Research: Infrastructure investors hungry for green assets in wake of Covid-19

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Renewables, digital infrastructure and green real estate among top investment priorities for fund and portfolio managers, survey suggests

Infrastructure investors look set to ramp up their pursuit of green assets in the wake of the Covid-19 pandemic, with renewables, digital infrastructure and green real estate singled out in a survey of fund managers as key priorities for investment, according to law firm Linklaters.

The Censuswide poll, which was carried out on behalf of Linklaters, quizzed over 300 fund and portfolio managers across Western Europe, who it said were together responsible for more than £1tr of assets worldwide.

The survey found almost a quarter expect to grow the proportion of green assets in their portfolios by at least a fifth over the next two years, while 63 per cent said they expected to raise green asset levels by between 10 and 20 per cent over the same period.

Moreover, environmentaly social governance (ESG) credentials and transparency ranked second in the top three factors fund managers are most likely to consider when managing their portfolio, the poll found.

Digital infrastructure was named as the sector in which fund managers see the most opportunities in the wake of the Covid pandemic, chosen by 37 per cent of respondents. Renewable power came a close second, cited by 32 per cent, and green infrastructure third, on 24 per cent.

When asked about their most likely future assets in the green space, green and climate-resilient real estate came top with over a third of fund managers planning such investments. Electric vehicles and their accompanying networks came a close second, picked by 35 per cent.

Industry data backs up a rush to green opportunities by infrastructure investment funds in the countries polled, with $14.4bn USD funnelled into green infra in 2019 - up from $12.5bn USD in 2018, an increase of 15.2 per cent.

"The appetite for green is clearly growing and fast," said Vanessa Havard-Williams, global head of environment at Linklaters. "But there is plenty of room for growth in this space, especially if we are to meet the ambitious global climate goals that have been set for the coming decades."

However, the research also showed that while many in the industry are fired up by the prospect of acquiring green assets, a substantial minority are also unprepared for new ESG disclosure requirements that will come into force next year.

From March 2021, new EU rules will require funds to disclose their approach to taking ESG positive and adverse impacts into account in investment decision making. Linklaters' research found that a third of fund managers at infrastructure are unaware of the new disclosure rules. Just over half - 53 per cent - said they wee aware of them, while a further 13 per cent told researchers they were unsure.

"The EU disclosure requirements are due to come into force in just over seven months,"Harvard-Williams added. "For those funds who are yet to be across the detail, the clock is ticking, and they will need to move quickly to ensure compliance."

 

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