Our approach to responsible investment is one where driving value for our investors is paramount. This means that, for instance, when making an investment decision that decision is optimised by careful diligence of all factors affecting value, including ESG factors. It also means that in the ongoing operation and maintenance of our infrastructure businesses, ESG initiatives are supported by robust business cases that drive investor value. Several measures are used across the range of our portfolio of infrastructure businesses to assess financial performance from ESG initiatives, including:
- Business case assessments focused on return on capital - for example a water saving initiative which has an upfront capital cost will also provide a reduction in the amount of potable water consumed by the infrastructure business. This will have a direct financial benefit through a reduction of operational costs. This cost/benefit outcome can then be used to determine a return on investment measure for the business case.
- Achievement of an ESG outcome for no net increase in unit cost - for example the reduction in embodied carbon in concrete used in the construction of new assets for no net increase in supply cost of that asset (benchmarked against previous provision of similar assets) reduces the carbon exposure of the business at no additional cost to the delivery of the infrastructure.
- Reduction in pollution or other regulatory compliance breach events - each event has a cost to the business to rectify. The reduction of the occurrence of these events provides a direct and definable reduction in this response cost to the business.
- Time delay outcomes - projects can be delivered on time through good community and workforce engagement. If a project is delivered early then this will have a direct benefit to the financial performance of the business.
ESG performance measures include:
- Resources use (water, energy, materials)
- Waste generation
- Carbon generation
- Safety performance
- Days of operational interruption (from protests, strikes, regulatory intervention)
It can also be measured by individual asset accreditation; for example, both of our airport investments have recently achieved higher levels of Airport Carbon Accreditation (ACI Level 3, ‘Optimisation’).