COVERAGE & GROWTH
The Infrastructure Fund Assessment grew by 43% to include 107 funds. By fund size, the Assessment covers 33 of IPE Real Assets’ Top 75 Infrastructure Investment Managers – participating with at least one fund.
Out of the 107 participating funds, 64 (60%) participated with more than 25% of their assets, allowing them to obtain a GRESB Fund Score, the ultimate ESG benchmark of fund performance for investors.
Fund Growth Waterfall
Fund participation grew from 75 submissions in 2018 to 107 in 2019 (40% growth). Looking forward, if current fund managers participating in GRESB reported with all their funds, we could expect an additional 208 funds to participate, bringing the potential future coverage to 315, without factoring in new fund manager participants
The Infrastructure Asset Assessment increased by 40% to cover 393 assets.
Participation grew across all regions being particularly strong in Oceania (53% growth) and the Americas (44%). The Assessment now covers 30 of the 33 industry sectors across 57 countries.
The growth in participation across sectors at the ‘superclass’ level is shown in the below chart. Transport, Renewable Power and Social Infrastructure sectors have the highest representation but there is solid and growing coverage across all sectors.
Asset Growth Waterfall
393 assets participated in the benchmark in 2019, up from 280 last year (40% growth). Looking forward, if all assets belonging to participating GRESB funds joined the benchmark, we would expect an additional 440 assets, bringing the total to 833 assets.
If we add potential new assets from the 208 funds that belong to participating fund managers but are not yet reporting to GRESB (see fund waterfall) we can estimate a further 1,600 assets could participate (assuming an average number of assets per fund is 7). This brings the potential future asset coverage to over 2,400 assets without taking into account new participants.
In 2019, all assets reported their facilities including their locations. The map above dots each facility based on the location of the reported facilities. Assets reported on six continents, with over 1,100 facilities spread across 57 countries, with coverage continuing to be dominated by OECD countries.
Europe builds upon its track record for transparency with the most funds and assets participating in the benchmark by both number and value. Assets in Oceania or that are Globally Diversified scored highest, with Oceania reflecting the same leadership trend shown in the Real Estate Assessment.
This treemap shows the participation in the GRESB Asset Assessment based on total Gross Asset Value (GAV) (in US$ billions) per country. Notably, three countries, USA, Great Britain and Australia make up US$324 billion or 75% of the total US$471 billion.
Within Europe, ‘EU’ (5.2 billion US$) represents assets that that have their operations spread across several European countries, while ‘Other’ represents the assets from other EU countries combined.
GRESB MODEL AND SCORES
The average GRESB Fund Score remained similar to 2018, with an increase in average Fund Assessment Score (71) being offset by a slight decrease in the average Weighted Asset Score (48 in 2019, versus 49 in 2018). The tendency for Fund Assessment Scores to be higher than Weighted Asset Scores continued in 2019, showing that fund management practices tend to lead the overall performance of the underlying assets. Fund managers should put most effort into improving asset performance before improving their own practices.
The number of funds eligible for GRESB Fund Scores grew sufficiently in 2019 to allow star ratings to be calculated for the first time. These ratings divide the participants into equal quintiles, providing a relative measure of performance against all other participants. The minimum score for a 5-star rating was 70 and the minimum score for a 2-star rating was 37
The GRESB Model for Funds shows the Fund Assessment Score on the vertical axis and the Weighted Average Asset score on the horizontal axis.
Funds are eligible for a GRESB Fund Score when they report for more than 25% of their assets (57% of the total in 2019). These are represented by the green dots.
Those reporting with less than 25% of their assets receive only a Fund Assessment Score and are clustered on the vertical axis (blue dots).
The GRESB Model for Assets shows the score for each asset on the two dimensions (Management & Policy and Implementation & Measurement) that make up the overall GRESB Asset Score.
Each dot is sized in proportion to its GAV. Overall GRESB Asset Scores decreased from 48 in 2018 to 46 in 2019, slightly reversing the trend seen since the Infrastructure Assessment launched in 2016.
Average scores for Management & Policy improved slightly from 49 to 50, but Implementation & Measurement scores decreased from 46 to 42. This is partly explained by lower scores by new participants (1 in 3 asset participants in 2019 participated for the first time). New participants to GRESB tend to have lower scores than continuing participants, generally because their ESG practices are less mature.
