Oliver Wyman and WWF Report Identifies Ways in Which Climate and Nature are Being Incorporated into Infrastructure Investments

Oct 12, 2020

Singapore, October 12, 2020 Oliver Wyman and the WWF today released a new report titled Incorporating Sustainability into Infrastructure which examines how environmental, social, and governance (ESG) factors are being applied in the infrastructure investment process.

A broader societal focus on sustainability has encouraged more ESG investments and the report identifies what investors are doing to better integrate ESG factors into their decision-making: Specifically, investors want to:

  • Acquire better quality ESG data – Investors seek to work closely with portfolio companies and include additional climate- and nature-related ESG measurement requirements as part of the due diligence process.
  • Enhance the number of climate- and nature-related ESG factors to be integrated – In addition to accessing better data quality when considering a single ESG factor, investors are also seeking better ways to incorporate less prevalent ESG factors, such as air pollution and biodiversity. 
  • Increase the range of infrastructure sectors for ESG factor integration – Investors are looking to identify key asset classes in which to focus ESG factors into infrastructure investment decision making.

“Investors have told us they are increasingly looking to expand from financing green infrastructure, to also selectively investing in cases where legacy infrastructure businesses and assets have developed a robust and clearly articulated plan to transform and become green,” said Nicholas Tonkes, Partner with Oliver Wyman.

“Infrastructure investments are long-term investments with impacts over multiple decades – meaning that we need to start integrating sustainability now to tackle global challenges such as climate change and nature loss. We found that whilst climate factors are being integrated, investors are at an early stage of integrating risks related to nature and biodiversity in infrastructure investment,” said Dr. Helena Wright, Vice President, WWF Singapore.

The report includes case studies from the European Investment Bank (EIB), Allianz Global Investors and others on how they are integrating ESG factors into their investment process. For example, some companies have dedicated sustainability managers while others have specific goals and performance indicators linked back to ESG factors.

Methodology

To examine the current practices of infrastructure investors related to the integration of ESG factors into investment decision-making, a survey was undertaken which involved more than 30 global infrastructure investors, just over half with over US$ 10 billion in assets under management. In addition, interviews were conducted with numerous investors and institutions to gather further supporting insights. Finally, an in-depth review of existing literature was also performed, to validate and supplement the primary research.

About Oliver Wyman
Oliver Wyman is a global leader in management consulting. With offices in 60 cities across 29 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. The firm has more than 5,000 professionals around the world who work with clients to optimize their business, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities. Oliver Wyman is a business of Marsh & McLennan Companies [NYSE: MMC]. For more information, visit www.oliverwyman.com. Follow Oliver Wyman on Twitter @OliverWyman.

About WWF

WWF is an independent conservation organization, with over 30 million followers and a global network active in nearly 100 countries. Our mission is to stop the degradation of the planet's natural environment and to build a future in which people live in harmony with nature, by conserving the world's biological diversity, ensuring that the use of renewable natural resources is sustainable, and promoting the reduction of pollution and wasteful consumption. Visit panda.org/news for the latest news and media resources; follow us on Twitter @WWF_media.  

Annex: Figure 1

Note: Survey respondents were asked which ESG factors are most relevant to their organization’s infrastructure investments, on a scale of 7 = Most relevant to 1 = Least relevant.

Source: Oliver Wyman and WWF ESG survey (N=26)