Sustainability-related Disclosures
Summary
Fiera Infrastructure (“Fiera Infrastructure”) seeks to continuously embed Environmental, Social, and Governance (“ESG”) considerations in our investment decisions and management processes to support long-term value creation for investors. We believe that ESG conscious investing and portfolio investment value creation go hand-in-hand, with ESG risk mitigation resulting in inherently stronger investments. Our Luxembourg-domiciled fund EagleCrest Infrastructure SCSp (the “Lux Fund” or “Fund”) has been categorized as meeting the provisions set out in Article 8 of Regulation (EU) 2019/2088 (“Sustainable Finance Disclosure Regulation”, “SFDR”). IQ-EQ Fund Management Ireland Limited acts as the alternative investment manager (“AIFM”) of the Fund. Under these disclosures, references to Fiera Infrastructure should be in its function as delegated portfolio manager of the AIFM.1
1. More information about IQ-EQ and its investor services can be found here: https://iqeq.com/
- No sustainable investment objective: The Lux Fund is a fund that promotes environmental and social characteristics in accordance with Article 8 SFDR, but does not have as its objective sustainable investment.
- Environmental or social characteristics of the financial product: Environmental and social characteristics promoted by the Fund are climate change mitigation, health and safety, and human and labour rights.
- Investment strategy: Many investments of the Lux Fund address critical environmental and social needs, such as renewable energy, water and waste utilities, social housing, and other social infrastructure. Various exclusions are integrated into the investment process to manage risks and support the promotion of the environmental and social characteristics promoted by the Lux Fund. Good governance practices and controls are continually assessed by Fiera Infrastructure as portfolio manager and are also monitored by the AIFM.
- Proportion of investments: A minimum of 70% of the net asset value of the Lux Fund will at all times be fully aligned with all of the environmental and social characteristics promoted by the Lux Fund. The Lux Fund does not commit to making any sustainable investments within the meaning of SFDR, and the Fund’s minimum proportion of investments that qualify as environmentally sustainable under Article 3 of the Taxonomy Regulation is expected to be 0%.
- Monitoring of environmental or social characteristics: Fiera Infrastructure maintains tracking of environmental and social indicators for each asset. These include environmental performance metrics, policies, and practices, and several indicators are used to evaluate alignment with the environmental and social objectives and the minimum proportion of investments fully aligned with all of the environmental and social characteristics promoted by the Lux Fund. Policies and data that support our promoted environmental and social characteristics are tracked on an annual basis. All portfolio investments are subject to our ESG integration and management approach.
- Methodologies: For each of the environmental and social characteristics promoted, Fiera Infrastructure uses various indicators (e.g. renewable energy generated (MWh) per annum) and various methods (e.g. total lost time injury frequency rate of employees and contractors per annum) to measure and track progress from deal sourcing to exit. In addition, other ESG performance metrics, including many of the SFDR Principal Adverse Impact indicators are tracked annually.
- Data sources and processing: Fiera Infrastructure uses the annual GRESB Infrastructure Asset Assessment to monitor ESG key performance indicators and evaluate ESG impacts and environmental and social performance metrics. Assets respond to the GRESB Assessment annually and self-report the indicators used to evaluate environmental and social objectives.
- Limitations to methodologies and data: ESG information from investments may be incomplete, inaccurate, or unavailable. To mitigate these risks, Fiera Infrastructure uses external consultants to review data, relies on GRESB validation checks, reviews year-over-year performance, and liaises closely with portfolio investments and their management teams.
- Due diligence: ESG considerations are incorporated from the outset of our investment process through the screening of any potential investment and by using Fiera Infrastructure’s ESG Due Diligence Guideline. A summary of ESG analysis is included in the Fund’s investment committee memos and is integrated into the decision-making process.
- Engagement policies: The asset management team engages with portfolio investments on ESG and environmental and social objectives multiple times throughout the year. The asset management team also reviews the results of the GRESB Assessment to identify opportunities for improvement and work with portfolio investments to advance ESG practices throughout the year.
- Designated Reference Benchmark: No reference benchmark has been designated for the purpose of attaining the environmental or social characteristics promoted by the Fund.
No Sustainable Investment Objective
The Lux Fund promotes environmental and social characteristics but does not have as its objective sustainable investment. The Lux Fund does not currently commit to investing in any sustainable investments (as defined by SFDR), but may hold investments that do meet this definition and may make commitments to investing in them in the future.