These charts show how the distribution of asset scores has evolved over the four years of the Infrastructure Assessment. The upper chart shows the histograms of scores for each year and the lower (stacked area) chart shows the number of assets scoring in 20 point bands for each year. In general, there is an increasing number of participants obtaining scores in the higher ranges.
The lower chart neatly illustrates the combined effects of growing participation whilst simultaneously increasing scores, showing how GRESB is supporting more and more companies on their sustainability journey.
It has been postulated that ‘ESG is easier for large entities’ because they can support the overhead of dedicated staff for this aspect. To investigate this we analyzed whether there is any correlation between Gross Asset Value (GAV) and GRESB Asset Score and found that there is a slight correlation (R2=0.2). From the figure though, it is clear that assets with lower GAVs show a wide range of scores and some are certainly able to score quite well. There are also no regional-specific trends.
DEFINING SDG MATERIALITY
There is an emerging recognition among GRESB Investor Members that the UN Sustainable Development Goals (SDGs) provide a useful reference point for both guiding the intent and measuring the impact of their investments. We have defined SDG materiality for real assets which provides the foundation for our work with our governance groups to agree upon a standardized set of metrics to track the contribution of real estate and infrastructure investment towards achieving the goals.
GRESB performed the mapping exercise with a top-down approach, first beginning with the alignment to the goal, then to the target, and lastly to the indicator. The alignment was ranked on a 0-3 scale (0- “Not aligned”; 3 – “Aligned”)
In addition to the alignment mapping, we analyzed which SDGs are the most frequently addressed in public reporting by GRESB participants. The highlighted SDGs in the image are the most material to the infrastructure sector
The GRESB Asset Assessment is structured into seven unique sustainability Aspects.
Average Management and Monitoring & EMS Aspect scores have stayed steady or increased compared to last year.
Scores for Performance Indicators, Policy & Disclosure, Risks & Opportunities and Stakeholder Engagement have weakened.
The chart shows the number of assets participating and average score, broken down by sector. Participation grew across all main sectors and was strongest in Transport (37 additional participants), followed by Social Infrastructure (an increase of 24 participants) and Renewable Power (20 new participants).
The best-scoring sector is Network Utilities with an average score of 63 and the lowest average Score is for Social Infrastructure (29). The score for the latter sector is dragged down by a significant number of low-scoring assets, suggesting that these organizations have not given ESG as much priority as other sectors.
This chart shows the distribution of asset scores across the main asset sectors using box and whisker plots. The dots represent all participant’s scores, the boxes show the first and third quartiles, the X shows the median and the line represents the mean. All sectors show a fairly wide distribution showing that high scores are possible in all sectors but there are many with room to improve. Looking at averages, the best scoring sector in 2019 was Network Utilities with an average score of (63) the lowest being Social Infrastructure with an average of (29).
The graph represents the average absolute score by sector broken into the seven aspects that comprise the asset assessment. Overall we find that Network Utilities (average score of 63) leads on all aspects with the exception of Certifications & Awards. In particular, this sector seems to have a strong focus on Risk & Opportunity Management, which may not be surprising given the tendency for these industries to be heavily regulated. Data Infrastructure (56) and Environmental Services (51) score relatively well in performance indicators, suggesting that these sectors have rigorous monitoring of their performance data and tend to set more quantitative targets in relation to their material issues.
This chart shows the distribution of asset scores across the Independent Power Producers superclass using box and whisker plots. The average score of Combined Heat and Power Generation was 42 with a very wide quartile range, whereas Gas-Fired Power Generation had a smaller quartile range and an average score of 48.
Other subsectors of Independent Power Producers were not included due to the sample size being too low (needs to be a minimum of 6).
Power Generation excluding Renewables absolute aspect score distribution
This graph represents the absolute average score distribution of Power Generation Excluding Renewables sectors across the seven aspects that compose the Asset Assessment.
This chart shows the distribution of asset scores across the sectors within Network Utilities. Within this superclass, Water and Sewerage companies scored the highest with an average of (71) followed closely by Gas Distribution companies (average of 68) and Electricity Distribution Companies (67).
District Cooling/Heating Companies and Other subsectors of Network Utilities were not included due to the sample size being too low (needs to be a minimum of 6).
Network Utilities absolute aspect score distribution
This graph represents the absolute average score distribution of Network Utilities sectors across the seven aspects that compose the Asset assessment.
This chart shows the distribution of asset scores across the sectors within the superclass of Renewable Power. 83 assets reported within this asset class with an average score of 48.
