First Sentier Investors (FSI) provides investment management services to institutional and wholesale investors across a diverse range of specialist asset classes, with Funds Under Management of EUR 153.4bn
“We’ve been doing ESG as an absolute core strategy for far longer than it’s been fashionable,” says Niall Mills, Global Head of Infrastructure Investment at First Sentier Investors. As one of the pioneers of infrastructure investing, FSI has over 25 years’ experience across sectors and economic cycles. The Direct Infrastructure team manages EUR 11.3bn of capital.
At FSI, sustainability and infrastructure investment go hand in hand. “We see ESG as essential to sustaining the value of an enterprise”, explains Mills. “If you’re investing in a utility or an essential service, it should still be there in 20 years. You have a social contract and responsibility.”
This is evidenced by the climate action goals of FSI’s portfolio companies. For example, ferry operator Scandlines has invested over EUR 300m in green technologies since 2011 as part of its vision to achieve zero-emissions operations. Similarly, Nordion Energi aims to become the first 100% green gas transmission grid in Europe, while Evos has set a target of 50% reduction in Scope 1 and 2 emissions by 2030.
By targeting more stable assets, FSI can add sustainable value over the long term by imbedding improvements into the business. “The most important thing”, according to Mills, “is recognising the need to constantly improve the businesses in the portfolio and delivering for customers and stakeholders to ensure that, in ten or twenty-years’ time, every enterprise or service is still valuable.” This includes innovating to deliver “everything their customers want and more”.
But how does Mills influence companies he is investing in to sign up to ESG and best practice?
“We do that from the bottom up, not top down. If you don’t effect change on the front line, if you don’t align and motivate your frontline staff and operatives to act, nothing will change. Policies don’t create change.” He believes in encouraging people to want to do things better for their customers and for the environment. “When you build that momentum up it is unstoppable. It’s absolutely fantastic when you see that working.”
Nonetheless he has a reflective take on ESG and Net Zero being the buzz words of the moment: “It’s great to see this all spreading into real practice and not just protest. But we aren’t influenced by fashion; we are focussed on delivering our promise to investors. We never lose sight of the fact we’re investing to protect people’s quite often modest pensions. The responsibility is real.”