More than three times as many infrastructure investors, compared to 2016, listed Environmental, Social and Governance (ESG) factors as a form of risk management according to a Global Infrastructure Hub (GI Hub) and EDHEC Infrastructure Institute-Singapore (EDHECinfra) report released today.
The third global report, 2019 Global Infrastructure Investor Survey, also revealed that investor appetite for emerging markets infrastructure is levelling. Respondents identified recent trends in monetary policy normalisation and greater emerging market foreign exchange rate risk as factors that may be driving investors away.
The report found year-on-year increases to infrastructure investment, particularly in emerging markets, other key findings include:
- 10% decrease in investors planning to invest more in infrastructure, compared to 2016;
- Nine out of 10 investors believe their current infrastructure performance benchmarks are inadequate because they are not representative and do not measure risk; and
- Around 36% of institutional investors now consider ESG to be a "first order question, possibly at the expense of performance" in infrastructure investment, which is more than double the 17.2% reported in 2016.
GI Hub CEO Marie Lam-Frendo said that the report’s findings play a significant role in bridging the public and private sector in infrastructure.
“Infrastructure is a dynamic market, and the results can be used to help policy leaders around the world better understand the changing perceptions of investors in infrastructure. Importantly, the report highlights the significant growth in importance of ESG factors in the investment decision process” said Lam-Frendo.
Greatest future potential
The survey asked respondents to rank the top five countries with the greatest infrastructure potential over the next five years and found:
- Top five advanced economies: United States of America; Australia; United Kingdom; Germany and France.
- Top five emerging markets: India; China; Brazil; Indonesia and Vietnam.
Co-author and Director of EDHECinfra, Dr Frédéric Blanc-Brude said: “This survey shows that a significant evolution in the way infrastructure investors benchmark their portfolio is necessary and that a vast majority of asset owners already recognise this. Investors need to understand their risk and monitor their portfolio better to get the full benefits of infrastructure asset class.”
The 2019 Global Infrastructure Investor Survey included more than 315 infrastructure leaders, representing approximately USD10 trillion of global assets under management.
View the 2019 Global Infrastructure Investor Survey fact sheet here
View the full 2019 Global Infrastructure Investor Survey here