Looking at averages, Wind Power Generation scored higher (52) than Solar Power Generation (46). Both sectors had wide quartile ranges with Wind Power slightly tighter.
Renewable Power absolute aspect score distribution
This graph represents the absolute average score distribution of the Renewable Power sectors across the seven aspects that compose the Asset Assessment.
This chart shows the distribution of asset scores across the sectors within the superclass of Transport. The Transport sector has the largest number of assets participating (105). Airport Companies have the highest average score (62), have a narrow distribution and generally score well (most scores are above 50), reflecting tight competition in this sector.
Airports are followed by Rail Companies (average score of 57), Port Companies (48) and Road Companies (43). Road Companies have a very wide distribution with very high and very low scores achieved within this sector.
Transport absolute aspect score distribution
This graph represents the absolute average score distribution of the Transport sectors across the seven aspects that compose the Asset Assessment.
This chart shows the distribution of asset scores across the sectors within the superclass of Social Infrastructure.
Social Infrastructure scored the lowest of all the super-classes with an average score of 29 (up from 27 in 2018). Within the superclass, Government Services had the highest average score (30), followed by Education Services (27), Recreational Facilities (19) and finally, Health and Social Care Services (14).
While the quartile range and scores for Health and Social Care Services are both low, there are a few outlier high scores, showing that high scores are possible.
Social Infrastructure absolute aspect score distribution
This graph represents the absolute average score distribution of Social Infrastructure sectors across the seven aspects that compose the Asset Assessment.
Performance indicator reporting is specifically challenging for the sector across social sector asset classes as well as the establishment of Risks and Opportunities.
The graph represents the average absolute score by region broken into the seven aspects that comprise the asset assessment. Overall we find that Oceania (X average score) leads on all aspects to the exception of Management and Policy and Disclosure, where Africa performs particularly well. On the other hand, Africa has the lowest scores for other aspects, showing the challenges of obtaining performance data in emerging markets.
Infrastructure Industry Partners
2019 INFRASTRUCTURE SECTOR LEADERS
GRESB Sector Leader Awards recognize the best performers annually from across the GRESB Assessments. Achieving sector leader status is recognition of best practice ESG performance. We congratulate the 2019 GRESB Infrastructure Sector Leaders.
|Sector | Region||Name|
|Sector: Diversified||Arcus European Infrastructure Fund 1, Arcus Infrastructure Partners|
|Sector: Renewable Power Generation||Capital Dynamics Clean Energy and Infrastructure V JV LLC, Capital Dynamics|
|Sector: Other (including Data infrastructure, Social and Transport)||Macquarie Super Core Infrastructure Fund, Macquarie Infrastructure and Real Assets|
|Region: Americas||Capital Dynamics Clean Energy and Infrastructure V JV LLC, Capital Dynamics|
|Region: Asia||Takara Leben Infrastructure Fund, Inc., Takara Asset Management Co., Ltd.|
|Region: Europe||Arcus European Infrastructure Fund 1, Arcus Infrastructure Partners|
|Region: Globally diversified||Macquarie Super Core Infrastructure Fund, Macquarie Infrastructure and Real Assets|
|Region: Oceania||AMP Capital Diversified Infrastructure Trust, AMP Capital|
|Sector | Superclass||Sector | Class||Name|
|Data Infrastructure||Data Transmission||AXIÓN Infraestructuras de Telecomunicaciones S.A.U.|
|Diversified and Other||REDEXIS GROUP|
|Energy and Water Resources||Pinedale Energy Partners|
|Environmental Services||Saubermacher Dienstleistungs AG|
|Network Utilities||Phoenix Natural Gas|
|Power Generation x-Renewables||Viesgo Producción S.L.|
|Renewable Power||Wind Power Generation||Ventient Energy|
|Social Infrastructure||Government Services||Operadora de Infraestructura Especializada de Guanajuato, S.A.P.I. de C.V. ("OIEGSA")|
|Diversified and Other||Other||ESVAGT A/S|
|Renewable Power||Solar Power Generation||Sonnedix Power Holding|
|Social Infrastructure||Education Services||UDICITE|
|Social Infrastructure||Health and Social Care Services||Gestión Integral de Hospitales de Zumpango, S.A.P.I. de C.V. ("GIHZ")|
|Transport||Airport Companies||Australia Pacific Airports Corporation Limited|
|Transport||Port Companies||Associated British Ports|
Entity is an Asset Sector Leader (leader for the Class)