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Dalmore Capital

PRI reporting framework 2017

You are in Direct - Infrastructure » Pre-investment (selection)

Pre-investment (selection)

INF 08. Incorporating ESG issues when selecting investments

08.1. Indicate if your organisation typically incorporates ESG issues when selecting infrastructure investments.

08.2. Describe your organisation's approach to incorporating ESG issues in infrastructure investment selection.

Although the nature of the assets in which Dalmore invests typically have a very strong and positive ESG impact, Dalmore still considers ESG issues in the selection of infrastructure investments.

As part of our pre-investment process, identification, quantification and mitigation of any environmental issues is undertaken through due diligence undertaken both by members of the investment team and as part of the technical due diligence undertaken by specialist third party firms.  Investment opportunities may be rejected if environmental issues or risks are identified that cannot be adequately measured, managed and mitigated.

As the projects generally have very strong socially positive impacts through the provision of new and improved infrastructure assets for the delivery of essential public services, this aspect of ESG is less of a focus during the pre-investment process.  However, Dalmore will assess the state of the working relationship with the public sector clients, the quality of the buildings and services provided to users and the inter-relationship of the project with other stakeholders.

Dalmore’s investment strategy is based upon being able to deploy our significant experience and skills in the management and stewardship of the assets in which we invest.  Part of this active management approach is ensuring in the pre-investment phase that the level of control and influence that Dalmore will have as a shareholder and through the appointment of non-executive directors will be sufficient to achieve this.  We also consider who the other shareholders are before investing in the asset, and whether their interests will be aligned to ours as long-term investors in the asset.

On the Thames Tideway Tunnel project the following was considered as part of the invesment selection:

1.This is an investment in a major new sewer, urgently needed to protect the tidal River Thames from pollution. This will benefit ecology, public health, the environment and the appearance of the Thames and will provide an economic boost by creating many thousands of skilled jobs and hundreds of apprenticeships. A cleaner and more useable river Thames will benefit London’s reputation for those that live, work and visit the city and will also meet the demands of the European Urban Wastewater Treatment Directive.

2. The project supports a number of community investment projects, which aim to create enduring partnerships and shared interests across the workforce and the general public. This includes the Thames River Watch which is a citizen science project that aims to improve the understanding of the health of the tidal Thames and the challenges it faces. The project also runs local community investment programmes and a volunteering programme. Each Tideway employee has the opportunity to take up to five days paid community volunteer days. They can also have up to three days per year to volunteer as STEM (Science, Technology, Engineering and Maths) Ambassadors, working with schools, colleges and employers to inform and encourage young people to follow STEM-related careers.

INF 09. ESG advice and research when selecting investments (Private)

INF 10. Examples of ESG issues in investment selection process

10.1. Indicate which E, S and/or G issues are typically considered by your organisation in the investment selection process and list up to three typical examples per issue.

ESG issues

List up to three typical examples of environmental issues

          Specific external surveys are carried out before the expiry of a 12year latent defect period on buildings to identify construction defects and protect the project.
          The current pollution levels and urgency to protect the tidal River Thames from further pollution was a major drive for the Thames Tideway investment decision.
          Dalmore decided not to invest in a hospital project following transparency issues identified between the operator/shareholder to the public sector client regarding ESG issues.

List up to three typical examples of social issues

          Part of the investment criteria for the Thames Tideway Tunnel was the consideration of impact of works to residents and how this was mitigated.
          Dalmore declined to pursue some investment opportunities (particularly the renewables sector) where level of public subsidy is considered to be unsustainable over the long term.
          Our due diligence process include the adoption and adherence to health and safety policies, covenants and other performance measures in place in the targeted projects.

List up to three typical examples of governance issues

          Dalmore tries to target projects in which it can get a significant share of ownership, in order to play an active role in project management
          Dalmore aims at appointing at least one director per project it invests in and is an active participant in board meetings
          The pre-investment phase includes thorough financial and tax analysis, enabling us to ensure projects have been run in a responsible way.

10.2. Additional information. [Optional]

INF 11. Types of ESG information considered in investment selection (Private)

INF 12. ESG issues impact in selection process (Not Completed)