the normal Board reporting cycle, which is usually monthly or quarterly.

For example, companies report on energy and water use, embodied carbon reduction performance, safety performance, pollution and other environment compliance outcomes, customer satisfaction data, service level statistics and other targets as set by the board. We usually receive monthly and quarterly reports including performance data and ESG information.

Annual reporting documentation from a majority of our companies also provides summary outcomes of ESG performance available for a broader stakeholder audience. Most of our portfolio companies for example produce some kind of sustainability or ESG report in addition to the required financial reports,

As part of our governance approach we usually establish an Environmental, Health& Safety committee as a subcommittee to the supervisory board which specifically focuses on the review and assessment of ESG issues in the respective company. These committees meet on a regular basis to discuss particular topics in a more detailed way.

To determine the format of ESG reporting we frequently refer to guidelines and recommendations given by IFC/ World Bank with respect to the relevant sectors, but also to those required by national or international associations which issue certifications and accreditations.


Infrastructure maintenance

INF 18. Proportion of maintenance projects where ESG issues were considered

18.1. ESG問題が考慮されている実施中のインフラ整備プロジェクトの割合を示してください。

(実施中の整備プロジェクトの件数)

18.2. インフラ整備プロジェクトにESGを検討するアプローチを説明してください。 [任意]

Major and ongoing maintenance forms a large part of the expenditure line for most infrastructure businesses. As such it is an area where there is significant scope for driving value. As highlighted in Section 16.3 we have an active approach to managing, monitoring and reporting on ESG matters across our entire infrastructure portfolio.

The drivers for ESG considerations include:

  • Proven economic benefit (makes good business sense);
  • Focus on sustainability drives operational efficiencies; 
  • Mitigation to climate change effects (rising seawater levels etc.) drives investments to secure asset's sustainability;
  • Compliance with existing regulation (note: many of our portfolio infrastructure businesses operate in the European Union which has some of the highest standards with respect to environmental regulation in the world); and
  • Leading the implementation of ESG considerations increases the resilience against changes in regulation;
  • Investors looking for responsible and sustainably managed investments.

Management teams within our portfolio companies are incentivised to target ESG specific initiatives which move the company towards the top of their industry. As such the ESG targets shape every part of the business: from how the company procures its services, manages its supply chains down to treatment of the natural resources it exploits.

Below are some examples of ESG considerations for Infrastructure maintenance projects:

  • On a recent pipeline maintenance program, environmental issues were considered to minimise the potential for future leaks and spills.
  • Recent focus has been on supply chain improvements in the ESG space for supply contractors to our businesses, particularly in relation to energy use and embodied carbon. Our regulated water utility in the UK, for example, is on track to reduce embodied carbon on all new capital investments by 50%. This will be a significant achievement and has been achieved without significant escalation of input costs to the maintenance programs. On the contrary, in most of the cases a clear and quantifiable economic benefit could be achieved.

Contractors’ compliance with portfolio companies ESG targets is controlled through setting up procurement processes which drive ESG outcomes and allow contractors to innovate in their contract delivery to ensure cost efficient ESG outcomes. These procurement processes generally reward contractors for better ESG outcomes via incentive payments or sharing of company financial benefits.

The long term ownership of portfolio assets allows for long term procurement strategies, which help suppliers and manufactures to optimise their processes, produce more efficiently and reduce costs. This allows for economic outperformance of capex plans which in turn will benefit customer through lower cost for the services provided.

18.3. 補足情報。 [任意]

Another focus has been on full life cycle ESG impacts and managing the individual assets over their whole life. This may or may not involve a higher upfront cost (asset replacement vs maintenance), but delivers whole of life savings on things such as resource use (energy for example) and better environmental outcomes (such as reduced carbon output or embodied carbon).


Stakeholder engagement

INF 19. Proportion of stakeholders that were engaged with on ESG issues

19.1. 組織やオペレーターが報告年度に組織のインフラ資産に関連するESG問題にエンゲージメントを実行したのはどのステークホルダーで、投資のどのくらいの割合に相応するかを記載してください。

エンゲージメントを実行したステークホルダー

インフラ資産の割合(件数)

 (in terms of number of infrastructure assets)

インフラ資産の割合(件数)

 (in terms of number of infrastructure assets)

          Supply chain contractors
        

インフラ資産の割合(件数)

 (in terms of number of infrastructure assets)

          Politicians and interest lobby groupsNGOs
        

インフラ資産の割合(件数)

 (in terms of number of infrastructure assets)

19.2. インフラ資産に関連してステークホルダーにエンゲージメントを実行するアプローチを説明してください。

Each portfolio company generally has dedicated resources that engage with stakeholders on ESG issues and it is in almost all instances incorporated into line management key performance indicators. For example, CEO's of investment companies often present to community groups and engage directly with regulators and politicians on ESG issues.  There are also dedicated staff for engagement with relevant regulators. 

In many instances our portfolio companies have formal community engagement forums set up that provide communities with an opportunity to communicate directly with the upper management of the company about concerns they may have on the operation of our assets. These engagement forums are either set up through open invitation or via formal regulator appointment mechanisms.

In the case of our UK water utility the complete business planning process has been developed on an outcomes focused approach considering the expected service level provided to customers. To develop such an approach, the company has engaged with all its stakeholders and identified the key criteria it will consider in the long term business planning. These criteria include for example satisfied customers, fair profits, fair charges, safe and clean water, caring for communities etc.

In case of our ferry business we conduct monthly surveys on customer satisfaction. The pricing of some of the tickets are directly impacted by the scores achieved.

We are also a member of, or engaged in, a number of forums that bring us in contact with various stakeholders in our investment space. This includes the Investor Group on Climate Change, the Roundtable Discussion with the Clean Energy Regulator and the Australian Sustainable Built Environment Council. We are also participating in the infrastructure working group of the Green Construction Board in the UK which is currently drafting guidelines to reduce embedded carbon in construction throughout the whole supply chain.

19.3. 補足情報。


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