Guggenheim Investments, the global asset management and investment advisory business of Guggenheim Partners, has collaborated with World Wildlife Fund (WWF) to commission the Stanford University Global Projects Center to identify and analyze the various metrics used to assess the sustainability of infrastructure investments.
The report surveyed the state of the practice for sustainability standards and rating or accounting systems for infrastructure planning, development, and investment. Sustainability assessment has been an important factor in infrastructure investing for some time, but this was largely limited to regulatory compliance and permitting. Recently, multi-stakeholder standards and project rating programs have been developed, and can be used by investors to certify and monitor their activities in the sector.
“It is clear that public funds alone are not enough to address the world’s critical infrastructure needs,” said Scott Minerd, chairman of Guggenheim Investments and global CIO. “But before sustainable infrastructure investing can successfully transition to an institutional asset class, there must be consistent methodologies for determining sustainability. The fruits of this report will make a significant contribution toward achieving that objective.”
The report is the latest in a series of initiatives by Guggenheim that are intended to help remove barriers for private capital to come into sustainable development investing and to ensure that such investments protect the environment and indigenous communities. These initiatives include establishing the Arctic Investment Protocol as part of the World Economic Forum’s Global Agenda Council on the Arctic. Guggenheim has also developed the Guggenheim Sustainability Quotient, a model that establishes the four attributes an institutional investor will require of sustainable infrastructure investment — financial return, good governance, environmental soundness, and social impact. The report advances the Sustainability Quotient by addressing methods for measuring and certifying sustainability.
The report provides stakeholders a practical guidebook and starting point for the practice of infrastructure sustainability. This is a key resource for investors who want to develop a differentiated approach to the impact of their investments. Most importantly the report reveals that rating and accounting tool developers for the industry will likely continue to evolve their offerings, and pioneering investors in the industry will likely continue to experiment with different tools. The key to the success of these efforts depends on the convergence of comprehensive, standardized reporting of sustainable investment metrics.
“Designing infrastructure for sustainability matters now more than ever,” said Carter Roberts, president and CEO of WWF in the United States. “Science tells us that the infrastructure of the future will need to be compatible with maintaining healthy ecosystems as well as withstanding stronger storms, rising seas, and other climate impacts. This report gives investors insight into how to ensure these criteria are met, needed to create sustainable, resilient communities for decades to come.”
As input to establishing a set of universal standards, the report brings together and evaluates key existing project screening methods and accounting tools developed by 12 organizations. “There have been significant steps made towards aligning the infrastructure investment community around a common language of reporting and set of international performance metrics,” said Michael Bennon, managing director of Stanford University’s Global Projects Center and co-author of the report with Dr. Rajiv Sharma, research director of the global projects center’s institutional investment research program. “As the metric and reporting industry continues to develop in the sector, those specific indicators and metrics that emerge as international standards will enable wider adoption by more diversified investors.”
To read the full 95-page report, State of the Practice: Sustainability Standards for Infrastructure Investors, click here.
