of GCP Infra’s £1.1bn of assets are invested in clean energy
"We saw the Green Economy Mark as an opportunity for the underlying portfolio’s green credentials to be recognised."
For Gravis Capital Management, which manages GCP Infrastructure Investments (GCP Infra), the Green Economy Mark offers a way to clearly communicate to stakeholders the environmental impact that the £1.1bn fund is delivering.
“A big challenge in the market is a lack of standardisation of what ESG actually means, and what it means across different securities,” says Philip Kent, lead advisor to GCP Infra. “We saw the Green Economy Mark as an opportunity for the underlying portfolio’s green credentials to be recognised,” he says.
“It helps us speak to our investors about the environmental benefits of the fund,” he adds. While GCP Infra was launched in 2010 as a vehicle to invest in debt issued by Public Finance Initiative (PFI) projects, it has gradually transitioned so a growing proportion of its assets are in renewables.
Making a green impact
GCP Infra, which is listed on London Stock Exchange’s Main Market, is around 60% invested in renewable energy projects, with the balance in PFI schemes and supported living units. Because more than 50% of its revenues are derived from the green economy, the fund is eligible for the Mark, which it received in 2020.
Although Gravis is not currently raising capital for the fund, Kent believes that the Green Economy Mark could potentially help in that process. “For investors looking for infrastructure exposure, we think the Green Economy Mark could provide a differentiator, generating more investor interest and ultimately supporting the share price.”
Looking to new technologies
The growing focus on achieving net-zero emissions in the UK economy is proving a mixed blessing for GCP Infra, in that it is increasing competition among investors for mature renewable energy technologies such as wind and solar.
However, the UK’s goal to reach net-zero emissions by 2050 will require a wave of low-carbon investment into new areas of the economy. “Meeting the target will require fundamental change not only to how we generate electricity, but also to how we generate our heat, how we travel, to agricultural processes, and the level of carbon sequestration in forests and in carbon capture and storage,” he says, adding that the fund’s latest investment is in a geothermal project, representing a new technology for the fund.
“There will be significant investment required to drive that change, and I think we’re well positioned to play our part,” he says.
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