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InfraRed Capital Partners Limited

PRI reporting framework 2019

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Pre-Investment (Selection)

INF 05. Incorporating ESG issues when selecting investments

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

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

InfraRed's broad investment approach to ESG matters during the pre-investment process has been described in the response to indicator INF 01.1 of this Module.

To summarise, ESG matters are fundamental to all InfraRed investment decisions across sectors, geographic locations and the scale of the investment. InfraRed manages several different funds with different investment parameters and strategies, including two that are publicly listed; the InfraRed ESG strategy and philosophy is a common requirement across all of them without any differentiation. Many of InfraRed's institutional investors have their own ESG requirements. InfraRed's overarching ESG philosophy has been developed to ensure that it exceeds these requirements.

As noted in the response to indicator INF 04.2 above, Side Letters can be used to record the requirements of individual investors in private funds, e.g. for investment in certain sectors to be considered an Excused Investment, with the option given not to participate. In practice, this is not normally a risk given the investment focus of the funds in question. Investment process controls ensure each new opportunity is screened against applicable investor requirements.

InfraRed's approach is now well established but also flexible. As standards increase and new areas take shape (e.g. in relation to climate change and the UN Sustainable Development Goals), InfraRed's investment process controls can be expanded to ensure the each Deal Teams gives adequate consideration to ESG issues and that the relevant Investment Committee can subject it to review and scrutiny.

INF 06. ESG advice and research when selecting investments (Private)

INF 07. Examples of ESG issues in investment selection process

07.1. 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

          Pollution risk, emissions
          BREAAM performance or local equivalent
          Effective sustainable material usage in construction

List up to three typical examples of social issues

          Acceptable employment standards in all areas of the project
          Acceptable levels of Health & Safety performance
          Community relationships and interaction

List up to three typical examples of governance issues

          Effectiveness of Project Board
          Anti-bribery and corruption policies in place, the anti-bribery track record, and any red flags
          Senior management and board track record re: corporate governance and responsible stewardship

07.2. Additional information. [Optional]

With regards to the 'Governance' issue of preventing bribery and corruption, InfraRed's global policy on regulatory risk requires enhanced due diligence to be carried out in relation to any Politically Exposed Persons, including national authorities awarding infrastructure projects.

In addition, InfraRed applies "enhanced due diligence" in respect of counterparties in any country rated "high risk", i.e. ranked at 50 or below in the Transparency International Corruption Perception Index or on the FATF list of high-risk and non-cooperative jurisdictions.

INF 08. Types of ESG information considered in investment selection (Private)

INF 09. ESG issues impact in selection process (Private)