Significant investment in infrastructure will be needed to support the transition to a net-zero carbon economy, creating a compelling opportunity for local authority investors. As the world emerges from a year of disruption and change, thoughts have naturally turned to the kind of world we want in the future. With governments around the world strengthening their commitments to a net-zero carbon future, increasingly utilizing new tech infrastructure, there is a renewed focus on the sustainability of our businesses, communities and society as a whole.

The unlisted infrastructure asset class is finally showing signs of recovery from COVID-19 with a significant drop in the equity risk premium in second quarter 2021, ending six consecutive quarters of losses. Since the onset of COVID-19, this quarter marks the first in which all segments of the infrastructure market have shown a positive return, even as interest rates remain at the highest level seen in more than a year amid ongoing fears of rising inflation.

More electric vehicles are showing up on the roads every day, and more are coming. But while electric cars are becoming a common sight, charging stations are not in all places. The United States has long lagged behind other countries when it comes to electric vehicle charging stations. That could change with the Biden administration’s $2 trillion infrastructure plan, which calls for half a million EV charging stations by 2030. The plan also includes a $174 billion investment in electric vehicles, including charging stations.

Pethokoukis: Is the goal of infrastructure maintenance to spend a certain amount of money now, or do we also need to make sure we keep spending money going into the future? This is underappreciated in the national debate. The United States has almost a trillion dollars of deferred infrastructure maintenance. That’s because the state and local governments that own the infrastructure focus more on the design and construction of new facilities rather than the maintenance of existing facilities. So, without a fundamental shift towards long-term operation and maintenance, we’re just going to get back to the same situation that we have today once new infusions of money are gone.

The COVID-19 rebound knows no bounds. With vaccines becoming widely available in spring 2021, the economy has bounced back so quickly that inflation is now more of a worry than recession, airlines and hotels are having trouble keeping up with the demand, and tickets to nearly every entertainment venue are selling out as soon as they are put online.

The GLIO Index of infrastructure companies was back on track in July, up 1.7 percent. Year-to-date the GLIO Index is up 8.2 percent. Electric (3.6 percent), Gas (1.8 percent) and Water (9.4 percent) utilities all finished the month well ahead. Communications infrastructure (2.7 percent), Renewables (2.5 percent) and Airports (2.3 percent) also finished July on positive ground. Transportation companies fell (–1.1 percent) on average, driven down by declines in railroads (–0.7 percent), toll-roads (–1.2 percent), passenger rail (–5.8 percent) and marine ports (–5.2 percent).

We’ve been on a mission here at Institutional Real Estate, Inc. to help build on and enhance the body of knowledge surrounding risk and risk management within the realm of real asset–related investing. Much of our work on this topic, led by our director of research, Dr. Randall Zisler, has focused on the search for, and greater understanding of, more useful data and analytics. But not all approaches to risk management need be quantitative.