Sustainable infrastructure shapes the foundation for long term economic growth and improved living conditions. Important for investors to consider when investing, it also can contribute positively to climate-change adaption and mitigation efforts. At Gore Street, we are actively pursuing project and platform investments in developing markets in the area of distributed generation, primarily focused on the commercial & industrial (C&I) segment with a focus on solar plus storage and where economic, grid or behind the meter storage solutions. Here are our top three tips on how sustainable infrastructure can attract new investments.
ESG Nature
Environmental, social and governance, also known as ESG investing, is a type of sustainable investing that evaluates an investment’s financial returns and its overall impact. An investment’s ESG score measures the sustainability of an investment in three specific categories: environmental, social and corporate governance.
Environmental:
Environmental factors include how a company mitigates its greenhouse gas emissions/ Examples of this would be, are the company’s products sustainable? Do the company avail of natural resources effectively? Lastly, how do the investor manage with recycling?
Social:
The social aspect incorporates factors both in the office building and outside. Examples of this component would be; does the company partake in community development such housing issues, or fair lending? Is there diversity and equality in the hiring process and are human rights prioritised in the work place and everywhere they trade business?
Governance:
Corporate Governance, depends on the business’ leadership and board, ensuring pay is reasonable, the company has a diverse team and whether it’s responsive to shareholders.
ESG is constantly on the rise as investors are growing a conscience for where they put their money. The ESG directness will be a key focus for companies this year and for many more to come. Investors are increasingly considering ESG issues to help manage investment risks. ESG performance improvements and reports show investors how a company mitigates risks and generates sustainable long-term financial returns.
Steady growth
Such a type of planning and implementing infrastructure creates for the investors a high potential of transformation, adding layers of security, longevity and strength to the business. Decisions made right now will have an impact on the return of long-term investment cases, given that infrastructure assets have long life cycles. Therefore, it is vital that investors avoid making choices that produce meaningless assets before the end of their lives. In addition to improvement aspects, infrastructure projects must also consider resilience to climate change, such as increased temperature and variation in rainfall levels, hence avoiding the interruption of services to the population.
Technology
Technology is constantly evolvingwhich means the results achieved from sustainable investments are greater. This means, technology has a vital role to play in the transition to a low carbon economy with sustainable infrastructure. Examples are this would include, LED light technology, footfalls are being measured to develop real time traffic management. Smart roads switch on and off lighting in response to usage. When you utilize renewable and biodegradable materials, you’re indirectly protecting business and ecosystem from the negative effects of climate change. Nearly half of businesses today make use of sustainability to improve production and innovation. Plus, long-term investors are likely to work with businesses with great ESG scores. With sustainable tech at your disposal, your business will become desirable for investment.
Gore Street Capital Limited is an entity authorised and regulated by the Financial Conduct Authority, to act as the Alternative Investment Fund Manager (“AIFM”) to the Gore Street Energy Storage Fund PLC.
Author Bio: Rutwij Hoshing is a Senior Investment Analyst: Joined Gore Street Capital in June 2019, working primarily on pipeline acquisitions and management of portfolio assets.