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Introduction

PiP takes the ESG issues associated with its operations very seriously.  It recognises the importance of adopting good standards in all areas of ESG and understands that ESG issues can and will have a material impact on the long term performance of the infrastructure assets that it manages.  As a result PiP has adopted certain corporate ESG policies and also embedded the assessment of ESG issues into its investment process to ensure that any issues are identified prior to the final approval of any investment.

Corporate ESG Policies

 

Environmental

Office Space – PiP occupies a single office space in central London so, unlike many other asset management firms, has no need for employees to be travelling between offices.

The office space is primarily leased by the PLSA and the PiP board do not have significant control over the environmental performance of the space.  The following outlines the principal arrangements in place for the management of the environmental and social impact of the office.

Recycling – the company operates a paper recycling scheme that ensures that waste production is limited.

Heating/Cooling systems – the heating and air conditioning systems are maintained to ensure that they work efficiently and at optimum temperatures in order to limit energy wastage

Lighting – the lights in the building are energy efficient and all lighting operates on a timer so that they automatically switch off if there is no movement for 30 minutes

Printing – print settings will default to double sided printing and the use of recycled paper.  External printers are also used

Travel – PiP employees do travel to see potential investors but at this stage all travel is limited to the UK.  Trains and other forms of environmentally friendly transport are always preferred and meetings are scheduled where possible so that long distance trips incorporate multiple meetings

Third Party providers – before engaging with third party providers PiP will often undertake an RfP process and where practicable this will involve an assessment of their approach to ESG.

Social

Health and Safety – PiP takes health and safety in the workplace very seriously.  All employees undergo a health and safety assessment of their workplace when joining the organisation. [James Crawford for further H&S work]

Governance

Board structure and independence – The PiP board is structured so that there is equal representation from our key stakeholders, PLSA and Founding Investors.  We have ensured that all Board members bring sufficient expertise in board governance and/or infrastructure.  In addition to Executive Board members and representatives of key stakeholders there is an independent Chairman who oversees the board.

Remuneration structures – PiP has established remuneration structures that are competitive, transparent and do not promote risk taking.

Auditor selection/independence of auditors – PiP’s auditors are BDO LLP who were selected in 2016 after an RfP process involving three top 10 auditing firms.  The decision was made by a panel of PLSA and PiP board members and neither BDO nor the individuals that work on the PiP account have any other involvement with PiP’s business.


 

Investment ESG Policies

The PiP investment team is committed to responsible investment and considers ESG issues carefully when analysing potential investments.

In the first instance the investment team places an emphasis on investments that have a positive environmental and social impact such as;

  • renewable energy projects that develop the efficient use of natural resources
  • Waste projects that promote the responsible and efficient waste management
  • PPF projects that ensure the continued development of vital social infrastructure such as schools and hospitals.

Over and above the selection of investments that are by their very nature socially and environmentally responsible, the assessment of specific ESG factors is an integral part of the investment process.

Each investment must go through a rigorous review and obtain approval by the investment committee.  There are two significant steps in this process where ESG issues will be identified;

  1. Initial approval prior to detailed due diligence – at this stage a ‘Deal Summary Paper’ is produced and presented to the investment committee for approval. Any ESG concerns and/or known potential deal breakers will be identified in this paper.
  2. Final approval before investment – the final ‘Investment Approval Paper’ will provide the output of detailed due diligence. This paper will include any and all ESG issues that have been identified during due diligence.  ESG issues will be risk rated and where it is considered a high risk there will be an explanation of how the issue is being addressed as well as outline any ongoing monitoring arrangements where necessary.  Some of the ESG issues that may be reviewed as part of a deal are in the table below with examples of what would constitute a deal breaker;
ESG area Issue Deal breaker
Environmental Pollution Environmental report has identified unacceptable levels of pollution that have not been addressed
Fossil Fuels Total reliance on power sources that require the ongoing burning of fossil fuels and no clear plan for a reduction in use of those power sources.
Waste Any known prosecution for irresponsible waste disposal
Social Community impact Any accepted negative impact to immediate surrounding community
Health & Safety Previous prosecutions for health and safety issues without clear evidence that the issued has been addressed
Human rights Evidence of child labour during the manufacture and operation of an asset
Governance Conflicts of Interest A member of the PiP Board or investment team has a financial interest in asset to be purchased
Lack of Board control PiP cannot have any representation on the board of an asset where they have an equity stake

 

The investment process is documented in detail and all members of the investment are required to adhere to it.  In addition each investment team member has an agreed set of objectives which includes the requirement to carefully consider ESG matters in all the deals that they are assigned as ‘lead’ on.

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