Climate policy settings key for attracting investment, says IFM Investors boss David Neal

Global institutional investors now have to assess the climate change polices of countries they have invested in, says IFM Investors CEO David Neal.

IFM Investors’ CEO David Neal: ‘A country that offers greater clarity is more likely to be attractive.’ Picture: Stuart McEvoy

Global institutional investors now have to assess the climate change polices of countries they have invested in, says David Neal, chief executive of the $150bn super fund investment fund IFM Investors.

“Long-term investors like ourselves have to look at the array of risks that come with climate change,” he said.

“Some are the physical risks themselves, some are the financial risks which come with a business responding to an evolving policy environment and a financial market environment which is pricing in all the various risks.

“A country that offers greater clarity and consistency in terms of the future policy environment is more likely to be attractive for long-term investors.

“That is particularly important for people buying long-term cash flow streams like infrastructure assets.”

Mr Neal was speaking as IFM’s global infrastructure fund is finalising a $8bn deal to buy a stake of up to 22.7 per cent in Spanish gas and electric utility, Naturgy Energy.

Based in Madrid, Naturgy runs the third largest electricity network in Spain and has an expanding renewable energy portfolio.

Mr Neal said the company was a “really exciting one” which had been “playing a leading role in climate transition in Spain”.

“They closed all the coal-fired power stations down in Spain and are moving to renewable energy.

“That is an important part of what we think the globe needs to do and an important part of what we at IFM are trying to achieve.”

While Spanish regulators had approved the deal, IFM was awaiting the outcome of its bid for the shares.

“The acceptance period for our on-market offer has just passed and we are awaiting the outcome of that,” he said.

Mr Neal said IFM was also investing in renewable energy in some of its assets such as solar power operations to generate electricity for Melbourne airport.

He said IFM was also “on the look out” for great investment opportunities around the globe in the renewable and clean energy area.

It has just bought a 50 per cent stake in Canadian company called Enwave Energy Corporation which focuses on low carbon energy in a $3bn deal with the Ontario Teachers Pension Plan Board.

“We have a range of assets we are currently looking at very closely which are at various stages of due diligence in the pipeline,” Mr Neal said. “And hopefully some of those will turn out to be attractive investments for us.”