P&I Supplement: Research for Institutional Money Management

Published:  August 2023
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This special issue of the Research for Institutional Money Management supplement to Pensions & Investments, which aims to provide institutional investors with an academic research perspective on one of the most pressing issues facing them today. We first look at the use of data to produce a benchmark or comparable (“comp”) of the climate risks of infrastructure companies. Few data

Summary

This special issue of the Research for Institutional Money Management supplement to Pensions & Investments, which aims to provide institutional investors with an academic research perspective on one of the most pressing issues facing them today.

We first look at the use of data to produce a benchmark or comparable (“comp”) of the climate risks of infrastructure companies. Few data points are available for comparable assets and a typical ‘comparable’ can look very ad-hoc and unrepresentative if it is based on fewer than a dozen datapoints. We discuss EDHECinfra& Private Assets data that is both granular and robust.

We then present a model that intertwines financial and macro-economic variables with Network for Greening the Financial System (NGFS) scenarios to make asset-level, scenario-dependent projections until 2050 of financial indicators such as revenues, profits, discount rates and valuation.

We summarize the findings of a new paper in which we examine the public’s sentiment toward wind power generation in the United States and the United Kingdom. Monitoring public attitudes toward infrastructure sectors is necessary to detect changes in public opinion, intervene promptly, and ensure projects can develop without interruptions. However, monitoring public opinion remains a challenge. Our study applies Natural Lan- guage Processing (NLP) techniques to analyze various text sources and to provide the infrastructure industry with novel Social Acceptance Indices that indicate public support and social risk factors.

Finally, we present a new study by EDHECinfra & Private Assets, which indicates that USD 1.6 trillion of the European infrastructure asset class (European Economic Area and the United Kingdom) by size is likely to qual- ify as sustainable under the EU Taxonomy for Sustainable Activities, while only USD 10 billion of assets by size is likely to have no sustainable characteristics and could be stranded in the transition to a low-carbon economy. An additional USD 235 billion of infrastructure is not aligned with the EU Taxonomy’s definition of sustainability.

We wish you an enjoyable read and extend our warmest thanks to P&I for their collaboration on the supplement.