Executive summary
Infrastructure provides the foundations for a more sustainable economy. The realignment of the global economy with a model that arrests environmental decline and promotes resilience, fairness and inclusivity is driving growing demand for new and updated infrastructure.
Government spending and incentives focused on weaning societies off carbon-intensive processes provide tailwinds for companies that provide sustainable infrastructure, strengthened further by swelling ranks of sustainably minded consumers and businesses.
Opportunities are being created across a spectrum of areas, from the new energy infrastructure enabling the decarbonisation of the global economy to social infrastructure whose importance has come into sharper focus following the COVID-19 pandemic. Digital infrastructure too has become integral to work and life today.
We look to capture the breadth of the opportunity set in the Impax Sustainable Infrastructure Taxonomy, which maps out the sectors and sub-sectors where we perceive investable companies within the global listed equities universe.
In this report, we outline why we believe infrastructure is at an inflection point and how the transition to a sustainable economy creates a range of opportunities for companies whose products and services can serve as its foundations.
Key points
- Climate change, demographics and the impact of the COVID-19 pandemic are driving a new wave of infrastructure investment
- The transition to a more sustainable economy not only requires new infrastructure, but also the replacement and substitution of ageing old economy infrastructure
- Government policy and corporate and consumer demand are catalysing investment in sustainable infrastructure
- An expanded opportunity set means listed equities today sit alongside debt and private equity as a viable mechanism for investing in infrastructure
- The Impax Sustainable Infrastructure Taxonomy identifies long-term investment opportunities in listed equities
- The transition to a more sustainable economy will be enabled by digital economy and social infrastructure as much as infrastructure that delivers clean energy and water
- Listed infrastructure can offer relatively reliable income and a high dividend yield, compared to the overall stockmarket, and play a diversifying role within an allocation to equities
- Sustainable infrastructure stocks have the potential to deliver long-term growth, help mitigate portfolio climate risks and deliver an impact