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Filling an ESG data gap for infrastructure investors: Investors respond with new tools to manage and measure environmental, social and governance issues in their portfolios
Addressing environmental, social and governance issues is not new to infrastructure investment and development. Before an airport adds a runway, a toll lane is added to an existing highway or a new pipeline is built across a landscape, investors and developers study the impact these projects will have on communities, the environment and individuals — and review continues throughout the lifecycle. But a confluence of emerging issues including changing climate and weather, aging populations and infrastructure as well as strained public budgets have put ESG risks in the spotlight, and infrastructure investors are responding by introducing new ESG investment principles and tools into their processes.
Infrastructure is a relatively young asset class with a developing institutional investor base. The investment growth trend is shifting away from early strategies solely based on investing via commingled funds and into actively managed direct investment opportunities.