Environmental or Social Characteristics of the Financial Product
Environmental and social characteristics promoted by the Fund are:
Characteristic | Description Examples | SDG alignment |
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Environmental | Climate change mitigation – Clean energy |
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Health and safety |
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Social | Human and labour rights |
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Investment Strategy
Fiera Infrastructure supports the environmental and social characteristics described above in three primary ways:
- Through investment in critical infrastructure assets that inherently promote environmental and social characteristics through the goods and services those assets provide, such as clean energy, waste management, social housing, healthcare, public transportation, and telecommunications
- By excluding investments in sectors and regions that present high ESG risks and that may run counter to the environmental or social objectives Fiera Infrastructure promotes
- Through active asset management practices that improve social and environmental practices and performance at portfolio investments
Although the Fund does not currently have a specific sustainable investment target, it undertakes the following:
- Evaluating investment alignment with identifiable positive contribution to one or more of the UN Sustainable Development Goals (“SDGs”) and associated targets
- As part of the firm’s Net Zero Asset Management Initiative commitment, Fiera Infrastructure has committed to managing the Fund’s portfolio in line with Fiera Capital’s attainment of net zero greenhouse gas emissions by 2050 or sooner. The Fund’s portfolio will be managed to ensure that by 2030 the absolute emissions are reduced by 50% from a baseline year of 2019
- Peer benchmarking through the participation in the GRESB Infrastructure Assessment, the largest global ESG benchmarking initiative for real asset funds and assets, with a general goal of continuous improvement and/or high performance in its peer group
Approach to Exclusions
We embed the following exclusions into our investment process to manage risks and support the promotion of the environmental and social characteristics promoted by the Lux Fund.
Companies or other assets that derive 5% or more of their revenue from extraction and production of fossil fuels are excluded from the investments of the Lux Fund, unless such extraction is part of a process that is aligned with the transition to a low-carbon economy in line with a 1.5-degree trajectory (for example landfill methane capture)
- Companies or other assets that derive 5% or more of their revenue from coal-powered energy generation are excluded from the investments of the Lux Fund, unless such energy generation asset has a viable plan in place to transition to lower carbon and achieve real-world emission reductions in line with a 1.5-degree trajectory (for example by adding carbon capture or retrofitting coal boilers)
- Companies that have been in violation of human or labour rights according to the United Nations Global Compact (UNGC) are excluded from the investments of the Lux Fund, unless there is sufficient comfort that the investee company has implemented (or is in the process of implementing within a reasonable period of time) formal policies and/or initiatives to ensure that such violations will not re-occur
- Any identification of possible human or labour rights violations involving an investee company are considered and further investigated by Fiera Infrastructure. Unless Fiera Infrastructure is comfortable that sufficient efforts have been made (or are being made within a reasonable period of time) by the investee company to correct the issue, such company will be excluded for investment (or otherwise divested) by the Fund.
- Companies that have had significant health and safety incidents due to organizational negligence are excluded from the investments of the Lux Fund, unless such company provides Fiera Infrastructure with sufficient comfort that it has implemented (or is in the process of implementing within a reasonable period of time) formal policies and/or initiatives (including improved practices) to ensure that the likelihood of such incidents re-occurring is mitigated as far as reasonably possible
Evaluating Good Governance
Good governance practices and controls are continually assessed by Fiera Infrastructure as portfolio manager and are also monitored by the AIFM.
During investment screening Fiera Infrastructure’s investment team reviews governance structures for each target investment, the appropriateness of controls and will determine our ability to influence and implement good governance practices. We seek to identify opportunities where we can play a role within the governance structure of the investee company. For our investments, there is a Fiera representative that sits on the portfolio investment’s management board and based on ownership position, positive or negative control is sought.
Our due diligence includes thorough evaluation of governance practice, including evaluating good governance practices outlined in the United Nations Global Compact (UNGC), OECD Guidelines for Multinational Enterprises or International Labour Organization (ILO) Principles. We review the board structure, governance framework of the investment entity and any investment consortium, governance oversight, controls, policies, risk management procedures, and tax compliance. As people are critical to good governance, we also conduct a thorough background review, reference checks and evaluate overall strength of management team as well as employee policies, relations, and compensation practices.
On an ongoing basis, governance policies and practices of investee companies are evaluated through the GRESB Infrastructure Asset Assessment. We look to identify opportunities to improve policies, processes, and reporting year over year. Our team engages with investee companies to communicate expectations on good governance and regular reporting on environmental, social, and governance management and practices. This expectation is shared with incoming investments to ensure governance practices can be continuously monitored across the Fund.
Proportion of Investments
At all times, a minimum of 70% of the net asset value of the Fund will be fully aligned with all of the environmental and social characteristics promoted.
The AIFM envisages a portfolio construction of the Fund such that approximately at least 70% of aggregate Fund commitments are expected to be invested in investee companies associated with environmental objectives and approximately at least 70% of aggregate Fund commitments are expected to be invested in investee companies associated with the social investment thematic. The Fund does not have a sustainable investment objective and does not commit to making a minimum proportion of investments which qualify as environmentally sustainable under Article 3 of Regulation (EU) 2020/852 (the “Taxonomy Regulation”) and therefore the Fund’s minimum proportion of investments that qualify as environmentally sustainable under Article 3 of the Taxonomy Regulation is expected to be 0%.
The Fund is expected to have direct or indirect exposure to infrastructure assets, in which the Fund will invest directly or through one or more portfolio entities. The Fund does not use derivatives for investment purposes.
