- Organisation: Meridiam
- Signatory type: Investment manager
- HQ country: France
Describe how you identify positive and negative sustainability outcomes related to your investments.
Meridiam systematically measures its assets’ contributions to the United Nations Sustainable Development Goals (UN SDGs) through a proprietary monitoring and management tool: The Sustainability Impact Measurement Platform (SIMPL.). Developed and deployed by Meridiam, SIMPL. combines an in-depth survey of over 600 indicators, measured against over 5,000 benchmark data points, with a data visualisation tool that enables Meridiam to understand its assets’ contributions to the UN SDGs and monitor progress over time. More specifically, the tool empowers Meridiam to closely track its assets’ performance against their geography and sector, as well as at a fund level.
By integrating the UN SDGs to its procedures, Meridiam is able to ensure rigorous impact evaluation, assessment and monitoring of projects, as well as consistency with its development objectives. It also captures the positive contribution of projects on issues such as health, education, water, sanitation, energy, urbanisation, environment, equality, diversity, and social justice. To develop SIMPL. and its underlying methodology, Meridiam undertook the following process:
- Through a materiality analysis, Meridiam identified the most relevant SDGs for each of its 15 assets types and five types of SMEs.
- For each asset type, Meridiam then selected the relevant target associated with material SDGs.
- For each target, we designed several key performance indicators, and adapted these to the asset classes and project development phase (construction or operation).
- For each performance indicator, we developed a benchmark focused on best-in-class performance of similar assets in similar geographies, using publicly available data and a market/literature review. More than 5,000 benchmark data points were collected from hundreds of assets and institution databases.
- Each portfolio company answers questions on a yearly basis and adds data to a dedicated web platform.
- Answers to the questionnaire are used to calculate each indicator’s rating, based on pre-established benchmarks. For each target, corresponding indicators are weighted and summed to generate a score from 0 to 5.
- For each SDG considered, the tool calculates the mean of the corresponding targets’ scores to generate an SDG score from 0 to 5.
- Assets’ scorings can be aggregated to generate the scoring of a fund or portfolio company.
The SIMPL. survey is administered each year to all portfolio companies, allowing Meridiam to monitor the progress made on every SDG indicator. SDG KPIs are leveraged to define Meridiam’s mission objectives and to develop Asset SDG Implementation Plans (ASIPs) – roadmaps that set out tailored pathways to improve positive contributions to the SDGs.
The main learnings from this journey derive from the fact that making our mission real means engaging and empowering our people. We need all our staff, in our organisation and at our project companies and concessionaires, to understand what it really means to deliver sustainable infrastructure that improves the quality of people’s lives. To that end, we need everyone to take ownership of our tool. We are building practical resources to educate and create accountability across the value chain.
Give an overview of your sustainability outcome policies and/or targets, explaining the methodology for establishing them.
Meridiam was one of the first corporations to become a Société à Mission (a French Benefit Corporation), and in tandem formalised a five-pillar sustainable development strategy built on the UN SDGs. Focused on a core set of SDGs most applicable to the infrastructure Meridiam develops and manages (SDGs 7, 8, 9, 11, 13, 14, 15, & 17), the strategy applies to all funds and assets. Supporting the five pillars are nine underling objectives, detailed below. Considering the nature and diversity of Meridiam’s assets (energy, social infrastructure, transport, SME assets, etc.), the SDG-based strategy allows Meridiam to approach sustainable development by bringing together complex and interconnected economic, social, and environmental concerns. The SDGs and their accompanying objectives and indicators provide precision and structure, which allows Meridiam to focus on the most relevant sustainability concerns for each asset. Further, recognising that the world is not static, the nine objectives are updated every three years to better reflect where Meridiam stands and the environment in which we operate.
Currently, the pillars are:
- Resilient infrastructure and sustainable cities
- Goal/Sustainability outcome: deliver resilient infrastructure and develop sustainable cities
- Targets (SIMPL.): improve current SDGs 9 & 11 scores from 2.6 to 3.1 for projects in operations and from 2.4 to 2.9 for projects in construction
- SDGs: 9 & 11
- Clean and affordable energy
- Goal/Sustainability outcome: Accelerate the energy transition
- Targets (SIMPL.): SDG 7 score from 2.7 to 3.2
- SDGs: 7
- Climate action and strategy
- Goal/Sustainability outcome: Reduce and avoid emissions
- Targets: MIAF – Carbon Neutrality between induced and avoided emissions (per MEUR invested); other funds – portfolio temperature nearing 2°C using CIARA
- SDGs: 13
- Decent work, inclusion, and gender
- Goal/Sustainability outcome: Promote good work conditions, inclusion, diversity, and gender equality
- Targets (SIMPL.): SDG 8, from 3.3 to 3.5; SDG 17, from 2.4 to 3; SDG 5, increase Sustainability Assessment from 61 to 63
- SDGs: 5, 8, 17
- Goal/Sustainability outcome: Protect and enhance biodiversity
- Targets (SIMPL.): SDGs 14 & 15 from 2.3 to 2.8
- SDGs: 14 and 15
To attain these goals, Meridiam utilises specifically-designed tools. In addition to SIMPL., Meridiam is a member of the 2-infra challenge initiative, a rigorous methodology to address key climate-related challenges including aligning funds with a 2°C climate trajectory. Among other things, it enables us to assess the alignment of infrastructure financial portfolios with the Paris Agreement (notably with a 2°C compatible pathway). This methodology, called CIARA, is unique in the market, as it has been conceived specifically for the infrastructure asset class.
