Infrastructure companies vital to reach climate goals

Global listed infrastructure companies are key to helping the world fulfil the goals of the Paris Agreement with many already achieving strong results in reducing their emissions, according to Andrew Maple-Brown, co-founder and Managing Director of Maple-Brown Abbott Global Listed Infrastructure.

 However, Maple-Brown also warned about the ongoing risk of greenwashing and the considerable amount of work the companies have left to do to achieve their ambitions.

“For this reason, active investors have a crucial role to play in helping companies achieve their net zero ambitions, through engagement, scrutiny and constructive encouragement,” he said.

“While many companies have outlined some variation of a net zero target, there are notable inconsistencies between what is being said and what is actually being done. As investors, we believe it is vital to assess the financial impact of any targets as they can mean different things to different people, and any disconnect between claim and reality is a potential risk.

“We have found it is useful to have a degree of scepticism about the claims made and to ask some tough questions of management in order to work out whether their statement of intent is authentic and achievable.”

Georgia Hall, ESG Analyst in the Global Listed Infrastructure team at Maple-Brown Abbott, said discussions surrounding what companies can do to reduce their emissions and continue the trajectory to a low-carbon world have been more welcomed recently.

“Even in the past 12 months, we have found that companies that were initially reticent to engage on certain topics – such as scope 3 emissions – are now much more open and willing to take on more accountability. We’ve engaged with well over three-quarters of portfolio companies on emissions targets and decarbonisation.

“Nonetheless, one of the key challenges we continue to face is that there are no globally accepted and mandated standards for companies when setting net zero targets, which means many lack external and independent accreditation,” Hall said.

This comes just after the firm became a signatory to the Net Zero Asset Management Initiative which endorses managers to align investments with net zero emissions and back global efforts to limit warming to 1.5 degrees Celsius by 2050 or sooner.

Maple-Brown said the firm has ratified its commitment to managing climate risks and opportunities and influencing the pace of decarbonisation.

“Overall, we believe that investing in the transition to a net zero economy, and managing climate-related risks, will deliver better long-term results for investors.

“And as active managers, we have the opportunity to engage with companies and help ensure they are achieving their net zero goals, thus boosting returns and better managing risk,” he said.