ESG

Environment, Social and Governance

INCORPORATION OF ESG

  • We are proud signatories of the PRI.  Our ratings are: Policy Governance and Strategy 5 stars (92%); Listed Equity – Active fundamental – voting: 5 stars (95%); Confidence building measures: 4 stars (90%).
  • We are active members of The Institutional Investors Group on Climate Change (IIGCC), and part of their working group for the Paris Aligned Investment Initiative (PAII) framework development
  • We are a supporter of the enhanced climate-related disclosures and transparency required under the Task Force on Climate-Related Financial Disclosures (TCFD)
  • We are supportive of the emissions reduction pathways as set out in the Paris Agreement and consider these emissions reductions in our investment process as described below
  • ATLAS is a signatory to the FRC Stewardship Code.  Our 2023 Stewardship Report is downloadable here
  • The ATLAS Global Strategy discloses under Article 8 of the European Sustainable Finance Disclosure Regulation (‘SFDR’)
  • The ATLAS Global Strategy UCITS has achieved an MSCI ESG rating of AAA

   Produced by MSCI ESG Research as of 31 December 2022

 

“ATLAS Infrastructure is determined to stay at the forefront of best practice with respect to the integration of investment and climate change, possibly the most important issue we face today. We are active supporters of the IIGCC and are proud to be a founder signatory of the Net Zero Asset Manager initiative, a major step in accelerating the transition towards global net zero emissions.”

Charles Kirwan-Taylor, Executive Chairman

Click here to view our Responsible Investment Policy

Click here to view our 2020 Transparency Report

Click here to view our 2023 Responsible Investment Report

Click here to view our 2023 Stewardship Report

 

 

ESG INTEGRATION

Our investment philosophy is that full integration of ESG, and climate transition in particular, is necessary to ensure that investors achieve long-term sustainable returns from their infrastructure investments.

We aim to understand the implications of each ESG factor, including climate transition scenarios, at a company and asset level through examining their impact on long-term company cashflows and through asset stress testing: ESG factors are explicitly integrated within our investment evaluation and portfolio construction process.

 

  • Environment

    Environmental factors are considered in context of a company’s environmental performance and how it is likely to be affected by the evolution of climate change policies.
    Environmental performance is monitored through company and regulatory disclosures, which are reflected in the cash flows of our company models.
    We also model the cashflow effects of a range of assumed changes to climate change policy for each of the companies within our universe through detailed scenario analysis.
    The Global Strategy aims to have a positive net exposure to companies which will benefit should climate policy develop in line with our ‘Fast Transition’ (most aggressive) climate change scenario.

  • Social

    Infrastructure assets, especially those working within a regulated, operate under an implicit social contract. Companies which fail to perform in line with that contract may be subject to penalties or reduced allowed returns.
    We spend time considering the behaviour of each company and its relationships with its regulator and customers, seeking companies which demonstrate strong regulatory relationships (and strong social contract management).
    We avoid assumptions that companies will be allowed to earn excessive profits over extended periods at the expense of their customers and other stakeholders.

  • Governance

    We monitor and evaluate the impact of a company’s management and oversight and make specific assumptions as to management’s ability to generate (or undermine) the company’s value over time.
    We assess management’s incentives, capital structure decisions and use of cash. Companies with poor reinvestment skills will show lower returns and higher risk and will be less likely to form part of a portfolio.

ENGAGEMENT

We believe that it is possible to create value by working collaboratively with management teams to implement strategies at the asset level which are consistent and aligned with the interests of our clients.

Engagement relating to ESG factors is undertaken as part of research and investment due diligence by the relevant ATLAS sector teams. Deep understanding of and frequent engagement with portfolio company management teams and boards provides one of the best forms of risk management and return optimisation.

Where possible we highlight to company management where underperformance on an ESG issue will be reflected in our cashflow forecasts and so negatively affect our ability to invest in their company.

All active engagements are reported in our Annual Performance Report. Please contact us if you would like to receive a copy of this report.

Click here to view our proxy voting data

 

ASSOCIATIONS AND INDUSTRY BODIES

 

Institutional Investors Group on Climate Change

ATLAS is a member of the IIGCC and is an active participant in many of the group’s initiatives. ATLAS Infrastructure is a member of the IIGCC’s Infrastructure Working Group which forms part of its Paris Alignment Investment Initiative (“PAII”).

ATLAS became a founding signatory to the Net Zero Asset Managers commitment in December 2020.  We believe this is an important commitment as it entails a tangible set of goals for the asset management community that go beyond other general statements of intent.

 

Global Real Estate Sustainability Benchmark – GRESB

Over the last year ATLAS has started working with GRESB (the Global Real Estate Sustainability Benchmark), an industry-driven organization committed to assessing the environmental, social, and governance performance of real assets globally, including infrastructure assets, to investigate the application of its processes to the listed infrastructure sector.

 

Principles of Responsible Investment

ATLAS is a signatory to the UN Principles of Responsible Investment and has achieved the following ratings:

  • Policy Governance and Strategy 5 star (92%).
  • Listed Equity – Active fundamental – voting: 5 star (95%).
  • Confidence building measures: 4 star (90%).

CLIMATE CHANGE

Whilst ATLAS regards all ESG factors as important to our analysis, we believe that climate change and energy transition are the risks that will have the most fundamental impact on the companies in our investment universe and so are the risks to which we pay most attention and on which we spend the most time modeling.

It is inevitable that governments will implement material climate policy actions over time and that the combination of these climate policies, together with technological evolution, will lead to material changes in global energy systems. This is likely to have profound implications for infrastructure assets, some of which will be beneficiaries of this change whilst others may see their businesses significantly disrupted.

ATLAS has an integrated approach to measuring the impact of future climate policies within all its financial models. The ATLAS approach evaluates the expected investment return of each company in our universe under three different climate policy scenarios:

  • Base Case: The world implements climate policy at a firm but moderate pace. Energy transition occurs in a meaningful but relatively orderly manner. Certain assets become stranded.
  • Fast Transition: Climate policies implemented at an accelerated pace, disrupting several industries and leading to stranded assets in a number of fossil fuel related sectors.
  • Delayed Action: Minimal climate policy in the near term. However, physical climate change prompts more severe policies over the longer term which leads to market disruption and stranded assets.

The ATLAS portfolio construction approach limits the ability of the portfolio to hold stocks which are materially negatively affected under a Fast Transition scenario.

Physical Risks

Increased costs of climate events will increase capex forecasts which will either directly reduce returns or will impact any excess returns earned through regulatory outcomes. Therefore, lower forecast returns will result in companies with high physical risk not being selected compared with similar risk/return assets.

Click here to view our Climate Change Summary Paper

 

 

SUSTAINABLE FINANCE DISCLOSURE

The ATLAS Global Infrastructure Fund (the “Fund”) discloses under Article 8 Fund of the Disclosure Regulation. The Investment Manager of the Fund is ATLAS Infrastructure Partners (UK) Limited (the “Investment Manager”). The Fund promotes environmental characteristics and seeks to invest in companies that follow good governance practices within the meaning of Article 8 of the Disclosure Regulation. In seeking to achieve the investment objective of the Fund, the Investment Manager aims to deliver long-term sustainable investment outcomes through the incorporation of environmental, social and governance (ESG) risks into every stage of analysis and decision making in the investment process.

Click here for ATLAS Article 3 and 4 disclosures

Click here for ATLAS Level 2 disclosures