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How ESG investing pays off: The best-performing infrastructure assets over the long term are those with strong environmental, social and governance credentials
1 Until very recently, one might have been forgiven for thinking that the Environmental, Social and Governance (ESG) credentials of an infrastructure investment were an optional extra; an afterthought to the all-important revenues and returns of a fund or individual asset.
However, the importance of investing in sustainable assets is now central to the financial decision-making process of the majority of institutional investors.
At a recent infrastructure conference in Berlin, 74 percent of the audience of LPs and GPs said that ESG was an important part of their business model. It is part of an overall trend recognizing the importance of ESG factors — especially environmental — that is being seen across the financial community.
In 2015 Bank of England Governor Mark Carney called the impact of humanity-induced climate change a “mega risk.”
That same year, for the first time ever more money was invested in new renewable electricity generation than in