Not only can our mission shape our newest infrastructure projects from the outset; it can also help us improve our existing assets, bringing them in line with our pillars and the highest achievable standards of environmental, social, societal and governance performance. Through this conversion process, we will aim to maximise the benefits of our infrastructure for people and the planet. Understanding what we do and how we do it will enable Meridiam to be a better infrastructure developer and manager. Communicating about it will help communities, policy makers, and investors appreciate the value and benefits of our work and will provide a template for good sustainable infrastructure. You can find more detailed information on our sustainability strategy, approach and the SIMPL. methodology here.
Explain how you have sought to increase positive and decrease negative sustainability outcomes.
The SIMPL. tool supports what we call an Asset SDG Implementation Plan (ASIP) for each asset in portfolio. This plan is executed in close collaboration with the portfolio company. This bottom-up approach is carried out through meetings and on-site feedback, leading to collaborative identification and validation of specific areas for improvement, and an implementation timetable.
Meridiam has appointed 45 Project Leaders tasked with delivering both financial and impact goals at project companies. Their role is to oversee the creation of SDG improvement plans that align with our five pillars, and to lead efforts to improve our performance against SDG targets.
Typically, once a portfolio company fills in its dedicated survey, the Project Leader accesses the data visualisation platform to analyse the performance of the asset. Through dedicated workshops and discussions, the team defines concrete actions to be implemented on the ground. With more than 600 indicators monitored across all asset class over 14 SDGs, the defined actions can include:
- installing on-site renewable energy projects, such as solar PVs;
- discussing a higher renewable energy share in the consumption mix;
- obtaining specific sustainability-related certifications such as LEED, BREAM or ISO 14001;
- improving the energy management system;
- establishing carbon reduction targets;
- developing a gender fair wage policy and monitoring system;
- ensuring efficient grievance mechanisms on site;
- increasing the number of training hours for employees on site;
- strengthening mechanisms to deal with non-compliant suppliers;
- ensuring a high level of alignment between contractors and SPV regarding ESG standards; or
- engaging with community projects through financial donation or some other means.
To ensure active stewardship and drive its portfolio management towards achieving its ambitious mission objectives, Meridiam aims to secure a controlling minority or majority of the capital of each asset. As such Meridiam is an involved investor, and asset monitoring is undertaken on three complementary levels:
- Representation on the Board of Directors: Meridiam is represented on the Board of Directors of each of the project companies.
- Staff of the project company: Meridiam appoints full-time members to the management team of each asset, or provides seconded staff.
- Active/involved management of assets according to a local approach.
By seeking co-controlling or controlling positions, Meridiam is able to pursue an active role throughout the life of the project and work collaboratively with stakeholders to achieve its sustainability targets. In particular, this includes monitoring, evaluating and engaging on the sustainability strategy of the assets through the SIMPL. tool.
Describe how you are tracking performance against your sustainability outcomes targets and/or policies (qualitative and quantitative).
SIMPL. allows for a continuous monitoring and tracking of the indicators and their related performance assessment over time. The data visualisation platform provides a user-friendly medium to compare a given asset’s contribution to the SDGs over time. The platform aggregates these performances at fund levels, within a given asset class, geographically, and at Meridiam global level. SIMPL. was first deployed at scale in 2019 and this year was used as a baseline to determine Meridiam’s sustainability outcome targets. The top-down approach of setting targets at Meridiam level percolates through the organisation and translates into a bottom-up process: collaborating on site to identify concrete action implementations that will then feedback to SIMPL. It is reflected in the evolution of scoring. The three years’ performance tracking of Meridiam’s mission objectives are accessible in our Impact Report 2022.
Some concrete examples of what these evolutions translate to on the ground:
- Several road assets reported an increase in the share of renewable energy in their overall energy consumption mix.
- These were either realised through power-purchase agreements (A2 Phase I and II), on-site production (Limerick Tunnel) or both (A5 Ostregion). The latter project signed a contract with its energy provider to obtain a supply of 100% renewable energy starting in 2022.
- Thanks to previous feedback from SIMPL. and from internal continuous improvement efforts, Fulcrum, a 42-health centre platform in the UK, reinforced instructions for sorting waste and general waste reduction programmes across its network.
- At Ausol I & II road assets, the project recently increased the amount of recycled construction materials to 5%.
- Reporting on water management and quality is implemented across portfolios to reduce water consumption (water efficient plumbing fixtures and water bottle filling stations at LaGuardia Airport).