Case study: Incorporating sustainability in the selection of infrastructure managers

A large CST client was transitioning into infrastructure assets with a substantial investment allocation. The investment advisor organised a “beauty parade” featuring three highly rated managers in this sector. At the conclusion of the selection day, two managers were identified as preferred providers. However, the Trustees raised concerns regarding the sustainability characteristics of certain assets within the energy sector of one of the funds, leading to the process being paused to conduct further due diligence.

Additional discussions were held both internally, through a “peer panel” comprising four independent LawDeb Trustee Directors and consultations with two other Trustees with expertise in this area, and externally, with an ESG expert from the investment consultancy. These discussions aimed to assess the ESG characteristics and risks of the relevant assets in the context of a future energy transition. As a result, the Trustees decided to introduce a fourth asset manager into the process, who was ultimately appointed in place of one of the initially preferred managers.

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