The impact advantage: a playbook for sustainable infrastructure investing

In Short

Impact investing has evolved significantly from its early days. Today, it is a sophisticated strategy that not only mitigates harm but actively seeks to generate positive social and environmental outcomes. Infrastructure, with its pivotal role in society, is at the forefront of this movement.
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By Benjamin Howard-Cooper, Head of ESG Research

Executive summary

In an era of headwinds against generic sustainable investment strategies, infrastructure, and in particular impact in infrastructure, stands out as an investment approach that delivers stable financial returns and robust sustainable outcomes. Impact investing has evolved significantly from its early days. Today, it is a sophisticated strategy that not only mitigates harm but actively seeks to generate positive social and environmental outcomes. Infrastructure, with its pivotal role in society, is at the forefront of this movement. From renewable energy projects that reduce carbon emissions to water systems that ensure clean access for all, infrastructure investments are spearheading the drive towards a sustainable future.

In general, infrastructure assets demonstrate resilience against market headwinds due to their strategic importance in achieving societal goals and development. Therefore, within this asset class in particular, we can distinguish between sustainable investment strategies that generate positive impacts and Impact investment strategies.

Indeed, within a sustainable investment strategy, GP s can identify the projects that make the most of market opportunities due to their positive contribution. This approach supports an authentic and clear investment narrative within the sustainable investing space, where broad themes untethered to real life outcomes have fallen out of favor with many LPs. It acknowledges the non-financial benefits of investing without imposing formal impact methodologies, distinguishing it from funds that specifically target impact returns alongside financial gains.

On the other hand, formal Impact strategies that rely on the robust frameworks of international standard setters and prioritize non-financial outcomes alongside returns have proven to be well-aligned with the infrastructure sector. The inherent measurability of infrastructure, a key feature of dedicated impact strategies, has meant that the investment c lass has delivered compelling investment opportunities, particularly as reporting frameworks and measurement systems have consolidated to provide the market with a clear basis for comparison.

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The impact advantage : a playbook for sustainable infrastructure investing

The global impact investing market has experienced remarkable growth, with assets under management surpassing $1.5 trillion in 2024. Infrastructure plays a crucial role in this market, driven by increasing interest from institutional investors aiming to align their portfolios with specific sustainability goals, including net-zero targets and the UN S D G targets. While renewable energy remains a flagship sector, emerging areas like decarbonized transport and energy storage are gaining momentum, offering diverse opportunities for investors.

The key to successful Impact investing in infrastructure lies in balancing risk, return, and impact. This ensures that investments are not only financially sound but also contribute to long-term societal benefits. By aligning capital with projects that offer stable cash flows and significant positive outcomes, investors can achieve a synergy that enhances both financial performance and impact.

Looking  ahead,  the  impact  infrastructure sector is poised for significant transformation. Innovative investment strategies will continue to evolve, addressing the interconnected nature of social, environmental, and economic challenges. Transition finance will play a key role in helping carbon intensive industries shift towards sustainability, while investments in social infrastructure will address critical needs in healthcare, education, and housing. 

As GPs, it is critical that we get this moment right. Ensuring that as investors we are clear in our intentions, diligent in our application and transparent in our measurement will support the continued growth of the sector. Clearly defining how impact is used in sustainable investing strategies, and creating a clear delineation between the colloquial use from impact versus formal Impact investing strategies is critical. As a result, L Ps will have a clear range of investment opportunities to reach target returns while delivering on real world impact.

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Important Informations

This document has been prepared by Infranity S.A.S., a simplified joint-s tock co mpany (société par actions simplifiée) under the laws of France, with its registered office at 6 rue Ménars 75002 Paris France, registered with the Paris Registre du Commerce et des Sociétés under number 831 26 6 721. Infranity S.A.S is an asset management company authorized by the French Regulator “Authorité des Marchés Financiers” under number GP- 19000030 .

None of the information contained in this document is intended to constitute investment, legal, tax, accounting or other advice. This document is produced purely for the purposes of providing indicative information. All statements of opinion and/or belief and all projections and forecasts contained in this presentation represent Infranity’s own assessment and interpretation of information available to it as at the date of this presentation. Infranity will not be held responsible for any decision taken or not taken on the basis of the information contained in this document, nor in the use that a third party might make of the information. This information may not be copied, reproduced, modified, translated or distributed, without the prior written approval of the management company, for any third person or entity in any country or jurisdiction which would subject the company or any of its products to any registration requirements within these jurisdictions or where this might be considered unlawful.

More information on the product s and services provided by Infranity are available on our website www.infranity.com and for further information relevant to our sustainability commitments: https://infranity.com/our-impact.

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