Sustainable investing-focused group the Institutional Investors Group on Climate Change (IIGCC) announced today the publication of proposed guidance for infrastructure investors to align portfolios with net zero goals.
The IIGCC’s new guidance was published as a new component for the Paris Aligned Investment Initiative (PAII)’s Net Zero Investment Framework (NZIF). Launched in 2021, the NZIF provides asset managers with a common set of recommended actions, metrics and methodologies to maximise their contribution to achieving net zero emissions globally by 2050 or sooner.
The guidance covers issues specific to the infrastructure asset class, given their physical nature and direct real world impact, as well as breadth of investors engaged with the asset class, and the wide range of investment types included in the category. The scope of assets covered by the guidance include transport-related assets such as airports, rail and roads, power generation, energy distribution and water utilities, renewable energy assets, communications infrastructure, as well as schools, hospitals, and government buildings, among others.
Stephanie Pfeifer, CEO of IIGCC, said:
“Infrastructure has a fundamental and unique role to play in driving the transition of the global economy to net zero thanks to the variety of real-world services it provides, including transport, energy and utilities, the long-term nature of assets and the opportunity to invest in climate solutions.”
Recommendations in the new publication include metrics and target setting considerations for asset owners and asset managers to measure net zero alignment over time, along with implementation actions to achieve alignment targets and real economy decarbonization.
The proposals include recommendations for investors not to invest in any new greenfield assets that cannot be aligned to net zero on a science-based pathway, in order to be consistent with a net zero investment strategy.
The IIGCC has opened a public consultation on the guidance that will run through early July, with final publication aimed for Q3 2022.
Chris Newton, Co-lead of IIGCC’s infrastructure working group and Executive Director of Responsible Investment at IFM Investors said:
“Harnessing collaborative thinking and the perspectives of a variety of stakeholders is crucial to developing solutions for a net zero future. I encourage stakeholders to look at the consultation report and provide feedback to support the further development of this framework, which aims to offer globally consistent guidance for infrastructure investors to align their portfolios to net zero.”
The infrastructure proposals mark the sixth guidance set to be put forward under the NZIF. Other asset classes covered to date include listed equities, corporate fixed income, sovereign bonds, real estate and private equity.
“Critically, by incorporating more asset classes into net zero analysis and strategy, the greater the chance investors have of achieving real-world impact. Building on the six asset classes already covered, we aim to continue to expand the Net Zero Investment Framework in the coming year.”
Click here to access the IIGCC’s net zero guidance for infrastructure.
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