Delivering sustainable value
A long-term sustainable mindset is imperative to achieve successful outcomes for shareholders and communities alike.
A sustainable management approach is an imperative for long-term outperformance. HICL’s assets on average have concession lengths that extend over 25 years and as such, short-term profit maximisation does not work.
In building and managing essential public assets for the long term, a stakeholder-focused approach has always been critical to HICL’s success – creating value for our investors and society as a whole.
The application of HICL’s Sustainability Policy (available below) and the management of HICL’s portfolio is undertaken by InfraRed, as Operator, so that HICL:
- Invests in assets which have a social purpose, which promote social development and quality of life;
- Creates a positive environmental impact now and for future generations; and
- Makes an overall beneficial impact on the communities in which our assets are located.
HICL’s Investment Manager, InfraRed, maintains a comprehensive sustainability management system which integrates sustainability into each stage of the investment process: from negative screening against exclusion lists, deal screening, due diligence, the investment approval, through to ongoing management and reporting.
InfraRed takes an active approach to long-term sustainable investment which is based on a foundation of robust ESG principles. Our manager uses environmental criteria to assess how effectively portfolio companies steward the natural environment, assists with the transition to a low carbon economy and complies with relevant laws and regulations. Through a social set of standards, the team evaluates the asset-specific approach to health & safety, labour standards and working conditions as well as the relationships held with stakeholders and surrounding communities. In terms of corporate governance, InfraRed looks to ensure that HICL’s partners adhere to the highest standards of corporate conduct. Regular studies, inspections, surveys and risk assessments are undertaken to ensure this remains the case at all times.
InfraRed is held accountable by the HICL Board and processes are reviewed and refreshed periodically as part of a commitment to continuous improvement.
HICL’s Investment Manager, InfraRed, is a signatory of the Principles for Responsible Investment (PRI), supported by the United Nations. These principles provide a voluntary framework of six principles, which we have incorporated into our business:
- To incorporate RI/ESG checks into investment analysis and decision-making;
- To be active owners and incorporate RI/ESG controls into ownership policies and practices;
- To seek appropriate disclosures on RI/ESG issues by the entities in which the investments are made;
- To promote acceptance and implementation of the Principles within the investment industry;
- To work together to enhance effectiveness in implementing the Principles; and
- To report on activities and progress towards implementing the Principles.
We are pleased that InfraRed’s infrastructure business has maintained an A+ rating, the highest attainable award, from the PRI network (https://www.unpri.org), for the sixth successive year.
InfraRed’s 2020 PRI Assessment Report and PRI Responsible Investment Transparency Report are available below.
Through InfraRed, HICL has systematically incorporated climate change opportunity and risk assessment into the investment process. It is vital that long-term risks and opportunities associated with the physical and transitional impact of climate change inform HICL’s strategy.
InfraRed’s thinking in this regard has enabled the Company to voluntarily adopt the Taskforce for Climate-related Financial Disclosures (“TCFD”) guidance as part of its annual reporting, which includes disclosing Scope 1, Scope 2 and Scope 3 greenhouse gas emissions. In 2020 HICL became an official TCFD Supporter company, confirming its commitment to acting on climate change through consistent climate-related financial disclosures.
Keeping track of emissions and identifying measurement tools is a key step in an ongoing process to reduce HICL’s environmental impact across the portfolio, and the Investment Manager is committed to reducing emissions and promoting energy saving opportunities in the underlying projects.
InfraRed has publicly committed through its Sustainability Policy (available below) to minimise its corporate carbon footprint, and as part of this has become a certified CarbonNeutral® company in accordance with The CarbonNeutral Protocol effective from 1 January 2019.
TCFD Supporters: https://www.fsb-tcfd.org/supporters/
Our story so far
The United Nation’s 17 Sustainability Development Goals
HICL actively contributes to the United Nations (“UN”) Sustainable Development Goals (“SDGs”) through the delivery of reliable and resilient infrastructure that supports economic development and human well-being. As a custodian of public, community infrastructure, there is a focus on inclusive, affordable and equitable access for all. The nature of HICL’s investment proposition means the Company inherently contributes to developing industry, innovation and infrastructure (SDG 9); and building sustainable cities and communities (SDG 11). HICL also leverages its resources, in particular that of InfraRed, its Investment Manager, to make a positive contribution to a number of other SDGs which is evidenced through the linked case studies below.