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Actis: Accelerating the transition
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Every business needs a ‘North Star’. For global investor Actis, it is to ensure a just and equitable transition to a decarbonised global economy.
The global energy sector is responsible for about 40% of carbon emissions
The global energy sector is responsible for about 40% of carbon emissions[1] and a successful transition towards more sustainable energy solutions is a key lever in securing a net-zero future and climate stability for the planet.
Supporting this and the broader transition required, is mission critical for Actis, according to its Head of Sustainability Shami Nissan — and at the heart of the firm’s investment approach.
She says: “Every sector and industry needs to decarbonise for a net-zero future. The “North Star” for every decision is: ‘is this investment going to help accelerate that transition or not?’”
Actis’ investments centre on digitalisation, sustainable energy and infrastructure, and although it will not invest in oil or coal for example, gas is part of its investment strategy and a crucial transition fuel for energy security and access, says Shami. “There are many markets in the world where there is simply not going to be an overnight switch to shift from fossil fuels to renewables,” she says. “Harnessing their domestic gas reserves as a bridging strategy until they can rely on renewables is absolutely crucial. Were you not to invest in and develop that, it would be like turning the lights off.”
“We have assisted Actis since it was founded with its investments, developments and exits in its different sectors across its focus markets. We are very proud to be involved in the way it contributes significantly to sustainability, and be part of making a real difference.”
Adrian Mayer, Partner, Corporate, Charles Russell Speechlys
Sustainability: A business imperative
There are several commercial imperatives driving Actis’ approach to sustainability both in terms of its portfolio investments across various sectors including in energy (such as wind and solar), real estate and infrastructure (long life and digital) and its own operations as a fund manager in global markets.
One is the basic mitigation of risk: in other words, not doing so would expose the business to risks that would preclude it from realising returns to its investors. “But the premium, greenium or value edge you get is not from the absence of negatives, it’s about striving to be a leader in all aspects of sustainability,” points out Shami.“Sustainability leadership is a proxy for high-quality decisions and quality companies that make quality decisions are fundamentally more valuable.”
Other commercial drivers for Actis include access to finance and lower cost of capital – a feature of its latest and largest energy fund, which includes a US$1.2bn sustainability-linked fund finance facility with a margin that can be discounted if it meets certain sustainability objectives[2].
Another crucial yet underappreciated lever, according to Shami, is the next generation of talent. She says: “All the data tells us that this generation is looking to work for responsible, sustainable, impactful and purposeful organisations. If you are compelling, convincing and authentic — and really deliver on that — you’ll get the best brains walking through your door.”
Get all of this right and the reputational benefits will follow too, she adds. “You get to talk about sustainability with authenticity and without the taint of cynicism or the risk of being a greenwasher. You get extra miles from really walking the talk — but you need to evidence it properly.”
“Actis’ ethos of ‘values drive value’ informs their investment strategy, and I was excited to see how this plays out in practice. From the beginning of my secondment, I have experienced first-hand how Actis lives these values and seamlessly does business within the sustainable infrastructure space around the world.”
Nia John, Associate, Charles Russell Speechlys, and recent secondee to the in-house Actis Legal Team
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