This minimum thresholds of investments is reported on annually and it is Fiera’s ambition to have this alignment figure in the 90th percentile year over year.
Monitoring of Environmental or Social Characteristics
Fiera Infrastructure maintains tracking of environmental and social indicators for each asset. These include environmental performance metrics, policies, and practices outlined in the following section. These indicators are used to evaluate alignment with our environmental and social objectives and the minimum proportion of investments outlined above.
Environmental and social indicators are factored into screening and investment ESG evaluation. Our exclusions list is embedded within this process and all prospective investments are screened against these exclusions. This assessment is tracked using our ESG Due Diligence Guideline and shared with the Fund’s investment committee.
Our active ESG management process begins at onboarding when we share our ESG Onboarding Guideline and Presentation with portfolio investments that defines expectations for ESG management and is being continued throughout the lifecycle of the Fund. These include expectations for ESG governance and reporting, and requirements aligned with the Lux Fund’s environmental and social characteristics, such as requirements for health and safety policies. Once expectations are communicated and onboarding is complete, environmental and social oversight is embedded into regular asset management discussions and reporting. Material risks, opportunities, and strategies, such as the transition to net zero emissions, are discussed at the portfolio investment board level.
Policies and data that support our promoted environmental and social characteristics are tracked on an annual basis. Each investment provides ESG information, detailing items such as policies in place and ESG performance data for the calendar year, which allows us to track performance year over year. In addition, this ongoing monitoring allows us to target specific investments where additional improvements can be made.
For each investment, the applicable investment and asset management teams oversee and take responsibility for reviewing and monitoring the alignment with the Fund’s environmental and social characteristics. We also work with an external consultant, whose role is to oversee the reporting and collection of data relevant to tracking the Fund’s progress year over year.
Methodologies for Environmental or Social Characteristics
Indicators to Evaluate Environmental and Social Characteristics
For each of the environmental and social characteristics promoted, Fiera Infrastructure uses the indicators and methods described below to measure and track progress from deal sourcing to exit. In addition, we track other ESG performance metrics annually, including many of the SFDR Principal Adverse Impact indicators. See our ESG Report for more information.
Characteristic | Indicator |
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Climate change mitigation – Clean energy |
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Climate change mitigation – Greenhouse gas emissions |
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Health and safety |
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Human and labour rights |
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Data Sources and Processing
Fiera Infrastructure uses the annual GRESB Infrastructure Asset Assessment to monitor ESG key performance indicators and evaluate ESG impacts and environmental and social performance metrics. Assets respond to the GRESB Assessment annually and self-report the indicators we use to evaluate environmental and social objectives. For select indicators, portfolio investments provide supporting documentation which may be audited by GRESB. GRESB data collection is supplemented by additional data requests, where needed.
The asset management team will analyze reported ESG data and follow-up on inconsistencies to check data. Typically, no data is estimated beyond what is reported by investments. Some portfolio investments with basic operations do not calculate their own greenhouse gas emissions and these are calculated by consultants based on reported energy usage or renewable energy generated (for emissions avoided).
Limitations to Methodologies and Data
The effectiveness of Fiera Infrastructure’s investment ESG analysis and ongoing monitoring depends upon the experience and skill of our investment and asset management teams, as well as the quality of data and information available to the relevant teams. ESG information from investments may be incomplete, inaccurate, or unavailable. To mitigate these risks, we use external consultants to review data, rely on GRESB validation checks, review year-over-year performance, and liaise closely with portfolio investments and their management teams. These processes provide a reasonable degree of confidence that environmental and social characteristics are met.
Due Diligence
Fiera Infrastructure’s investment management process incorporates ESG considerations from the start, factoring these characteristics into the screening of any prospective investment. Each deal undergoes an evaluation using Fiera Infrastructure’s ESG Due Diligence Guideline. The Guideline prompts analysis of ESG factors, including strengths, risks (including sustainability risks), opportunities, as well as deal and asset management implications. ESG diligence expressly addresses the environmental and social characteristics we promote. A summary of ESG analysis is included in the Fund’s investment committee memos and is integrated into the decision-making process.
Engagement Policies
The asset management team engages with portfolio investments on ESG and environmental and social objectives multiple times throughout the year. Fiera Infrastructure uses the annual GRESB Infrastructure Asset Assessment and ESG reporting cycle as a catalyst for continual improvement in ESG practices and ongoing dialogue. This annual process enables monitoring of ESG key performance indicators and evaluation of ESG impacts and environmental and social performance metrics. GRESB data collection is supplemented by additional data requests, where needed. Metrics are self-reported by portfolio investments. The asset management team also reviews the results of the GRESB Assessment to identify opportunities for improvement and work with portfolio investments to advance ESG practices throughout the year. Additionally, ESG, and environmental and social objectives, are often discussed at the portfolio investment board level where the asset management team receives updates from the portfolio investment management teams.
Designated Reference Benchmark
No reference benchmark has been designated for the purpose of attaining the environmental or social characteristics promoted by the Fund.