ESG and sustainable investments

As our collective understanding of global environmental issues grows, it is increasingly clear that organisations need to invest responsibly and sustainably.

With 60 6MW wind turbines Germany’s Arkona is the largest offshore wind farm in the Baltic Sea to date. Arup was commissioned by the subsequent buyer, Credit Suisse Energy Infrastructure Partners (CSEIP), to conduct a comprehensive technical due diligence.

Governments, investors and businesses have committed to ambitious environmental goals, and are now considering how best to overcome the challenges ahead, minimising risk and maximising beneficial outcomes.

ESG is now a major driver of value creation, underpinning profitable businesses that are more sustainable, equitable and transparent. At Arup we help clients to invest sustainably, and turn their wider commitments into actions that produce lasting value and positive societal impacts.

We help investors and the businesses they invest in to assess risk, invest, divest, change direction and grow in a sustainable and profitable way. We help them to assess and mitigate risks and to identify, define and implement the right actions and investment choices to achieve the results they need at all phases of the transaction and investment cycle.

Whether it is risk assessment, addressing health and safety concerns, designing decarbonisation pathways, investment alignment, due diligence or transaction support, we bring a deep understanding of the underlying asset, the story behind the numbers and the meaningful next steps towards a successful outcome.

How we can help you

Developing sustainable investment policy

We help clients build the business case and access funding to invest in what's most relevant to their sustainability ambitions whether it's a company, project, or idea, and develop the mechanisms to assure delivery of outcomes. Arup supports investors in identify market entry and growth opportunities, build sustainability business cases, develop policy and funding mechanisms and in setting up new partnerships and delivery models.

ESG due diligence

We help our clients identify ESG opportunities across infrastructure assets and portfolios, value critical ESG factors, assess climate and wider ESG risks at deal stage, mitigate challenges and realise ESG value through the deal cycle. Our teams bring great rigour to every transaction and in-depth understanding of the assets that sit beneath. Our deals experts forensically probe the technical, commercial and ESG context of a proposed investment and work with the client to achieve the optimal result. Our insights identify risks, reveal opportunities and provide valuable advice about how an asset might be improved, driving better, more sustainable returns tomorrow – physically, operationally or both.

Arup is an award-winning ESG advisor. We act as a trusted ESG partner and support major investors, banks and pension funds navigate ESG risks and opportunities. Arup’s expertise in sustainability and advisory assists organisations and investors in adapting to the evolving regulatory landscape surrounding ESG priorities. Arup is uniquely positioned to be able to integrate ESG into wider technical and commercial due diligence. This enables us to, for example, include ESG CAPEX and OPEX in financial models to reflect investment required for compliance, decarbonisation or to take advantage of opportunities for improvements.

ESG post-deal value realisation

Post-deal operations have the potential to produce significant value, however there are high risks and challenges involved. Contractual obligations and agreements, attrition risks, suitable skills and experience, employee morale, knowledge management and system streamlining are some of the many challenges that organisations face, if the new organisation is to operate independently and effectively.

People are typically an organisation’s largest operating expense and controllable cost. Organisational assurance is critical to preserving deal value in a landscape where 70-90% of deals fail to deliver expected returns. It has been predicted that people and organisations (P&O) will become one of the top three investor focus areas pre- and post-deal from 2024. Where other firms largely focus on HR compliance and preserving the deal, we offer breadth of strategic people and organisations advice to add more value to the asset. Our service combines industry, business operations, strategy, talent, HR, analytics and technology expertise. Our strategic approach to due diligence and post-deal services addresses complex workplace, industry and local market trends.

Net zero and decarbonisation goals are also now fundamental aspects of asset management. Arup offers a suite of post-deal decarbonisation related services including decarbonisation assessments, road maps, portfolio assessments, and decarbonisation strategy to support our clients to transition to a low carbon future.

