Natixis and research institute EDHECinfra, who have worked together for seven years, has launched a team to assess the impact of environmental, social and governance (ESG) factors on infrastructure investments.
The three-year project would document and produce a comprehensive analysis of ESG reporting standards and aim to provide a set of potential ESG impacts and risks. It would then create new datasets on ESG risks and their impact on infrastructure investment.
The two organisations hoped this would develop into an ‘infrastructure social acceptability index’ which would allow people to measure the economic impact of the climate risk exposure of infrastructure assets.
Although ESG was a growing consideration for firms, the organisations said, there were few holistic or systematic measures to help investors to track ESG outcomes.
Frederic Blanc-Brude, director of EDHECinfra, said: "Infrastructure investments have value because they are useful over long periods of time. Social and environmental factors significantly impact this long-term value, but today we do not know how or on what scale. We can build a new area of applied knowledge, combining existing datasets with new ones created using artificial intelligence, and drawing on the depth of knowledge on infrastructure assets and investment shared between EDHECinfra and Natixis."
"We want to determine what impact better-designed, more resilient infrastructure can have, both for the economy and for investors, focusing on first-order problems like climate risk and social acceptability over the life of these investments. Ultimately, the understanding of these issues will impact investors' selection criteria and the prudential treatment when investing in the asset class", explained Anne-Christine Champion, global head of real assets, corporate & investment banking at Natixis.
The two organisations had previously worked on research involving credit risk in private infrastructure debt.