GLOBAL
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
FUND
The chart shows the average scores obtained for the 12 scored fund indicators. Scores increased for strategy, policy and disclosure, and decreased for commitments, investment and incident monitoring, and third party review of disclosures. Nearly all funds have a senior decision-maker accountable for ESG issues.
In 2019, just over 80% of funds reported a public commitment to one or more ESG standards or principles. This chart shows the commitments made by funds, from most to least popular. Becoming a signatory to the PRI is the most commonly reported commitment, increasing from 44% in 2017 to 79% in 2019.
Additionally, 71% of this 79% also report their progress to PRI. Commitment to the Taskforce on Climate-related Financial Disclosure (TCFD) recommendations is relatively strong, with almost half of all participants committed to reporting- ing in line with the recommendations.
The FUND1 indicator was modified from last year and now focuses on strategies rather than objectives. 77% of funds reported having a sustainable investment strategy in 2019. This chart shows the range of strategies applied for each of the funds that reported applying one or more strategies.
Interestingly, it is not uncommon to employ multiple strategies. Nearly all of these respondents integrate ESG factors in their business strategy (96%). Screening based on ESG is still mostly based on exclusion (75% of responses), rather than on positive characteristics (43%) or international norms (42%). Two out of three use corporate engagement as part of their investment strategy.
These charts show how the distribution of GRESB Fund Score (combination of the Fund score and weighted average Asset Score) has evolved over the four years of the Infrastructure Assessment. The upper chart shows the line trend of scores for each year and the lower (stacked area) chart shows the number of funds scoring in 20 point bands for each year. In general there are an increasing number of participants obtaining scores in the higher ranges. The lower chart neatly illustrates the combined effects of growing participation and increasing scores, showing how GRESB is supporting more and more companies on their sustainability journey.
ASSET
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.
Score Distributions
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.
Asset Geography
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.
Box and whisker of the average scores of European nations. The country with the highest average score is Sweden (52) followed by Spain (43) and France and Portugal (42). The highest scoring asset was from the United Kingdom with a score of (92).
Box and whisker of the distributions for Americas and Oceania countries. Looking at averages, scores for the USA and Canada were 49 and 36 respectively, lower than for Australia (52), whilst New Zealand assets lagged behind with an average score of 32. As previously noted, a minimum of 6 participants was necessary for each box and whisker plot therefore some countries were omitted.
The Asset Performance Indicators show the extent to which assets report on their most material ESG issues. There are currently seven Performance Indicators in the assessment, as shown left.
This chart shows the number of participants that reported on each Performance Indicator compared to the number that should have reported (i.e. for whom the issue was deemed material). Investor demand for greater reporting on these indicators has led to an absolute increase in the number of participants reporting, although the proportion has remained stable. As seen for overall scores, this is largely due to the high number of new participants, who are still developing their ESG reporting. It is therefore expected that Performance Indicator reporting will increase in the future, aided by standardization of the metrics.
To drive performance improvement, it is good business practice to set targets and track performance. This chart shows the number of participants that set short-term (2018) targets compared to the number that should have set a target (i.e. for whom the issue was deemed material). Out of the seven performance indicators, it is most common to have targets for Health & Safety (72% have short-term targets), followed by Energy, then Biodiversity & Habitat. There has been an absolute increase in participants reporting on these indicators, although there hasn’t always been a relative increase.
Intensity metrics use a numerator (measure of performance or impact) divided by a denominator (measure of asset size). The most readily available denominators are Gross Asset Value (GAV), revenue and asset output. By encouraging assets to report on these standardized intensity metrics, GRESB is increasing comparability by providing ‘benchmarkable’ data. This chart shows the number of participants that reported output intensity metrics and the number of participants for whom it was deemed material. In almost all cases, reporting of intensity metrics has increased from last year, although the percentage reporting is only about 35 – 55%, showing there is some way to go before this becomes standardized.
Carbon Intensity by Asset
In 2019, an indicator on gender and diversity was introduced to both the Fund and Asset assessment. In the chart, upper, darker bars show the gender diversity for management/governance level staff while lower, lighter bars represent the diversity for all employees.
Reporting shows a predominance of men in the infrastructure sectors at both employee and governance level with a tendency for the proportion of women to be lower at the management/governance level than for employees in general.
