Gresham House Energy Storage | ESG

The central sustainability focus of the Gresham House Energy Storage Fund plc (the Company) is investing in and increasing Battery Energy Storage System (BESS) capacity to support the decarbonisation and electrification of energy systems. BESS play a fundamental role in supporting the decarbonisation of energy systems and consequently the broader economy. In this way, the Company, aims to contribute very positively to climate change mitigation and net zero strategies.

Through its provision of investment in, and development of new BESS capacity, the Company demonstrates additionality. “Additionality” is a term used by impact investors that demonstrates the meaningful contribution that an entity has in addressing environmental or social challenges through the deployment of capital and management expertise that enables the creation of solutions that would otherwise not exist. The Company aims to monitor and report on four key metrics that demonstrate its additionality and contribution to climate change mitigation going forward. These metrics show the direction of travel and are most important in demonstrating the positive sustainability outcomes of the Fund. The metrics are:

• Operational BESS connection capacity (MW)
• Operational BESS battery capacity (MWh)
• Carbon emissions - scope 1,2 and 3 - (tCO2)
• Carbon emissions avoided (tCO2)

As reliance on renewable power grows globally there will be an increased need for energy storage to stabilise energy networks and ensure supply and demand are balanced in a cost effective and environmentally beneficial manner. Therefore, operational BESS capacity (MW and MWh) is the biggest indicator of the Fund’s impact on enabling the transition to a net zero electricity system and will be a key focus for the Manager.

Gresham House is the investment manager of Gresham House Energy Storage and therefore the ESG information on this page and policies here reflect those of the investment manager and the New Energy division, through which the Company is managed.

The Manager’s work for the Company is part of its commitment to be a leader in sustainable investment as set out in the GH 2025 Strategy. The Manager recognises the importance of environmental, social and governance considerations and incorporating them into the investment process to deliver long term, sustainable growth and consistent positive outcomes across local and national communities.

To support this ambition, as well as its commitment to responsible investment as a signatory to the Principles for Responsible Investment (PRI), the Manager has established an approach to sustainable investment that is based on three core components:

• its Sustainable Investment Framework;
• commitments and committees;
• policies and processes.

These three core components drive a common approach across all the Manager’s investments and ensure the Manager's investment activities reflect its public sustainable investment commitments.

These commitments are applied by the Manager in respect of the investment processes and asset management approach of the Company. The Manager has developed and published a New Energy Sustainable Investment Policy which is specific to the Company's sector. This policy describes the Manager’s approach to sustainable investment for the New Energy division and highlights the commitments to investing sustainably which apply to the Company.

The Manager has also integrated sustainability into the investment process for all divisions which starts with the completion of a proprietary ESG Decision Tool. The ESG Decision Tool  supports the identification of potential material ESG risks that need to be managed and mitigated and which helps shape the due diligence process prior to investment into a new battery site. The Tool aims to provide a rational and replicable assessment of key ESG risks which should be considered prior to an investment decision being made. The Tool continues to be applied for all new investments prior to acquisition. More information on the Manager’s sustainable investment activities can be found on its website and in its annual Sustainable Investment Reports.

The New Energy Division, which is responsible for the management of the Company, is supporting the energy transition away from fossil fuels towards one dominated by renewable energy. The strategy aligns with national and international goals to decarbonise energy generation and supports the transition to a low-carbon economy.

ESG considerations are integrated into the lifecycle of each investment as follows:

01 Preliminary due diligence

High level assessment carried out to identify material ESG matters requiring further investigation during the due diligence stage. If certain risks are unlikely to be manageable or mitigated, then the investment team may choose not to proceed at this stage.

02 Due diligence

The Manager's ESG Decision Tool is used to uncover material ESG risks that need to be mitigated and monitored and to identify ESG opportunities that have the potential to drive value, now or in the future. Where necessary specialist consultants are engaged to support the diligence process and a summary of the ESG analysis is discussed with the Investment Committee.

03 Investment appraisal

Investment recommendations to Investment Committees include an assessment of material ESG risks and opportunities identified in due diligence which are then factored into the decision-making process. Appropriate risk mitigation approaches will also be referenced and assurance that the business is open to making improvements is sought.

04 Asset operation

The team aims to construct and operate our projects with minimal disruption to local communities and the environment. Construction and operational contractors are subject to ongoing review and the requirement to manage material ESG risks is included in contract terms. Compliance with planning conditions is stringently adhered to and monitored. The team continue to assess how it can enhance positive environmental and social impacts of its projects.

The Investment Manager identifies supply chain sustainability as a key area to be managed for long-term risks and opportunities for the Company. The Manager has a supply chain policy for BESS to ensure it works with suppliers and contractors who aim to reduce the social impacts of their battery production processes and operations.  The Manager intends to update the supply chain policy to meet best practice in the market and to continue to effectively manage potential supply chain risks.  

The Company supports the disclosure recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and has adopted the recommendations in its annual reporting.

The Company’s investments in BESS play an important role in facilitating the continued deployment of renewable energy generation. Renewable energy generation through wind and solar is inherently intermittent and the increased penetration of renewable energy generation therefore increases the challenges facing energy system operators to ensure a stable supply of energy.

BESS has the ability to help deal with some of those challenges by providing ancillary services that support the transmission network balancing system and by storing energy from the electricity grid during period of high supply / low demand and releasing energy to the Grid during periods of low supply / high demand.

To date, the roll-out of BESS has lagged behind the deployment of renewable energy. The Company has been targeting rapid growth of its investments in BESS to help close the gap and support the future increase in renewable generating capacity and thereby reduce dependency on fossil fuels.

The Board and Investment Manager consider that the most important climate-related metrics for the Company relate to the scale, availability and efficiency of the Company's BESS investments, and are measured as:

• Total operational BESS capacity at the year end (MW and MWh)
• Weighted average BESS capacity for the year (MW)
• Carbon emissions avoided (tCO2e)

The Manager commits to monitoring and reporting against these metrics. In addition, the Investment Manager will monitor carbon emissions and carbon intensity metrics in line with TCFD recommendations for the financial industry, including:

• GHG emissions - scope 1,2 & 3 carbon emissions (tCO2 e)
• Weighted average carbon intensity (WACI) (scope 1+2 emissions/£mn revenue)

The methodology used to calculate the average carbon intensity and carbon emissions are aligned with the Greenhouse Gas Protocol and the Partnership for Carbon Accounting Financials (PCAF).