ESG regulation, including the EU Taxonomy, the Sustainable Finance Disclosure Regulation (SFDR) the Corporate Sustainability Reporting Directive (CSRD), and the Corporate Sustainability Due Diligence Directive (CSDDD), is becoming an increasing focus for investors and lenders. We conduct assessment of eligibility and alignment with EU Taxonomy and provide regulatory assessment and strategy services at asset and portfolio levels.

Health and safety reviews

These reviews evaluate the current state of an organisation or an asset, an essential element for improving health and safety outcomes. During the review, we assess several critical factors: identifying any fatal or high-risk activities and ensuring suitable controls are in place, evaluating material risks and their management, assessing the maturity of the H&S management, and gauging management commitment to health and safety.

ESG investment framework

Arup's ESG assessment approach applies a bespoke, evidence-based ESG maturity framework to evaluate the performance of target companies against defined aspects of ESG. The assessment framework involves a qualitative grading scale for the target’s performance on a five-point scale against each ESG aspect which can be tailored as required.

This methodology has been created by Arup based on selected external standards, legislative requirements and industry experience to reflect ESG maturity against all sectors, helping us to identify opportunities for improvement and value creation.

ESG portfolio risk assessment

We understand the criticality of ESG factors in today’s investment landscape. Our ESG Portfolio Risk Assessmen t service is designed to help investors and portfolio managers identify and capitalise on ESG risks and opportunities across infrastructure assets and portfolios. We provide a comprehensive evaluation of critical ESG factors, enabling our clients to make informed decisions that align with their sustainability goals.

We assess climate and wider ESG risks at the deal stage, providing a holistic view of potential challenges and opportunities. This proactive approach allows our clients to mitigate challenges early and realise ESG value throughout the deal cycle.

In an era where ESG risks can significantly impact the performance and reputation of infrastructure portfolios, our service offering is not just a value-add, but a necessity. By assessing ESG risks, we empower our clients to future-proof their investments, ensuring resilience, sustainability, and long-term value creation.

Lender's environmental & social consultant

Our team has extensive experience as the Independent Environmental and Social Consultant or the Lenders' Environmental and Social Consultant (IESC-LESC). In this role, Arup acts as an expert third party between the borrower and the potential lenders or investors when a major project, mostly infrastructure, is seeking its financial close, and the credit or investment agreement requires close monitoring of environmental and social (E&S) risks and management. We standardise the review by applying global environmental and social standards that have become the reference for the financial markets in terms of sustainability matters in their portfolios: IFC Performance Standards, Equator Principles, OECD Common Approaches, the EU Taxonomy on sustainable activities, specific multilateral banking standards by region, among others.

Our global team comprises a range of technical experts across various business sectors such as transport, energy, and utilities, among others. They provide guidance on a range of technical and operational aspects, including project scheduling and progress, design and permits, financial modelling, construction methods, commercial agreements, covenants, and more.

Sustainability loans and green bonds

Lenders’ perceptions are evolving and they increasingly include an ESG lens in their valuation and risk assessment criteria. Having the right ESG profile can provide access to sustainable and green project financing, often with an improvement on basis points resulting in lower costs of financing. It can also impac t stock valuation, access to talent and more.

We provide independent technical expert reviews for sustainable financing across various sectors, including building, energy, transportation, water, and waste management. Our services help clients understand and enhance their ESG credentials, thereby bolstering their credibility with lenders.

We are proud to become the first engineering firm to verify green bonds in both Asia Pacific and the US.

Case study

Gentari acquisition of WIRSOL Energy Australia

Our team of Transaction Services specialists provided a significant contribution toward the acquisition of Australian renewable energy business WIRSOL Energy (WIRSOL) by Gentari, a Malaysian clean energy solutions provider – the company’s maiden entry into Australia’s renewable energy market.

ESG

At Arup, we work to embed ESG considerations across the lifecycle of a business, including investment, operation and management, design and construction and divestment.

Explore our expertise