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For the companies you mentioned, the demographic of their consumers are focused on this. They are demanding that these companies do something, and they are listening. Taj: There are also a lot of initiatives in hydrogen. A lot of chem- ical companies want to use it in their processes, instead of gas. In our fund, we play that through the industrial gas companies with Air Liquide and Linde heavily involved. A lot of the assets being built, such as electrolysers, are financed by corporate and private money with no government involvement. The government has a big role to play in terms of not interfer- ing too much in the sector, which is going to broaden out beyond government control going forward. Dusch: We have discussed the energy transition and the impor- tance of ESG, but we have focused on the E. Infrastructure also serves society. If we look at the S, the topic we have not dis- cussed is digital infrastructure. We saw it during the Covid pandemic with remote schooling, people being diagnosed remotely and working from home, but it is a big part of the allocation for pension schemes. We prob- ably have more than 20% exposure to digital infrastructure. We were a true believer of it because of the impact it has on society. It also contributes to the environment as some people may travel less thanks to video conferencing. We invest significantly in renewable energy, but there is a much broader way to contribute to the energy transition and be ESG focused, as explained earlier. Taj: Telecom towers is a great digital infrastructure investment because with the transition to 5G more robust wireless infra- structure is needed along with a denser network of towers. It goes beyond the energy transition. Ebner: How do you consider a tower as a sustainable invest- ment? Everyone is seeking exposure to sustainable infrastruc- ture, but I do not see towers as sustainable, despite their eco- nomic viability.


We are seeing more interest in the transition assets than the traditional renewable assets. It is seen as the more exciting


part of the space. Catherine Lloyd, Mercer


It will be hard to find sustainable infrastructure as not all investments in the social space are. Whistler: It comes back to the definition of what is sustainable. In the environmental space it is easier to define what that is based on metrics such as carbon emissions or agreed pathways to net zero.


When it comes to other assets, you are looking much more at the social and governance side of ESG. What are you measur- ing there? What is the social value that you put on digital infrastructure?


I cannot answer that directly, but it is an essential piece of the puzzle. It is important that we move the conversation away from just focusing on the environment. It needs that definition to make it clearer. Lloyd: Some managers look at it on the basis of how they man- age their assets. If they are short-term focused, they will sweat that asset for as long as they can and then sell it, passing the problem to someone else.


If their focus is long term, they want the asset to be there for the next generation and the generation after, so they maintain it to avoid wastage and do not have to replace it.


20 December – January 2023 portfolio institutional roundtable: Infrastructure


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