For assets, the average proportion of women across all sectors is 22% at management/ governance level and 28% for all employees. This compares to a proportion of 34% reported in the Fund Assessment, and as a comparison, 44% reported in the Real Estate Assessment.
RESILIENCE
In 2018, GRESB launched the Resilience Module as a tool to provide investors and participating companies, funds and assets with information on resilience and adaptation. The Resilience Module is a three-year effort that will ultimately lead to new indicators in the core GRESB Real Estate and Infrastructure Assessments. In 2019, the Resilience Module was revised to increase alignment with the recommendations by the Task Force on Climate-related Financial Disclosures (TCFD) and it was made available to funds for the first time.
18 funds and 60 assets participated in the GRESB Resilience Module this year, more than twice the number of last year. The chart above shows the percentage of funds and participants in each sector that participated in the module. The sectors with the highest response rates were Network Utilities (31% of participants completed the Resilience Module) and Power Generation Excluding Renewables (28%).
In terms of the indicators, the chart on the right shows that funds and assets are scoring well on senior employee responsibility, communication with governance bodies and implementing business strategies. However, the results show a need for improvement in setting specific resilience targets and analyzing transition risk.
This chart shows the Resilience Module scores broken down by indicator. The top row represents the number of sectors that participated in the module and the numbers on top of the stacked bars represent the average scores for each sector (out of a maximum of 24). Renewable power assets tend to outperform their peers in the Governance and risk assessment process, however, Network Utilities performs best on strategy, setting risk and resilience targets and goals. The Power Generation x-Renewables sectors show vastly lower scores than the other sectors across all indicators except having a senior employee responsible.
Sector score distribution averages of the indicators that compose the resilience module, Renewable power tend to outperform their peers in the Governance and risk assessment process, however, Network Utilities performs best on strategy, setting risk and resilience targets and goals, Power generation x-renewables display several gaps in their management of resilience risks, despite transition risks being very relevant to the sector.
Transport Scores distribution
19 Transport assets participated in the resilience module this year 2019 (out of a total of 105 Transport assets). Only the Airport Companies sub-sector (7) had sufficient participants to allow analysis as a minimum sample size of 6 is required for analysis. The bar chart above shows the performance of Airports in orange with an average overall score of 44 in relation to its relative Transport peers in red (average score of 47). Airports tend to do particularly well in the Governance aspect of the module with all airports having a senior employee for dealing with resilience issues. Airport companies outperformed the average in terms of resilience-related business strategies. However, despite these foundations, the reported companies tends to lag behind in terms of addressing and assessing risks whether transitional, physical and social as well as setting climate risk and resilience targets or goals.
PUBLIC DISCLOSURE
This year saw the launch of the Infrastructure Public Disclosure dataset. This is based on a separate evaluation to the Infrastructure Fund and Asset Assessments, being simpler and focusing on public disclosure, and targeted specifically at listed infrastructure companies. GRESB collected ESG disclosure information on 155 listed infrastructure companies globally, including full coverage of the GLIO Global Coverage Index and listed companies that participated in the GRESB Infrastructure Assessment.
Each company received a disclosure level from A-E. The average letter grade was a C, equivalent to a score of 49% of all points available. The region with most participants is the Americas, but the highest number of constituents receiving an A-Level for disclosure relative to their sample size is Oceania, closely followed by Europe. Over time, it is expected that companies covered by the Public Disclosure dataset will participate in the full Infrastructure Assessment (12 entities did this in 2019).
Listed Infrastructure companies included in the Infrastructure Public Disclosure Assessment were assessed on their transparency and reporting of operational data. Certain issues such as GHG Emissions are reported significantly more often than others, such as Water Discharge. 76% of the constituents report on at least one of the operational data metrics studied for GHG Emissions versus only 24% on Water Discharge, respectively.
In terms of reporting absolute values, GHG Emissions are publicly disclosed significantly more often than the other measures. Like-for-Like values are very rarely reported, whilst intensities are most often provided for Health & Safety data. Data on portfolio coverage of the values reported by participants is also relatively weak with none of the issues shown in the figure breaking through the 1/4 mark.
Infrastructure Partners
Global
Premier
Partner
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") |
| Transport | Road Companies | Globalvia |
| 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)