The role of infrastructure investment in climate risk management
The change from the emission intensive economy of today to a net zero economy won’t happen overnight, and it won’t happen by accident. For investors, an active and considered approach to portfolio and asset management will likely be
Infrastructure portfolios have a number of important roles to play in decarbonisation of the real economy. Of course, the operations of infrastructure assets need to decarbonise. But beyond this, infrastructure assets are critical enablers of
the decarbonisation of other sectors. Fulfilling this enabling role will require not only change to existing infrastructure assets, but a significant amount of new infrastructure to provide goods and services – especially energy –
in new ways.
The best way for pension funds and likeminded long-term institutional investors to protect their beneficiaries from the financial risks of climate change is to take all reasonable steps to support an orderly transition to a net zero world.
Zachary May, Executive Director, Strategy and Policy
Both transitioning infrastructure and “clean” economy infrastructure could be expected to generate attractive, stable, long-term returns, and both have a systemic risk mitigation role to play. Clean economy infrastructure also has
a portfolio risk mitigation role.
This paper outlines how investors can use their infrastructure asset allocation to help manage their total portfolio climate risk, whilst also channelling capital into greener projects that will assist in the mitigation of systemic (global) climate
About the author
Executive Director, Strategy and Policy
Joined in 2022
Zak May is an Executive Director at IFM Investors, and is part of IFM’s global management team. Zak is responsible for developing and leading IFM’s public policy program and supporting the firm’s strategy to represent a distinct form of capital that delivers superior sustainable long-term investor returns in a manner that respects the environment, labour rights and the communities in which IFM’s assets operate. He is also the co-lead of the IFM firm-wide climate change strategy.
Zak joined IFM with significant experience in both the public and private sector. Prior to joining IFM, Zak was Director of Policy for Industry Super Australia, where Zak led the development and advocacy of the industry superannuation sector’s policy positions, the organisation’s research function, and strategic projects on matters of common interest among the industry superannuation funds. Before relocating to Australia, Zak served on the executive staff of the United States Securities and Exchange Commission, after working as an attorney at Shearman & Sterling in San Francisco and at Weil, Gotshal & Manges in New York. Zak is a frequent participant in industry, government, and civil society expert panels.
Zak holds a doctor of law from New York University, and is admitted to practice law in several jurisdictions.