New analysis by B Capital Partners AG (B Capital) and IISD, supported by the MAVA Foundation, has found that B Capital’s onshore wind portfolio in Germany yield greater profitability and more benefits to society than a comparable gas-fired power plant.
These findings were the result of applying IISD’s Sustainable Asset Valuation (SAVi),which involves assessing how an infrastructure asset will perform if environmental, social and governance (ESG) factors are incorporated in the asset valuation.
These types of assessments allow for greater transparency on how an asset will affect the environment, as well as society, through the incorporation of ESG risks and co-benefits. Indeed, ESG factors are often not well integrated into traditional financial valuations, meaning that investors may not be aware of important risks that may affect the financial performance of their assets, neither about the adverse impacts their investment decisions may mean for society.
The SAVi methodology also ensures that investors and other key stakeholders have a comprehensive view on “sustainability adjusted” internal rate of returns (IRRs), while being clear on the asset’s financial resilience when faced with climate change risks.
In the B Capital assessment, the SAVi methodology allowed for incorporating two climate change risks that could have significant impacts on energy generating assets, namely an increase in air temperature and the introduction of a carbon tax. These were integrated into the SAVi assessment, which combines system dynamics modelling and financial analysis to calculate key financial performance indicators under various scenarios.
The SAVi assessment found that these two climate change risks do not affect the financial performance of the onshore wind portfolio, but would have harmful financial implications for a gas-fired power plant with the same power generation capacity. This means that the onshore wind portfolios would be the more climate-resilient investment choice.
Meanwhile when accounting for environmental, social, and economic costs and benefits, the “sustainability-adjusted” IRR of the same onshore wind portfolio decreases. Yet this performance indicator would be negative in the case of the fossil fuel-based asset – again demonstrating that the wind portfolio is the more beneficial investment choice, as well as the energy option that is less costly to society.
Visit the SAVi project page on this assessment.
About B Capital Partners
B Capital Partners AG is a partner-owned investment house, established in 2003 in Zurich. B Capital exclusively focuses on core sustainable infrastructure. Since 2010, it has invested and advised capital in excess of EUR 2.6bn across Europe. B Capital’s goal is to select superior infrastructure assets its our clients, while adhering to the highest corporate ethic as well as to state-of-the-art ESG standards. B Capital is a signatory to UNPRI and a member of GRESB.
Catherine Evers Media Relations Manager – tel. + 41 010 2401804 – mob. + 41 44 532 38 11 – email: [email protected]
About International Institute for Sustainable Development
The International Institute for Sustainable Development (IISD) is an independent think tank championing sustainable solutions to 21st–century problems. Their mission is to promote human development and environmental sustainability. They do this through research, analysis and knowledge products that support sound policymaking. Its team on infrastructure finance and procurement, part of IISD’s Economic Law and Policy program, is the founder of the SAVi methodology, working with KnowlEdge and with the generous support of the MAVA Foundation. IISD is registered as a charitable organization in Canada and has 501(c)(3) status in the United States. IISD receives core operating support from the Province of Manitoba and project funding from numerous governments inside and outside Canada, United Nations agencies, foundations, the private sector and individuals.
Contact: [email protected]
About MAVA Foundation
The MAVA Foundation was established in 1994 and is a family-led, Swiss-based philanthropic foundation with offices in Switzerland and Senegal.
They work towards securing a future where biodiversity flourishes, especially in the Mediterranean, West Africa and Switzerland; the global economy supports human prosperity and a healthy planet; and the conservation community is thriving.