Governance

Board’s oversight

At Board level, our Chief Executive has overall responsibility for climate-related risks and opportunities, and for the Group’s response to climate change.

The Board monitors progress against mitigating climate change risks along with other risks. It considers specific reports, reviews business and financial performance, as well as strategy, key initiatives, risks and governance, this includes climate-related issues where relevant.

Management’s role

At the Executive Committee level, the Chief Operating Officer has responsibility for ESG including climate-related risks and opportunities including the Group’s response to climate change.

Ongoing oversight by management of sustainability risks, including climate-related issues, is performed by the Management Risk Committee.

The Management Risk Committee among its responsibilities, it is responsible for reviewing the Group Risk Register as well as advising the Board on current and future risk exposures and strategies. The register lists ESG integration as a principal risk. The physical and regulatory risks presented by climate change are considered through this process and appropriate mitigation measures identified.

The Investment Committee is responsible for assessing actual climate-related risks and opportunities in relation to investment opportunities, with enhanced due diligence as required.

The Investment Committee responds to climate-related opportunities (such as decarbonisation infrastructure as part of energy transitions towards net zero carbon) and has responsibility for climate-related risks: transition (policy, legal and technology) and physical (acute damage to assets, for example from floods or hurricanes or long-term chronic impact of rising sea levels). It is also responsible for approving investment proposals.

At the project level, the Boards of the individual projects are responsible for assessing climate-related risks and opportunities.

Strategy

Climate-related risks and opportunities cover all aspects of our business, from origination and investment through to construction and management of infrastructure projects.

Impacts of climate risks and opportunities on businesses, strategy and financial planning

Our strategy as a Group has been influenced in the following ways:

Products and services: New opportunities to invest and derive financial returns mean we expect to see continued growth in demand for investment in the decarbonisation of infrastructure and the wider energy transition market. Our view of the climate challenge and importance of energy transition also means we exclude fossil fuel related infrastructure in portfolio and future investments.

Operations: As ESG requirements and stakeholder expectations continue to grow in the short to medium term, as an investor we are exposed to increasing compliance burden and reputational risks through failure to respond.

Supply chain: In the medium to long term, we have identified risks and opportunities within our investment value chain in relation to climate change through our investment in Renewable Energy projects and sustainable and resilient public infrastructure.

Our financial planning has been influenced in the following way:

Capital budgeting: Climate-related risks and opportunities are considered through our investment appraisal processes. They are factored into decision-making regarding new acquisitions and divestments, capital allocation and capital expenditure in the short to medium term.

Resilience of strategy, taking into consideration different climate-related scenarios

Our portfolios are subject to ongoing material changes given our business model to progress assets to the secondary markets. In line with TCFD recommendations we are reviewing options for climate scenarios, building upon the screening undertaken for certain projects pre Investment Committee.

The Board plans for an initial climate-related scenario analysis to be developed by 2022, including extreme weather risk, temperature scoring, stress-testing assets’ ability to withstand the carbon emissions of the Intergovernmental Panel on Climate Change’s Representative Concentration Pathways) and different environmental and social factors specific to our business.

Given the context specific nature of many environmental and social risks, we approach risks on an asset-by-asset basis as well as with a geographical focus and engage with multiple third-party consultants in understanding risks such as long-term energy prices and weather patterns.

Metrics and targets

Targets to manage climate-related risks and opportunities, and performance against targets

John Laing does not yet currently set a GHG emissions reduction target. We currently report our Scope 1, 2 and 3 emissions for direct operations and are in the process of establishing our pathway to Net Zero including implications for our portfolio and growth plans with further details to be announced in the coming year.

We have committed to integrating ESG principles into the business and will assess a range of environmental and social impacts together with specific carbon impact in line with market frameworks, including the UN SDGs and Paris Agreement targets.

For our direct operations we have seen a reduction in emissions in 2020 and expect to see a further decrease in emissions across Scope 1, 2 and 3 categories over the next five years.

Several further initiatives are in progress to manage climate-related risks and opportunities, and also to improve future performance against targets under the SECR.

• In 2020, we had emissions reduction initiatives, saving over four tonnes CO2e: company fleet vehicle replacement (Scope 1 benefit) and energy efficiency in buildings through lighting (Scope 2)
• Engaging with our value chain on climate-related issues: with our PPP clients for the decarbonisation of transport; with clients (government departments, public sector, or local authorities) during the bid process to ensure that new projects meet national sustainability targets and socio-economic development criteria
• Direct engagement with policymakers and trade associations: we engage with C40 Cities, a network of the world’s megacities on the topic of decarbonising infrastructure