ALSTON Macquarie Investment Management has a big focus on ESG. It’s also implicit to our process within the PP platform. The reason I say this is there’s a large part of ESG – especially the ‘G’ – that is part of any decent credit underwriting.

The ‘G’ part covers management governance, integrity and how ‘good’ companies are. On the ‘E’ and ‘S’ side, it varies from company to company. But we would always be concerned about any environmental-health liability exposure.

The approach is not formalised within the PP group. But we recognise that ESG is becoming increasingly important to some investors in Europe and Australia. My suspicion is that it will become a more overt part of our process.

BEHRING ESG is not currently an actively-managed KPI for us. We have invested in green bonds, we like the good they do and we have done quite a bit of sustainable-energy investing. However, it’s not a formal part of our decision parameters.

I agree with Alex Alston, though – looking at ESG factors is part of good underwriting, even if it’s not formalised. 

ECHEVERRIA The whole issue of ESG is definitely something that is getting more prominence. We haven’t seen enough green demand to change market dynamics – it’s still the marginal dollar from USPP investors that is driving pricing.

Having said this, sustainable financing has accelerated a lot more than I would have thought. We do a lot of renewable project financing. It will get to the point where there are dedicated funds with a mandate to invest in socially responsible credits.

But with the size of the USPP market at US$80 billion and the public market at US$1 trillion, we will need a lot of socially responsible funds to start influencing the relative-value decision.

ITALIANO The fundamentals of the Australian energy market are vastly in favour of renewables. We are one of the few, if only, markets in the world where offshore wind makes no sense because the opportunity cost for onshore is so positive. We have a lot of land space, sun and wind, along with very low peak demand.

The ability to service our energy needs from renewable generation is naturally quite strong. When you couple this with investors’ general wariness about the longevity of coal, you have all the ingredients for a preference for renewable generation in the Australian market.

We are looking at this already, even in our organisation. We recover our capital cost over a 50-year period. When we make an investment on a connection asset, we need to make sure the asset will be required in 50 years’ time. This is a very different question when you’re looking at a coal-fired generator versus a renewable one.

The investor appetite, while not huge, is driving a small price difference for capital. It’s also already driving some of the investment decisions in the Australian energy market.

ITALIANO We include sustainability but not from a philosophical position. We deal with it from a fundamental risk position – particularly the ‘G’ part of ESG. We look at whether an asset will be able to wash its face over its life. We deal with this through the investment committee rather than through treasury.

LEWIS We raised A$150 million (US$108.5 million) through the Clean Energy Finance Corporation (CEFC) based on the environmentally friendly aspect of Moorebank. I understand this was the first corporate lending the CEFC did.

As an organisation, we try to be environmentally friendly in how we manage our business, and as an Australian Securities Exchange top-100 company there’s increasing focus on ESG. But it doesn’t drive our treasury policies.