Infrastructure funds: ESG risks and opportunities

May 20, 2020
97% of infrastructure companies are exposed to environmental, social and governance risks.

Here are Linklaters’ insights on ESG risks and opportunities for infrastructure funds. Key findings include:‍

  • Public levels of interest in ESG investment have grown very significantly over the past 12 months. ESG factors are being interpreted in EU regulations as sustainable finance;
  • ESG is now being considered by credit rating agencies when providing their credit ratings on companies, which could affect their cost of capital and their ability to raise funds in the market, thus also impacting the value of a company. However, different ESG scoring and rating providers add complication to the interpretation of ESG elements; and
  • Infrastructure funds with typically controlling shareholders and with a long-term investment horizon are in a unique position to work with management to embed ESG values into the company culture.

The chart below sets out ESG considerations at different stages of a transaction:

See Linklaters report here.

Jihyun Kim

A computer scientist with a passion for human-driven technology. Jihyun co-developed an award-winning open-source project about AI and algorithmic bias. Formerly at Goldman Sachs and startups in New York, Berlin, Dubai and Seoul.