Shami Nissan, head of sustainability at Actis, reflects on the past year and looks forward to 2023.
Looking back at 2022, were there any pivotal events, moments or developments in terms of sustainability in private markets?
The growth of impact-linked loans – lending by banks at more preferential terms based on the achievement of set impact targets. This means the definition about what sustainable investing actually is – as well as measuring it, verifying it and reporting it – is becoming more important.
In February this year we secured a $1.2 billion impact-linked financing for our latest energy fund – the revolving subscription credit facility arranged by Citi and Standard Chartered pioneers a new course for impact-linked loans in private markets, by both incentivising and measuring environmental and social outcomes of investments.
Thinking specifically about private markets, do you think the industry has made progress on climate in the last year? Where are the bright spots? Where has it disappointed?
A bright spot would be a better understanding of a “Just Transition” sustainability is holistic and we must ensure the benefits of the transition are shared widely with nobody left behind. Sustainability is about being here today and tomorrow – and that’s particularly important in a long-term investment such as infrastructure. I’d like to see the global platform shift towards a ‘Global South’ agenda”, with much more focus on delivering a ‘just’ transition that incorporates social considerations.
Despite commitments to ‘phasing down’ fossil fuels, geopolitical issues have dominated agendas of policymakers. Energy security challenges serve to emphasise a dependency on imported fossil fuels, and highlight the urgency of transitioning to domestic renewable power. It is crucial that political will is re-galvanised – the urgency is greater than ever. We must be bold and ambitious and translate ambition into action. Let’s create the right frameworks and incentives for high emitters to decarbonise and fast-track net zero strategies – it’s time to take these ideas out of the conceptual and prove what can be done.
Aside from climate, which other areas of sustainability will be prominent on your agenda and why?
Other focus areas are digitalisation, long life infrastructure and Diversity Equity and Inclusion (DEI). We will be working on infrastructure projects in the sectors of renewable power generation, regulated utilities in areas such as electricity transmission and distribution, toll roads, and district energy.
Making positive changes when it comes to DEI is coming to the fore and something we prioritise. We embed inclusive practices across our businesses and we believe this approach isn’t just important in supporting fairer societies – it helps drive performance too. We also believe that these inclusive practices are something that should be in focus not only at our portfolio companies, but at our own business as well.
How are more emerging topics like nature/biodiversity occupying your time and resources?
Biodiversity- and nature-positive opportunities are a big focus for Actis. For us this means infrastructure that supports the ‘just transition’ in the fullest sense – infrastructure which accelerates the world towards net zero, is resilient to climate shocks, inclusive and equitable, and which is nature positive.
One example of this in action is Actis portfolio company BTE Renewables, an African wind and solar business that has successfully implemented a pioneering vulture mitigation and conservation programme, one of the most unique in the world. Vultures are one of the most endangered groups of birds in the world and BTE sought to conserve a colony of Rüppell’s vultures during the development, construction and operation of the 100MW Kipeto Wind Farm.