Infrastructure tailwinds renews focus on assets

A new report from IFM Investors has highlighted the benefits of investing in infrastructure amid the renewed interest in energy security and green transition as well as inclusion and safety of workers within investments.

The Infrastructure Outlook 2023: Uncertainty, transition and social factors report said the “resilience” of infrastructure is set to continue due to its positive correlation with inflation and is being driven by tailwinds including the “strength of government infrastructure investment” and its contributions to funding the green economy transition.

“The global economic environment is a difficult one for investors, but we believe the infrastructure asset class has the characteristics to provide resilience in the face of rising inflation, higher interest rates, softening growth, and continuing geopolitical and economic uncertainty,” IFM Investors Global Head of Infrastructure, Kyle Mangini, said.

“Infrastructure assets are showing significant resilience across different sectors, given their favourable links to inflation and steady underlying demand, which is generating a supportive environment for infrastructure equity and debt investment.”

“The infrastructure equity and debt sectors will also benefit from tailwinds from the energy transition as governments get on with the significant task of building out the infrastructure their communities need for 2030, 2050 and beyond.”

“We also believe social factors will attract increasing attention as investors become more attuned to the social issues and challenges that need to be addressed in order to meet our environmental goals.”

The second report on infrastructure released by IFM, it also said the Russian invasion of Ukraine had facilitated other investment opportunities with European countries in particular working on “friendshoring” to forge stable relationships to benefit regions and secure against the eventual fallout from the war.

The report also found investors are using their funds to make real impacts by focusing more on managing social issues and ensuring benchmarks are continually met, including labour standards, working conditions, worker safety, supply chain risks, inclusion and diversity.