Environmental, Social and Governance (ESG)

The Octopus Renewables mission is to accelerate the transition to a future powered by renewable energy in order to mitigate climate change. By channelling capital towards sustainable outcomes that mitigate climate change, Octopus Renewables aims to contribute to international efforts to limit the global temperature in this century to below the Paris Agreement’s target of 2 degrees.

We want to change the world for the better and strive to do business the “right” way. For us, this means considering a wide range of stakeholders when we make important decisions, including our customers, shareholders, employees, the community and the environment.

Our core impact goal is to accelerate the transition to net zero through our investments by building and operating a diversified portfolio of renewable energy assets.

This impact objective is clearly defined and aligned to the funds’ investment strategy. The assets generate renewable energy which in turns generates a yield . The renewable energy generated supports the transition to net-zero by replacing unsustainable energy sources with clean power. We measure progress against our core impact objective through ESG Key Performance Indicators (KPIs).

Our ESG approach: Performance, Planet and People

Octopus Renewables manages investments on behalf of a wide range of investors. As well as an overarching Octopus Renewables Responsible Investment policy, each Octopus Renewables fund has its own bespoke ESG policy that is reviewed annually. This allows for different investors to dictate the direction, depth and breadth of the ESG approach for their investment, all of which must exceed the minimum standard set by the Octopus ESG committee each year.

All of our funds’ ESG Policies are based around our fundamental stakeholder pillars: Performance, Planet and People. This framework embeds ESG risk factors and considerations into investment processes, asset management and reporting, helping us to mitigate ESG risks and measure and track the positive impact that the investments we manage has for investors, the environment and society.

Performance

Build and operate a diversified portfolio of renewable energy assets, mitigating the risk of losses through robust governance structures, rigorous due diligence, risk analysis and asset optimisation activities to deliver investment return resilience.

Planet

Consider environmental factors to mitigate risks associated with the construction and operation of assets, enhancing environmental potential where possible.

People

Evaluate social considerations to mitigate risks and promote a ‘Just Transition’ to clean energy.

Related policies

In addition to fund-specific ESG Policies, Octopus Renewables has policies and processes that support our commitment to ESG matters, including an equal opportunities policy, modern slavery policy, whistleblowing policy and conflicts policy, all overseen by Octopus Group ESG Committee.

Reporting on ESG

We choose to report our impact through KPIs and in line with the UN Sustainable Development Goals (SDGs). The UN SDGs aim to create a better future for all in relation to ending extreme poverty, fighting inequality and injustice, and protecting our planet by 2030. These SDGs have become part of the universal language for reporting on the impact of investments.

Our investments contribute directly to the UN SDGs 7, 11 and 13. With investor support, impact initiatives also enable us to contribute to a broader and deeper set of UN SDGs.

Core SDGs

Reducing reliance on fossil fuels for energy by investment into renewable energy generation assets.

Reducing the adverse environmental impacts of cities and communities through renewable energy generation.

Demonstrating commitment to the Paris Agreements and contributing to decarbonisation of the economy through low-carbon, renewable energy assets.

Additional SDGs

Broadening implementation of anti-poverty strategies via community benefit agreements and initiatives.

Reducing pollution through the reduction of emitted GHGs by the installation and management of clean, low-carbon energy generation assets. Championing health and safety and promoting employee wellness.

Supporting a just transition to a low-carbon economy.

Using expertise and latest technologies to maximise electrical output and future-proof energy systems.

Conducting human rights due diligence and providing access to remedy.

Preserving integrity of land through investment in low-impact and low-polluting technologies and the introduction of environmental initiatives through active asset management, supporting biodiversity and the ecosystem.

Strengthening our approach through external ESG focused organisations

A need for a sustainable global financial system is recognised by international organisations and frameworks, and Octopus Renewables supports and is aligned to many of them.

We incorporate ESG criteria throughout our investment cycle and ongoing management and alignment with external ESG focused organisations allows us to strengthen, authenticate and measure our progress on our ESG approach.

Taskforce on Climate-related Financial Disclosures (TCFD)

Whilst renewables represent a climate solution, it is not exempt from the potential impacts of climate change. We recognise that a number of climate-related risks and opportunities may have a material impact on the performance of the funds that we manage. As such, we support the recommendations of the TCFD.

PRI

Octopus Group is a UNPRI signatory, demonstrating its commitment to responsible investment, and places Octopus Group at the heart of a global community seeking to build a more sustainable financial system.

The PRI is a voluntary framework concerned with the incorporation of ESG considerations into the investment decision making process. It provides a basis for potential and existing investors to judge the quality of a company’s ESG processes and positioning within an industry sector. Octopus Group is a PRI signatory, demonstrating its commitment to responsible investment and placing Octopus Renewables at the heart of a global community seeking to build a more sustainable financial system.

Taskforce for Nature-related Financial Disclosures (TNFD)

Nature and its ecosystem services are essential inputs to many businesses. However, financial institutions are currently unable to fully identify, measure and manage nature-related risk. 2021 will see the launch of the TNFD. The TNFD will provide these institutions with a framework to assess and manage nature-related risk, helping to redirect global financial flows toward nature-based solutions.

Octopus Renewables will continue to follow the progress of the TNFD launch and look to implement TNFD guidelines as soon as they become available.

“The new Taskforce on Nature-related Financial Disclosures will help financial institutions to shift finance from destructive activities and toward nature-based solutions.” United Nations Secretary-General, António Guterres.

EU Taxonomy Alignment

The EU Taxonomy is a classification system for sustainable activities designed to help investors identify “green” environmentally friendly activities. This is aimed to demonstrate investments that are sustainable, ones that make a substantial contribution to climate change mitigation or adaptation, while avoiding significant harm to other environmental objectives and complying with minimum safeguarding standards.

Impact Principles

Octopus is a signatory to the International Finance Corporation ‘Impact Principles’ which outline the Operating Principles for Impact Management . The Impact Principles provide a framework for investors to ensure that impact considerations are purposefully integrated throughout the investment life cycle. To increase transparency and authentication of impact management systems, signatories are required to publish an annual disclosure statement and an independent verification statement.

Sustainable Finance Disclosure Regulation (SFDR)

The SFDR is a legislative tool designed to reorient capital towards more sustainable businesses while combating ‘greenwashing’. A key part of the SFDR is linked to transparency, explaining how managers take adverse impacts on sustainability factors into account. Although Octopus Renewables is not obligated to comply with the SFDR, Octopus Renewables supports the aims of this regulation.

Please see below for the Octopus Renewables Principal Adverse Impacts Statement.

ESG in action