Environmental and social factors are material, as they have a direct effect on permitting, which is a prerequisite for successful renewable energy infrastructure projects.
ESG factors are identified and defined during the investment process through due diligence reports commissioned by expert advisers presented and analysed by our investment team and investment committee. Consideration goes beyond simply complying with the applicable environmental laws and other permitting procedures. These are integrated in the investment structuring and strategy building process and follow through into the business planning process. Our Investment Committee must approve all potential investments against our ESG-parameters and any breach prevents us from making an investment.
Material environmental factors will be required under permits which are necessary to develop and build renewable energy projects. Concessions must be awarded through transparent processes. We work through the environmental risk factors during the development and construction phase with dedicated experts and obtain the necessary reviews and sign off by regulatory bodies. During the operational phases these risks are usually reduced (as they have been considered thoroughly during the design process), so we outsource the ongoing responsibility to manage these to local teams who review regularly and ensure that we keep up with best practice. To date investments have been made in Europe and adhere to EU EIA Directive and Water Framework Directive. If a new build project has the potential to affect a Natura 2000 site protected under the Habitats Directive or Birds Directive, additional care is taken, and a more detailed assessment is completed to ensure no negative impact as a result of the build. We develop calendars to ensure that the requirements under permits are monitored with the correct frequency and with sufficient time to put the proper considerations in place.
Social issues are considered during the management of portfolio companies and design of management reporting systems. Local communities are closely involved in the permitting phase of the projects we invest in and under EU-standard permitting procedures local citizens have a right to participate in the procedure. Where investments have employees we adhere to EU directives on social matters such as European Principles for the Environmental and Human Rights Law. We always insist that all applicable employment laws and health and safety regulations are duly observed, and comprehensive insurance policies are in place. Compliance checks are completed on all outsourced providers and suppliers engaged.
We seek to address and resolve any material governance issues prior to investing. Our preferred approach is to acquire 100% of the ownership interest in our targets, otherwise investments are structured so that we maintain control. Then we can implement straight forward oversight and governance systems. Compliance checks are completed on all counterparties we engage with and all suppliers adhere to anti money laundering policies. Quarterly board meetings at joint venture company levels ensure that enough time is dedicated to review governance issues. Annual review meetings identify any risk areas, whilst monthly investment meetings can implement regular reviews if issues arise in the meantime.