Environmental, Social and Governance (ESG)
Octopus Renewables Infrastructure Trust (ORIT) has a core impact goal to accelerate the transition to net zero through our investments into building and operating a diversified portfolio of renewable energy assets. By channelling capital towards sustainable outcomes that mitigate climate change, ORIT aims to contribute to international efforts to limit the global temperature in this century to below the Paris Agreement’s target of 2 degrees.
This impact objective is clearly defined and aligned to the ORIT’s investment strategy. The assets generate renewable energy which in turn generates a yield. The renewable energy generated supports the transition to net-zero by replacing unsustainable energy sources with clean power.
We measure progress against our core impact objective through ESG Key Performance Indicators (KPIs). These include: amount of funding committed into renewables, gigawatt hours (GWh) of renewable electricity generated and tonnes of carbon avoided.
We embed ESG considerations into our investment processes, seeking opportunities where possible to implement initiatives that enhance the environment and communities we operate in.
Our ESG approach: Performance, Planet and People
In support of our impact ambitions, ORIT has developed an ESG and Impact strategy which is based around three pillars: Performance, Planet and People.
This framework embeds ESG risk factors and considerations into investment processes, asset management and reporting, which is reflected in our ESG policy, reviewed annually by the Board of Directors. This enables ORIT to measure and track the positive impact its investments have for investors, the environment and society.
Build and operate a diversified portfolio of renewable energy assets, mitigating the risk of losses through robust governance structures, rigorous due diligence, risk analysis and asset optimisation activities to deliver investment return resilience.
Consider environmental factors to mitigate risks associated with the construction and operation of assets, enhancing environmental potential where possible.
Evaluate social considerations to mitigate risks and promote a ‘Just Transition’ to clean energy.
In addition to a fund-specific ESG Policy, our investment manager, Octopus Renewables, has a number of policies and processes that support our commitment to ESG matters, including an ESG policy, equal opportunities policy, modern slavery policy, whistleblowing policy and conflicts policy. Their ESG Committee monitors fund management teams’ adherence to the Group and fund policies.
Reporting on ESG
We choose to report our impact through KPIs and in line with the UN Sustainable Development Goals (SDGs). The UN SDGs aim to create a better future for all in relation to ending extreme poverty, fighting inequality and injustice, and protecting our planet by 2030. These SDGs have become part of the universal language for reporting on the impact of investments.
Our core impact goal directly contributes to the UN SDGs 7, 11 and 13 but ORIT also contributes to a broader set of SDGs as a result of its additional impact initiatives and business processes.
Reducing reliance on fossil fuels for energy by investment into renewable energy generation assets.
Reducing the adverse environmental impacts of cities and communities through renewable energy generation.
Demonstrating commitment to the Paris Agreements and contributing to decarbonisation of the economy through low-carbon, renewable energy assets.
Broadening implementation of anti-poverty strategies via community benefit agreements and initiatives.
Reducing pollution through the reduction of emitted green house gases (GHGs) by the installation and management of clean, low-carbon energy generation assets. Championing health and safety and promoting employee wellness.
Supporting a just transition to a low-carbon economy.
Using expertise and latest technologies to maximise electrical output and future-proof energy systems.
Conducting human rights due diligence and providing access to remedy.
Preserving integrity of land through investment in low-impact and low-polluting technologies and the introduction of environmental initiatives through active asset management, supporting biodiversity and the ecosystem.
Additional impact initiatives positively impact our Performance, People and Planet stakeholders and are categorised by four impact themes:
Driven by the production of renewable energy. Aim to promote sustainable cities and communities and mitigate the impacts of climate change through additional social and environmental initiatives.
Propagate positive change through explorative collaboration and setting targets with key partners such as investors, asset managers and operation & management contractors. Have an active presence in lobbying for progressive government initiatives.
Invest time and resources into promotion of entrepreneurship and asset performance optimisation. This includes exploration into low carbon transition enabling opportunities and technologies.
Equality & wellbeing
Encourage employee, contractor and community wellbeing through robust governance structures, health & safety management, educational training and workplace engagement. Promote equality measures through transparent diversity initiatives and reporting, educational opportunities and volunteering activities.
Strengthening our approach through external ESG focused organisations
A need for a sustainable global financial system is recognised by international organisations and frameworks, and ORIT supports and is aligned to many of them.
We incorporate ESG criteria throughout our investment cycle and ongoing management and alignment with external ESG focused organisations allows us to strengthen, authenticate and measure our progress on our ESG approach
Taskforce on Climate-related Financial Disclosures (TCFD)
Whilst renewables represent a climate solution, it is not exempt from the potential impacts of climate change . ORIT recognises that there are a number of climate-related risks and opportunities that may have a material financial impact on ORIT’s performance. For this reason, ORIT supports the recommendations of the TCFD.
The PRI is a voluntary framework concerned with the incorporation of ESG considerations into the investment decision making process. It provides a basis for potential and existing investors to judge the quality of a company’s ESG processes and positioning within an industry sector.
Octopus Group is a PRI signatory, demonstrating its commitment to responsible investment and placing ORIT at the heart of a global community seeking to build a more sustainable financial system.
Taskforce for Nature-related Financial Disclosures (TNFD)
Nature and its ecosystem services are essential inputs to many businesses. However, financial institutions are currently unable to fully identify, measure and manage nature-related risk. 2021 will see the launch of the TNFD. The TNFD will provide these institutions with a framework to assess and manage nature-related risk, helping to redirect global financial flows toward nature-based solutions.
ORIT will continue to follow the progress of the TNFD launch and look to implement TNFD guidelines as soon as they become available.
EU Taxonomy Alignment
The EU Taxonomy is a classification system for sustainable activities designed to help investors identify “green” environmentally friendly activities. This is aimed to demonstrate investments that are sustainable, ones that make a substantial contribution to climate change mitigation or adaptation, while avoiding significant harm to other environmental objectives and complying with minimum safeguarding standards.
Octopus is a signatory to the International Finance Corporation ‘Impact Principles’ which outline the Operating Principles for Impact Management. The Impact Principles provide a framework for investors to ensure that impact considerations are purposefully integrated throughout the investment life cycle.
To increase transparency and authentication of impact management systems, signatories are required to publish an annual disclosure statement and an independent verification statement.
Sustainable Finance Disclosure Regulation (SFDR)
The SFDR is a legislative tool designed to reorient capital towards more sustainable businesses while combating ‘greenwashing’. A key part of the SFDR is linked to transparency, explaining how managers take adverse impacts on sustainability factors into account.
Although ORIT is not obligated to comply with the SFDR, ORIT supports the aims of this regulation.
LSE Green Economy Mark
The Green Economy Mark identifies London-listed companies and funds that generate between 50% and 100% of total annual revenues from products and services that contribute to the global green economy.
On admission to the London Stock Exchange (“LSE”), ORIT was awarded the LSE’s Green Economy Mark, recognising the Company as a significant contributor to the transition to a zero-carbon economy.
ORIT has registered through the IMP+ACT alliance platform, an interface that enables funds to demonstrate their impact strategy and the contributions their investments are having. This is a way to share best practice approaches and encourage collaboration and progression in the impact space.