Consultation to launch on sustainable infrastructure label ‘with potential to cut transaction costs’

RFP for SI Label Secretariat also planned for later this year

A public consultation on the framework for a proposed global Sustainable Infrastructure Label (SI Label) aiming to enable developers and operators to demonstrate the positive impact of an infrastructure asset will kick off tomorrow, RI has learnt. 

The SI Label framework has been developed under the finance industry-led initiative Finance to Accelerate the Sustainable Transition: Infrastructure (FAST-Infra), launched in early 2020 by the Climate Policy Initiative (CPI), HSBC, IFC, OECD and the World Bank Global Infrastructure Facility (GIF). 

An SI Label working group, led by Macquarie, HSBC and the World Bank GIF, has held a raft of roundtables with various types of stakeholders and will tomorrow launch a public consultation on its framework, which sets out the requirements and guidance for market participants looking to use the label. (The consultation can be found here and will be live on 2 June at 10am BST)

“The premise of the label is to establish sustainable infrastructure as a distinct asset class, improve liquidity and enhance and mobilise private investing – especially into emerging markets,” Hayden Morgan, Director, Morgan Green Advisory and previously an Associate Director at Macquarie’s Green Investment Group (GIG), told RI. “There’s a massive need for sustainable infrastructure in these markets but one barrier to get investments at scale into emerging markets is a lack of consistency and standards for what classifies as a sustainable project.” 

FAST-Infra plans to launch the label in September, “hopefully with some pilot projects to show how the label is applied”, Morgan said.

The SI Label working group developed the global framework and sustainability criteria by mapping 21 existing standards and frameworks, including the EU Taxonomy, the Green and Social Bond Principles, GRESB and Global Infrastructure Basel’s SuRe standard. 

The framework being consulted on sets out four ‘dimensions’ for sustainable infrastructure, including environmental, social and governance as well as an adaptation and resilience dimension. There are 14 sustainability criteria in total across the dimensions and the working group has suggested reference standards – such as the existing standards mentioned above – and indicators for each criteria.

For an asset to qualify for the SI Label, it will need to meet baseline requirements of the IFC Performance Standards while also making a measurable positive contribution to at least one of the 14 criteria. In addition, it needs to comply with minimum environmental and social safeguards and risk mitigation measures set out in the framework. 

The SI Label will be applied at the asset level, which as Morgan explained is different from any other existing standard, and can be applied to any type of financing – equity, debt or public finance. It can be used at all stages of a project, including planning, designing, developing, constructing, financing and decommissioning. 

“From a private investor perspective it allows a really quick insight into the actual project if it has the label, allowing identification of projects aligned with their stated sustainability objectives,” said Robin Grenfell, Manager, GIG. “This has the potential to reduce due diligence and transaction costs and really promotes the project individually but also sustainable infrastructure as an asset class.” 

The idea is for the SI Label and framework to evolve and be updated periodically by an SI Label Secretariat. In addition, the working group aims for a data platform to be developed to help harmonise reporting and measure the sustainability performance of assets over time. 

The working group is planning to run a request for proposals (RFP) for Secretariat and data platform later this year, likely around the time of the September launch of the label, said Morgan. In the early stages, the Secretariat is expected to be set up with donor backing from governments already involved in FAST-Infra.