Senior Leadership Statement 2021

Why do we engage in responsible investment?

For almost a decade, ThomasLloyd has been investing where our money makes a difference. Infrastructure investment is vital for economic and social progress; helping build resilient communities and supporting purposeful activity. Indeed, infrastructure is essential to the functioning of society and a modern economy. We are proud to be an Impact Investor, and we set out deliberately and intentionally to generate positive, measurable social and environmental impact alongside a market-driven financial return.

We believe there is no conflict between doing well and doing good, and there need be no trade-off between performance and positive impact. The focus on governance and regulatory compliance in the social and environmental domains, together with the requirement to evidence the impact of an investment are powerful tools to align the interests of all stakeholders.

By reducing risk, driving innovation and enhancing reputation, the incorporation of wider societal goals into our operating models brings real benefits. An environmental, social and corporate governance (ESG) framework embeds this philosophy in all our processes and investments, keeping us on track to deliver the impact our investors demand.

What is our overall approach to responsible investment?

We are exclusively an Impact Investor. We fully comply with all laws and regulations, at all times and in all jurisdictions, following industry standard ESG guidelines and best practices. Acting with integrity in all our operations, we avoid all forms of discrimination and embed equality and diversity in our employment policies. We respect human rights and avoid exploitation of child labour, ensure no bribery or corruption and actively manage investment projects to deliver ESG and Impact outcomes in the communities and countries in which we operate.

In the context of the United Nations’ 17 Sustainable Development Goals (UN SDGs), our focus naturally is on SDG 7 Affordable and Clean Energy, SDG 8 Decent Work and Economic Growth, SDG 10 Reduced Inequalities, and SDG 11 Sustainable Cities and Communities. The Impact Reports we produce during the year for both India and the Philippines clearly evidence, and in great detail, the significant progress already made in these areas. They demonstrate that a sustainable future can be one which delivers prosperity for all whilst creating employment, providing security for families and communities and ensuring environmental stewardship. The philosophy which underpins all our investment activities is ‘Realising Sustainable Value’. For the communities in which we operate, and for our investors together, it delivers a triple return; social, environmental and financial.

Progress made in 2020

2020 was a challenging year for everyone, being defined by the global spread of the COVID-19 virus and the individual and collective responses to it. The pandemic highlighted the need for reliable infrastructure and energy security – we still need food, water, electricity, communications and sanitation. Economic growth may have gone into reverse during the year, but population growth didn’t and neither did the demands which this places on infrastructure, nor our commitment to Responsible Investing.

Stewardship activities with investees

As developers of real assets, we have a significant local workforce in the countries in which we operate. Our Fuel Supply Division in the Philippines is one of the major employers in the province of Negros Occidental, harvesting the sugarcane trash to power our biomass electricity plants. In Uttar Pradesh, India, almost 800 workers have been constructing our latest solar plant. The safety of our workforce during the pandemic has been paramount and we are proud of the excellent labour relations which have been maintained throughout this period.

The cohesion and security of families and communities requires well-paid and secure employment. This, in turn, helps drive economic activity and tax revenues, with a multiplier effect on jobs in both the private and public sectors. We know from our many conversations with municipal leaders and elected officials that our investments have directly and indirectly funded improvements in local services such as education and welfare, as well as infrastructure projects in highways, buildings and sanitation.

Collaborative engagements

Supporting Sustainable Cities and Communities (SDG 11) has been taken even further with our direct and targeted pandemic relief efforts. After the outbreak of the COVID-19 virus on the island of Negros, ThomasLloyd and its local partner moved quickly to donate to the Provincial Governor a mobile test unit which helps to speed up test procedures and protects medical staff from infection at the same time. In addition, medical equipment, protective equipment and disinfectants were donated to clinics and quarantine centres to create additional laboratory capacity. In India, meantime, we authorised our local partner to provide immediate support to below poverty-line families. By the end of April, we distributed 1,000 food kits which each provided subsistence for a family of four for one month.

In addition to pandemic relief, in 2020 we continued our programme of direct community support. We purchased and installed 13.4 kWh of solar panels, 25 ceiling fans and 34 lights at four village schools close to our plant in Maharashtra, along with battery storage facilities. Run-down sanitary facilities were refurbished and new bathrooms built.

Attainment of LuxFlag Environmental Label

Our achievements and ongoing commitment to Responsible Investing were recognised in July 2020 by the Board of LuxFLAG which resolved to grant the use of the LuxFLAG Environment Label to ThomasLloyd SICAV - Sustainable Infrastructure Income Fund. The LuxFLAG Environment Label is recognised for its high standards and rigorous assessment of applicant investment funds’ investment strategy, ESG integration into the investment process as well as an affirmation of their transparency to investors, which are all key components of the eligibility criteria of the LuxFLAG Environment Label.

Our commitment to responsible investment in the next two years

The incoming Sustainable Finance Disclosure Regulation (SFDR) regulations are designed to improve and standardise ESG disclosures. SFDR requires investment managers with financial products targeting sustainable investments as part of their investment objective to disclose how the sustainable investment objective is met and provide details on the “Sustainability Indicators” used to measure this. ThomasLloyd intends to submit to Article 9 regulation which is the most stringent in terms of pre-contractual disclosures and ongoing transparency. We propose adopting the Principal Adverse Impacts framework with immediate effect and a set of sustainability indicators which can be used to measure the ESG performance of our investee companies and the attainment of the sustainable investment objectives of our financial products.

Memberships, Affiliations and support

UNITED NATIONS ENVIRONMENT PROGRAMME FINANCE INITIATIVE
 UNITED NATIONS GLOBAL COMPACT
PRINCIPLES OF RESPONSIBLE ENVIRONMENT
GLOBAL IMPACT INVESTING NETWORK
EUROPEAN CHAMBER OF COMMERCE OF THE PHILIPPINES
BRITISH CHAMBER OF COMMERCE PHILIPPINES
FSB TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES
 UK INDIA BUSINESS COUNCIL
ZENTRALER IMMOBILIEN AUSSCHUSS E.V.
 BVI, THE ASSOCIATION FOR INVESTMENT FUND MANAGEMENT COMPANIES AND INVESTMENT FUNDS