Following completion of an investment, at either the project or portfolio company operations level, practices and procedures are revised to ensure consistency and alignment with Quinbrook's ESG principles.
As a direct investor making mostly control investments in both projects and operational businesses, Quinbrook is able to actively implement and direct the adoption of ESG focused actions and strategies by requiring and/or encouraging portfolio company management teams to adopt Quinbrook's policies as their own and to also establish dedicated ESG training and staff incentivisation programmes. This is facilitated by Quinbrook's strategy of investing earlier in the asset creation cycle where legacy processes and systems are less of an obstacle to new adoption. However, Quinbrook maintains similar efforts at projects that are in later stage development, construction or early operations and also following the assumption of management control after the completion of corporate acquisitions.
Change is facilitated by Quinbrook having in most cases, governance control in the form of voting rights, Chairmanship of all boards of directors, frequent managerial intervention and by fostering constructive senior management relationships. This is combined with the considerable hands-on experience and track record that the senior members of the investment team have in building, owning and operating both lower carbon and renewable power businesses, and in creating contractual and incentive mechanisms that directly align the interests of Quinbrook with those of its portfolio companies, especially in terms of ESG risk management. This is often overlaid with Quinbrook driving change to operating procedures, maintenance practices, human resourcing and prioritisation of capital expenditure to address ESG risks and opportunities that arise during daily operations.
We also believe that cultivating a business culture where management behaviour, employee training, general awareness, financial incentivisation and working procedures, highlight and prioritise ESG principles, is central to effective engagement with portfolio company employee/management stakeholders who are challenged to deliver specific and positive environmental and social impacts on a continuous basis.
Regular reporting on specific ESG issues is mandatory for portfolio company management teams who are accountable directly to the Quinbrook controlled Board on ESG issues. This assists ongoing visibility for Quinbrook's representatives in a governance capacity to conduct ongoing risk assessment, mandate new actions or undertake capital expenditure to improve risk mitigation and then monitor outcomes in improved ESG performance. Material actions and resulting progress is reported regularly to investors. As an exemplar, Quinbrook has commenced implementation of an innovative global asset management platform with Mercatus for all portfolio companies that tracks not only financial and investment specific data, but also ESG-specific performance metrics, such as OH&S, environmental incidents, cumulative community benefits delivered and emissions displacement.
Quinbrook will continually assess the markets in which we operate, the progress of investments under our management, and ongoing operations to assess whether an investment has or may become inconsistent with Quinbrook's ESG policies. If such a case arises, Quinbrook is committed to taking positive corrective action and to restore compliance with our ESG policies. Should a decision be taken that an investment cannot be remediated and re-aligned with our policies and ESG principles, then a divestment will likely be considered by Quinbrook's Investment Committee.
Post investment, the consideration and active management of ESG factors is demonstrated through:
- 'Day-to-day' oversight of portfolio companies by Quinbrook's multi-regional teams;
- Investing in and building the operational and maintenance capability within Quinbrook controlled portfolio companies wherever practicable rather than having dependencies and reliance on third party contractors;
- Where specific ESG risks or opportunities arise, third party experts may be engaged to assess and report on these and/or portfolio company management or Quinbrook's investment team may undertake analysis, assessment and planning that is then submitted to the Board for consideration of remedial or positive action;
- Implementing new or revised policies and procedures within our portfolio companies to better assure adherence to Quinbrook’s ESG policies;
- Implementing remuneration and incentivisation structures to better align portfolio company management with delivering positive ESG outcomes and/or specific initiatives as determined by the Board. This encourages awareness, identification and monitoring of ESG factors on a continuous basis;
- Fostering a culture within portfolio companies that encourages and rewards staff and managers at various levels to identify, assess and report areas of potential ESG risk or opportunity;
- Implementing a standard ESG reporting template across all portfolio companies via the Mercatus global asset management platform;
- Monitoring of the changing ESG landscape for evolution in minimum standards/expectations in relevant areas to ensure ongoing consistency with Quinbrook’s ESG principles (for example in relation to governance, changes in regulations such as the introduction of the UK Bribery Act, the entering into of the Paris Agreement as it relates to international efforts to mitigate climate change and emissions reduction).
Stakeholder Engagement and Reporting
Quinbrook's commitment to ESG and responsible investment is an ongoing process where we continuously seek to improve and refine our procedures, reporting and impact measurement. Quinbrook engages with our clients and other stakeholders on ways to enhance our ESG policies, initiatives, products and services, and seeks their feedback on possible improvements relevant to Quinbrook's investment strategy.
Quinbrook discloses our ESG performance as an investment manager by reporting regularly to our investors on our management of material ESG related risks and our measurement of impacts. In addition, we will continue to ensure ongoing compliance by our portfolio companies with our shared reporting obligations under relevant environmental laws and regulations.
We will seek to partner with organisations that are actively working to protect the environment and educate regulators, governments and communities about climate change and broader environmental issues and the benefits and the broader impacts the low carbon energy infrastructure investments can offer. This rationale sits behind our inaugural sponsorship of the world leading Climate Finance and Investment Centre at Imperial College London. We will continue to engage in policy discussions on climate, energy and environmental issues directly and through our industry representatives as we strive to contribute to the improvement of the quality of ESG data available to the global investment market.