Sustainability report marks an ‘inflection point’ for MIRA

The report signals that it's 'stepping up' its commitment to ESG principles both in terms of how the firm acquires businesses but also how it manages its existing assets, Chris Leslie explains.

Macquarie Infrastructure and Real Assets is taking a more integrated approach to sustainability, an effort marked by the release of its inaugural report on sustainable infrastructure investments, which it says is an “inflection point” on how it will approach asset management.

In the report, MIRA, which manages A$215 billion ($153.9 billion; €130.6 billion) in assets, highlighted the efforts it has taken over the past year to disclose the carbon footprint of its A$168 billion infrastructure portfolio and steps that are underway to implement sustainable investment strategies.

Chris Leslie, global head of sustainability at MIRA, which is the real assets-focused investment division of banking giant Macquarie Group, tells sister publication Infrastructure Investor in an interview that the firm’s Infrastructure Sustainability Report “signals that we’re stepping up for [environmental, social and governance principles] in a far more integrated way in terms of how we acquire businesses and run them day-to-day.”

Leslie adds that the goal of MIRA’s sustainability push is to “embed a lot of these principles far more throughout what we do, what our portfolio companies do and how they operate, than has been the case up to this point.”

In describing the firm’s sustainability approach, MIRA said in the report that it views investments as “materiality-based,” adding “there isn’t one standardised set of sustainability conditions.” MIRA focuses on four themes it believes will drive the conversation around sustainable investment in the future: adaptation and decarbonisation; social licence; value creation; and diversity and capability.

The first initiative MIRA said it has started to support over the past year is to encourage portfolio companies to “identify sustainability initiatives” that improve the value of their businesses. “Quick wins” that MIRA highlights include portfolio companies switching light bulbs to LEDs to save energy and improve earnings before interest, taxes, depreciation and amortisation. Larger initiatives MIRA has tracked at its portfolio companies include the installation of onsite solar power generation and the transitioning from fossil fuel generation to cleaner sources.

In 2019, MIRA also formalised a policy “restricting investments in businesses exposure to coal”. Along with limiting future investments in coal-fired generation, MIRA states it is now actively encouraging and supporting its portfolio assets to decarbonise and plans for a transition away from traditional energy sources to renewables and cleaner sources.

The firm announced in October a partnership with the Australian government’s Clean Energy Finance Corporation, which committed A$100 million towards MIRA’s Australian infrastructure platform. It aims to reduce carbon emissions and improve the energy efficiency of infrastructure across the firm’s investments in the airport, electricity, port, rail and water sectors.

To achieve this objective, MIRA states in its sustainability report, the firm and CEFC established an emissions commission, which facilitated a decarbonisation workshop with representatives from MIRA’s portfolio business.

In measuring the firm’s Australian infrastructure greenhouse gas emissions footprint, the firm found that scope 1 (direct) and scope 2 (indirect) emissions were estimated at 184,764 tonnes of carbon dioxide equivalent, of which 82 percent was generated by the utilities sector. MIRA explains that those emissions are mainly due to power losses arising from transmission inefficiencies over long distances.

The rail sector is the second-highest emissions-intensive sector in MIRA’s portfolio, contributing almost 13 percent of scope 1 and 2 emissions, with the remaining footprint split between airports, ports and digital infrastructure.

“As Australia transitions to a greater mix of clean energy generation, this will naturally decarbonise the energy supply transported through the grid and reduce GHG emissions associated with line losses over time,” the report states.

MIRA also outlines five assets from its Australian infrastructure portfolio for which it has now established baseline emissions inventories and aspirational science-based emissions reduction targets, based on the framework of the internationally recognised Science Based Targets initiative.

Billed as the “world’s largest infrastructure fund manager”, MIRA has held the top spot in the Infrastructure Investor 50 ranking since inception. As such, it was among the top 20 global infrastructure investors and managers Infrastructure Investor surveyed for the May cover story that explored what these firms are doing to combat climate change. MIRA provided some answers to the questions but declined to make them public.