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First Sentier Investors (including First State Investments)

PRI reporting framework 2020

Export Public Responses

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Infrastructure Maintenance

INF 15. Proportion of maintenance projects where ESG issues were considered

15.1. Indicate the proportion of active infrastructure maintenance projects where ESG issues have been considered.

(in terms of number of active maintenance projects)

15.2. Describe your approach to ESG considerations for infrastructure maintenance projects. [Optional]

Major and ongoing maintenance forms a large part of the expenditure line for most infrastructure businesses. As such it is an area where there is significant scope for driving value. As highlighted in the responses to earlier questions, we have an active approach to managing, monitoring and reporting on ESG matters across our entire infrastructure portfolio; ESG is an integral part of everything we and our companies do, as such the consideration and monitoring of ESG issues in major maintenance projects is part of this approach.

The drivers for ESG considerations include aspects such as:

  • Proven economic benefit (makes good business sense), including whole of life optimisation between capital and operating expenditures;
  • Focus on sustainability to drive operational efficiencies;
  • Reduction or avoidance of greenhouse gas emissions;
  • Reduction of noise
  • Mitigation of climate change effects (rising seawater levels etc.) drives investments to secure asset's sustainability;
  • Compliance with existing regulation (noting that many of our portfolio infrastructure businesses operate in the jurisdictions that have some of the highest standards with respect to environmental regulation in the world);
  • Targeting zero accident safety management in all works performed by staff and contractors (particularly relevant to maintenance projects of infrastructure assets, which are often high-risk engagements);
  • Leading the implementation of ESG considerations increases the resilience against changes in regulation; and
  • Investors looking for responsible and sustainably managed investments.

Management teams within our portfolio companies are incentivised to target ESG-specific initiatives which move the company towards the top of their industry. As such the ESG targets shape every part of the business: from how the company procures its services; manages its supply chains; and down to treatment of the natural resources it exploits.

Contractors' compliance with portfolio companies ESG targets is controlled through setting up procurement processes. These processes are either guided by procurement laws or companies will have a procurement policy in place which considers ESG factors

The long term ownership of portfolio assets allows for long term procurement strategies, which help suppliers and manufacturers to optimise their processes, produce more efficiently and reduce costs. This allows for economic outperformance of capex plans which in turn will benefit customers through lower cost for the services provided.

Another focus has been on full life cycle ESG impacts and managing the individual assets over their whole life. This may or may not involve a higher upfront cost (asset replacement vs maintenance), but delivers whole of life savings on things such as resource use (energy or water for example) and better environmental outcomes (such as reduced carbon output or embodied carbon).