Octopus Renewables Infrastructure Trust | ESG

The Octopus Renewables Infrastructure Trust ("ORIT") Board view ESG as complementary to the core investment objective, and not as a cost to the Company. ESG processes and policies are a prudent risk management tool that improve the financial performance of the Company while reducing risks.

ORIT’s Investment Manager, Octopus Renewables, also shares this view. Octopus are values driven and their philosophy is embedded in their culture, their approach and the assets they manage. ESG is placed at the core of their investment business. Unlike some fund managers who might look at a very simple screening process to eliminate ESG risk (such as, no investment in fossil fuels/arms/tobacco/etc.), good governance and ESG are very much ingrained in the way they seek to originate and execute investments. ESG is embedded within diligence processes, investment and exit requirements as well as in ongoing portfolio and asset management.  

ORIT has positioned itself as an impact fund with a core impact objective to accelerate the transition to net zero through investments, building and operating a diversified portfolio of renewable energy assets.

ORIT’s investment strategy is to make investments in  the renewable energy sector, with a particular focus on onshore wind farms and photovoltaic solar (“solar PV”) parks, while excluding investments into fossil fuel or nuclear.

The approach to ESG and Impact is based around three fundamental stakeholder lenses: Performance, Planet and People and an impact objective has been set for each. This framework embeds ESG risk factors and considerations alongside measuring and tracking the positive impact that the investments we manage has for investors, the environment and society. These measures enable ORIT to responsibly achieve its mission to accelerate the transition to a future powered by renewable energy.

ORIT seeks to generate additional impact through impact initiatives. The initiatives associated with ORIT’s investments are aligned to the stakeholder lenses; Performance, Planet and People. ORIT has committed to at least one additional impact initiative per sub-portfolio within the first 12-18 months of acquisition.

More information on ORIT’s Impact strategy can be found on the ORIT website.

Examples of impact initiatives undertaken to date can be found on the ORIT website in the interim and/or annual report.

ORIT’s ESG policy is set by the board and performance is assessed annually.  The policy embeds ESG risk factors and considerations alongside measuring and tracking the positive impact that the Company’s investments have on its investors, the environment and society.

The Investment Manager ensures ESG is fully integrated through a comprehensive governance structure and continuous monitoring. ORIT’s ESG policy sits within a larger ESG framework and is positioned under a wider “Responsible Investment Policy”. The Octopus Renewables ESG team is continuously monitoring best practices in the industry as well as researching potential future disclosure requirements such as the Sustainable Finance Disclosure Regulation. Findings are shared internally and incorporated in policy and asset management plans, as appropriate.

ESG risks are considered in all stages of investing in renewable energy assets. On behalf of ORIT, the Octopus Renewables investment team is required to complete an ESG risk matrix as part of the investment committee paper submitted to the Octopus Renewables Investment Committee (“ORIC”). The ESG risk matrix is a tool used to drive interaction and warrant additional investigation or due diligence into ESG risks where necessary. This ensures ESG risks are identified and mitigated during the investment process.

The matrix is comprised of around 30 questions aligned to ORITs ESG policy and requires completion of due diligence questionnaires by key counterparties to enable the matrix to be completed. Materiality of risks included in the ESG matrix is determined using guidance from the Sustainability Accounting Standards Board (SASB) framework, that identifies financially material ESG risks by asset class. The key risks in our asset class are Political & Regulatory, Conflicts, Environment damage (Biodiversity, Carbon, Pollution), Health and Safety, Unfair advantage and Community Relations. An assessment of each deal is conducted three times throughout the investment process: at Approval in Principle, Final Investment Committee and at the Pre-Completion Stage. The matrix has a total possible score of 15, with a score of 9 required to indicated compliance with ESG Policy. 

Octopus Renewables work with a range of external service providers to manage ORIT’s portfolio of renewable energy assets, for example Construction Managers, Operations and Maintenance providers and External Asset Managers. To ensure continued compliance to the ORIT’s ESG policy, Octopus Renewables are committed to carry out an annual ESG review on each site’s material 3rd party service providers alongside HSE and quality reviews. This ensures that strategies to mitigate any new ESG risks are put in place in a timely manner. 

The Investment Manager’s senior team provides directorship services across all of our underlying investee companies ensuring each asset is actively managed in line with the ESG policy. The Investment Manager regularly reviews and monitors external service providers and aims to actively engage with and collate data from contractors to further improve ESG factors. 

ORIT is conscious of “impact washing” and therefore commits to transparency and accountability in how the impact of its renewable energy investments and associated initiatives are presented. ORIT will measure progress against its core impact goal through ESG KPIs. Typical ESG KPIs include: amount of renewable energy generated, equivalent homes powered, equivalent tonnes of carbon dioxide avoided, equivalent number of cars displaced from the road, equivalent number of trees planted.

Impact delivered through Performance, Planet and People impact initiatives will be measured through qualitative case studies and quantitative metrics alongside any contributions to the UN SDGs. These case studies use a framework adapted from the Impact Management Project’s “Five dimensions of Impact” helping to bring the positive impact created by the ORIT's activities to life for investors.

ORIT supports the TCFD and EU Taxonomy and is committed to aligning with these frameworks for reporting. ORIT is also working with the ICS and IRIS, alongside SASB to support its ESG and Impact management systems.

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.

ORIT's Investment Manager is  a UN PRI signatory and is also signed up to the Impact Principles (Operating Principles for Impact Management).