The concept of sustainable infrastructure is becoming more widely accepted as a suitable option for investors. Managers such as Vantage bring an additional enhanced focus on sustainability, including tailored portfolio construction and active engagement approaches to environmental, social and governance issues.

Generally we believe that assets and projects in this strategy would be expected to encounter similar short term impacts from the COVID-19 crisis as those more widely applicable across infrastructure. However a few points specific to sustainable infrastructure are worth making, focusing more on the medium-longer-term future:

1. There will be more of a reckoning on sub-sector demand and supply and some consequent dispersion of attractiveness as a recovery develops.
2. For example waste and wastewater are always generated, whether people work at home or in the office. So demand for that sort of solution is unlikely to change materially though the sub-structure of the industry may need to adapt. Centralised processing is still likely to be necessary and so construction and returns for such assets may not be diminished.
3. Localisation and personal resilience resources (including food, energy and healthcare resources) will likely be considered higher up the agenda for individuals and governments than distance travel and discretionary spending. These drivers, if significantly different in future, will also impact the attractiveness of specific projects.
4. We expect a renewed focus on and increased weighting in investors' portfolios to social infrastructure as perhaps a more sustainable, resilient allocation - ie government backed, population usage driven assets (eg hospitals/healthcare, security) - at the expense of GDP-driven assets (eg transport, energy, etc.). A limited or fixed supply of such assets may tend to support enhanced return for risk in such assets, subject to regulatory interventions and potential oversight.

[NB The EU Taxonomy, which forms part of the Action Plan on Sustainable Finance, has been developed by a Technical Expert Group (TEG) set up by the EC in 2018 to determine whether an economic activity is environmentally sustainable. The TEG was set up to assist the EC in developing the EU Taxonomy, an EU Green Bond Standard (now live, in action), benchmarks for low-carbon investment strategies and guidance to improve corporate disclosures of climate-related information. Please see The EU Taxonomy: Summary overview; and Using the Taxonomy for more information.]