Internal staff have the ultimate responsibility to make the final recommendation to the relevant investment committee on investments but will take a range of advice in forming that recommendation including external advice on environmental and social issues associated with an investment opportunity.
Our commitment to Responsible Investment means maintaining internal capability with the highest quality investment professionals across asset classes and across other specialisations. Our internal staff are trained in ESG issue identification to ensure appropriate ownership of ESG issues is embedded in the internal investment teams.
A risk-and-opportunity based approach is part of the responsibilities of the investment team to ensure a broad and continuous focus on ESG issues. While the Unlisted Infrastructure team is responsible for providing robust ESG assessment of investment opportunities and existing businesses, the team also draws on the specialist Responsible Investment team within the broader organisation.
We maintain a dedicated Responsible Investment team, with global and local leadership. The resources from the Responsible Investment team are drawn on to enhance the inherent capability of the Unlisted Infrastructure investment team. The business also maintains an ESG Committee, with members drawn from both the Responsible Investment team as well as various investment teams including Unlisted Infrastructure.
The ESG Committee has established working groups on: remuneration; human rights; and the physical impacts of climate change. Our internal team members also draw on external resources and publications. For example, for the evaluation of ESG issues we also frequently refer to guidelines and recommendations given by the IFC/ World Bank with respect to the relevant sectors.
External resources are also used to supplement the skill base of the Unlisted Infrastructure team and the dedicated Responsible Investment team. These external resources are employed on a project-by-project basis as required. The typical due diligence process associated with a large infrastructure investment will involve environmental and technical advisors on environment impacts and asset condition.
Additional advice may be sought on legal liability issues or on social licence to operate issues should they be relevant to the particular asset. Also corporate governance will be reviewed and compliance with good corporate governance codes assessed. For example, we employed specialist external environmental advisors for our detailed due diligence and bidding for a sea port where environmental risk and contamination was a significant factor. More recently, we engaged specific regulatory advisors as part of our successful bid for and acquisition of a regulated gas network business. The specific advice supplemented the knowledge of the investment team and ensured that we submitted a fully considered bid, which ultimately drove value for investors.
Our investment strategy is to manage a large, in many cases 100%, interest in each individual business to enable value added contribution via board and board committee representations. Our team members have a variety of backgrounds and expertise. Some members have a financial or legal background, while others have first-hand operational experience. The background and experience of the team members is reflected in the allocation of board membership and support tasks, thus allowing for active involvement and support of the management teams where ESG is concerned.