We evaluate and implement environmental, social and value creation considerations throughout the entirety of our investment process from due diligence to investment approval and asset management.
Our purpose as an organization is to enrich people’s lives through the investments we make, our corporate citizenship and community commitments, and meaningful opportunities for professional and personal growth.
Environmental, Social and Governance Commitment
We believe that essential infrastructure is fundamentally about relationships: between a community and its citizens, between a business and the stakeholders it serves, and between the physical infrastructure and its surrounding natural and socioeconomic environment. Studies show that infrastructure investment creates tangibly better economic and social opportunities for individuals and for countries, with an economic multiplier in North America of approximately 1.7 times for every dollar invested.
In North America and around the world, rapid urbanization and population growth are increasing city sizes, placing greater strain on water and energy consumption, the environment and the infrastructure we use for mobility, waste management, housing and more. We believe that collaboration between businesses and communities is imperative to finding innovative solutions to address our burgeoning infrastructure deficit along with mounting climate change risk. The greatest challenge of our time is to build more resilient infrastructure that will be sustainable for generations to come, improving equality and diversity of opportunity while reducing global carbon emissions.
Our corporate purpose of enriching people’s lives guides our investment decisions and defines our culture and ESG commitment as an organization. As a signatory to the United Nations-supported Principles for Responsible Investment (UNPRI), we address environmental, social and governance (ESG) risks and value creation opportunities as part of our investment and stewardship strategy to create long-term sustainable value for our investors and stakeholders in the communities we serve.
InstarAGF strives for sustainable action on ESG matters across its platform and in our operations. Our Toronto office is located in Toronto-Dominion Centre, a LEED Platinum building that is among the greenest office complexes in the world with an energy-efficient profile, including use of a deep lake cooling system. InstarAGF has installed LED lighting within its own premises to improve energy savings and implemented programs to reduce the use of paper and plastic. InstarAGF is further committed to diverse and inclusive hiring practices and leading health and safety standards, including installing medical-grade air purification systems for a cleaner indoor environment.
Investment and Stewardship Approach
Our investment stewardship includes the evaluation and implementation of environmental and social considerations and value creation opportunities throughout the entirety of our investment process from due diligence to investment approval and asset management. Our stewardship is a part of our ownership practices within our larger ESG initiative, which is directed by InstarAGF’s senior leadership team and portfolio company executives. We define material ESG issues as those that have the potential to have a direct substantial impact on a portfolio company’s ability to create or preserve economic value as well as environmental and social value for itself, the communities where it operates, and other stakeholders.
Examples of ESG matters that InstarAGF considers as part of its investment evaluation process include:
- Environmental: energy use and efficiency, carbon emissions, pollution, and waste and water management.
- Social: human rights, equality, health and safety, community impacts.
- Governance: management and board structure, anti-money laundering and conflicts of interest.
InstarAGF assesses material sector-specific ESG risks and develops reporting metrics guided by Sustainability Accounting Standards Board (SASB) standards.
Key elements of our investment approach include:
- Consistently employing a comprehensive due diligence template to assesses material ESG risks and opportunities in our evaluation of potential investments and engaging external advisors to provide specific technical or market analysis where necessary. This includes identifying mechanisms for mitigating potential ESG risks and capitalizing on opportunities to add value to the portfolio company post-acquisition.
- Assessing the type, geography and relative control of an investment to identify ESG elements that might affect the risk profile and performance of a targeted investment.
- Including an assessment of material ESG risks and opportunities in the investment memoranda presented to our Investment Committee for discussion and approval.
We subsequently incorporate these ESG factors into our ongoing asset management and monitoring activities, including identifying ESG reporting metrics relevant across our portfolio and establishing metrics linked to specific sector risks and opportunities for each portfolio company. InstarAGF is focused on the stewardship of all our investments through our board positions, management relationships and overall corporate governance, which ensures appropriate management incentives, compensation and alignment with long-term goals, including ESG objectives. Across our platform, our short- and long-term incentive programs for our senior executives, which are established by each company’s board of directors, including both InstarAGF representatives and independent directors, are linked to the delivery of business goals, including those related to ESG, and aligned with the company’s long-term strategy. We believe strong active ownership leads to better management practices, value creation and long-term financial success.
Environmental, Social and Governance Policy
Respect for people, communities and the environment is integral to our business strategy given the essential nature of infrastructure businesses and the services they provide. As a long-term investor, we believe we have a fiduciary obligation to proactively address ESG risks and opportunities as part of our investment strategy to create long-term sustainable value for InstarAGF’s investors.
We seek to:
- Consider environmental, safety and social issues associated with potential investment opportunities in InstarAGF’s evaluation of the prospective entity or asset and the ongoing asset management of the portfolio investment.
- Continually engage with relevant stakeholders, including, but not limited to, local communities, First Nations and all levels of government, either directly or through representatives of portfolio companies, as appropriate.
- Actively develop and improve the long-term sustainability of portfolio investments for the benefit of multiple stakeholders.
- Work with partners, management of portfolio companies, contractors and stakeholders to the extent reasonably possible to improve and advance ESG initiatives at InstarAGF and its portfolio investments.
- Promote transparency and timeliness in communication with stakeholders and InstarAGF’s limited partners on ESG matters.
- Follow strict guidelines that prohibit bribery and other improper payments to public officials and follow anti-money laundering laws and regulation globally.
InstarAGF Asset Management Inc.
Toronto Dominion Bank Tower
66 Wellington Street West, 34th Floor
Toronto, ON M5K 1E9