Infrastructure managers must begin to take seriously environmental matters, the CIO of the UK’s Environment Agency Pension Fund has urged.
Mark Mansley said infrastructure was an interesting area for pension funds.
“In theory, it’s a really great asset – it’s a long-term, asset-backed, medium to low-risk asset with good income flow and the right sort of duration and right sort of inflation,” he said at the recent RI Europe conference in London.
“The fact is, there are all sorts of issues.”
He added that while there were a few noteworthy actors in the field of green infrastructure, the “real challenge” remained engaging the industry as a whole on issues of sustainability.
“We like to have the dark green assets, but we would like a bit more of a spread at the moment,” he said.
Mansley said that, while many mainstream infrastructure managers invest in areas such as clean energy and public transport, many funds would also have exposure to less environmentally friendly areas such as oil pipelines and coal ports.
He added that the fund had struggled to get infrastructure managers engaging with sustainability, “even up to the level of a lot of listed asset managers”.
Calls for a more holistic approach were echoed by Donald MacDonald, chairman of the Institutional Investors Group on Climate Change, who said areas such as low-carbon investment needed to be taken out of the “SRI silo”.
“This is mainstream,” MacDonald argued, saying there was a need to remove the “green label” on such assets.
“We need to be looking at our own asset classes, and how carbon is going to impact them,” he said.
MacDonald argued during the same panel that there was a need for greater risk-sharing in infrastructure investment, and urged the development of vehicles that would allow the pensions industry to invest in smaller-scale projects.