AMP Capital's Global Infrastructure Team considers ESG issues as a core component of our mainstream investment process. This is reinforced by:
• AMP Capital's overarching investment philosophy (that ESG integration provides greater insight into the risks and opportunities affecting the value and performance of investments we make on behalf of our clients); and
• AMP Capital's integrated corporate responsibility framework (that commits our organisation to making responsible investment decisions on behalf of our clients).
Explicit protocols include ESG factors at each stage of investment selection, regardless of sector, fund, investment style or geography.
Stage 1 - Pre-investment
For new investment opportunities, we apply both a qualitative and quantitative approach in assessing the risks, opportunities and potential impact of ESG issues. ESG issues are considered in the very early stages of investment analysis, setting them up to be addressed throughout the investment approval process.
Opportunities pipeline report: a regular report on investment opportunities, with an overview of investment characteristics, deal metrics, key risks and status. ESG risks are included in the key risks sections, advancing from sector to transaction-specific as the deal advances.
Stage 2 - Concept paper approval. The investment concept paper for the Infrastructure Investment Committee(s) must contain a prescriptive list of transaction-specific ESG issues for the investment team to explore during detailed due diligence. It must also include a nominated ESG work stream manager and identify any ESG resources required (i.e. collaboration and/or secondment of internal expertise and/or specialist external consultants).
Stage 3 - Due diligence. Given the complex nature of infrastructure transactions, the investment team may appoint external advisors where specialist skills or technical knowledge are required, e.g. engineering and environmental consultants. The ESG work stream manager is responsible for allocating transaction-specific ESG issues to internal or external specialists and for deciding whether to 'Price, Transfer or Monitor' any ESG factors associated with the transaction.
Pricing of ESG factor(s)
• Quantify the financial impact of potential ESG events
• Integrate material ESG issues and impacts into valuation model sensitivities
• Consider insurance for ESG issues that are difficult to mitigate
Transfer accountability to manage specific ESG factors
• Identify the counterparty best positioned to manage specific ESG factors (given transparency and influence)
• Formally commit investee company management or relevant counterparties to agreed process or standards of performance
• Formally commit and/or incentivise performance through contractual and financial arrangements
Monitor ESG performance for lead indicators
• Identify metrics that are highly correlated to financial performance and/ or risk profile
• Formally commit investee company management and/or relevant counterparties to provide transparency of key ESG metrics and clear accountability for specific ESG factors at senior management level
• Ensure board is actively managing key ESG risks and opportunities through standardised processes and reporting
• Seek periodic appraisal of ESG monitoring practices and adherence to policy
Stage 4 - Final approval paper: A detailed investment paper is submitted for the Infrastructure Investment Committee(s) final investment approval. Explicit price, transfer and monitor strategies are required for all material ESG risks. Pricing sensitivities on specific ESG issues highlight their commercial relevance.
Stage 5: Completion paper and investment pack: (consisting of all due diligence research and data room materials, internal approvals and transaction documentation). The completion paper and investment pack, with all ESG due diligence materials, are submitted to the Infrastructure Investment Committee(s) within 28 days of the transaction completion and are retained for future reference.
Further details on the above are contained in our Infrastructure ESG Policy Guidelines available at the following link: