Raffaele Della Croce (OECD)

“Investing in Sustainable and Resilient Infrastructure” 

Short Bio. Raffaele Della Croce is a Senior Economist at the OECD, and Senior Fellow at LTI@Unito – Fondazione Collegio Carlo Alberto in Turin. At the OECD he is responsible for producing statistical research and analysis on sustainable finance, long term investment financing and connectivity infrastructure. He is the Lead Manager for the OECD project “Institutional Investors and Long-term Investment” in the Financial Affairs division of the OECD and also responsible for the Long Term Investment Network gathering major pension funds, insurance companies, and sovereign wealth funds across the world www.oecd.org/finance/lti.

Abstract
Reaching the Paris Agreement and the Sustainable Development Goals (SDGs) will require large- scale private investment in low-emission infrastructure and reallocation of investment away from carbon-intensive assets. The COVID-19 pandemic has added to the urgency, showing how infrastructure, new or old, will also need to be made resilient to extreme hazards and climate impacts. Understanding the role of financial markets and the private sector in economic recovery packages over the medium/long term will be crucial in stimulating the economy and achieving long-term development goals.

Recent decades have seen a shift towards greater involvement of institutional investors and new technologies in the delivery and financing of infrastructure. At the same time, among investors there is increased recognition of ESG factors – such as climate change – as potential drivers of future portfolio risk and return affecting their ability to meet future obligations. This is having an impact on securities valuation models and asset allocation decisions reflected for example in an interest for active investing and ESG integration. In fact sustainable and resilient infrastructure investments play a crucial role in not just bridging the current investment gap, but in maximising the long-term returns and benefits from investments in infrastructure.

Overall objective of recent OECD work is to offer a new narrative on investing in infrastructure linking the sustainability and resilience characteristics of infrastructure to investor’s long- term horizon and ESG approaches. In order to do so we look at current investors actions and approaches building on OECD investors data tacking stock of existing benchmarking initiatives. This will enable governments to gain a better understanding of the landscape of ESG in infrastructure and identify relevant policies to mobilise private sector capital and create sustainable infrastructure as an asset class (i.e. price in sustainability aspects in the infrastructure proposition).