In brief: ESG is a risk factor in infra debt, says BlackRock’s Daniel Fuchs

Daniel Fuchs, BlackRock's head of high yield infrastructure debt, highlighted the need to avoid physical risks and stranded assets at the Infrastructure Investor Global Summit last month.

ESG was less of a buzzword and more of a bomb at the Debt Forum opening panel at the Infrastructure Investor Network Global Summit in Berlin last month.

After discussing regulatory risks facing LPs in Europe and the US, Daniel Fuchs, managing director and head of high yield infrastructure debt at BlackRock, tackled another, less discussed risk: ESG.

“ESG is a risk factor and that is something you have to [consider] in every single investment, right? You need to make sure it’s not a stranded asset; you need to make sure you don’t have physical risks,” said Fuchs.

“Obviously you’re very well-placed to talk about it, because… [the Texas Permanent School Fund] withdrew $8.5 billion from BlackRock because you were too much on the ESG side,” Fuchs’ fellow panellist, Vivien de Gunzburg – founder, president and managing partner at Ceres Infrastructure Asset Management – reminded him.

“I have a different view,” Fuchs retorted. “It’s about choice [for LPs] and you can deliver [on] the choice.”