Back
Sustainability investing: the case for core infrastructure
2025 continues to be an eventful year, with the second quarter seeing rising geopolitical tensions as the United States and Iran engage in direct military confrontation. In June, the U.S. launched strikes on Iranian nuclear facilities, prompting Iranian missile retaliation and heightening global market volatility. Amid this turmoil, a major ESG milestone emerged: global carbon credit adoption accelerated, with Microsoft, JPMorgan Chase, and ByteDance signing multi-million-ton carbon removal deals. Meanwhile, governments in the UK, EU, and Singapore advanced new sustainability disclosure frameworks, signaling that climate finance and corporate transparency remain top priorities despite negative sentiment and geopolitical uncertainty.
Last quarter we highlighted the advantages of investing in social infrastructure and care homes in particular; this quarter we will continue elaborating on the theme but broadening the focus with core infrastructure. At IPS, we’ve been investing in core infrastructure since 2016 with our preferred pick being International Public Partnership, or INPP for short. The company was launched in 2006 and since then it has shown a solid track record of resilience, surviving through the great financial crisis and other periods of market meltdowns, through differing levels of interest rates and government policy uncertainty. Its business model is centered around acquiring public and social infrastructure assets across the UK, Europe and North America. Today its portfolio comprises 140 different projects in sectors including health, education, clean energy, water and transportation.
INPP’s primary objective is to provide investors with long-term inflation-linked returns via delivering growing dividends and potentially capital appreciation.
The company’s approach to sustainability is integrated throughout its investment lifecycle with ESG factors considered at every stage of the assets’ life. This commitment serves not only to reduce risk, but also to drive value creation and deliver positive outcomes for all stakeholders; while alignment with prominent global standards is a solid testament to the commitment to sustainability. INPP’s activities are in fact closely aligned with the United Nations Sustainable Development Goals (SDGs), the Paris Agreement and the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Furthermore, INPP is classified as an Article 8 financial product under the Sustainable Finance Disclosure Regulation (SFDR), which means it actively promotes environmental and social characteristics through its investment decisions.
All the assets in INPP’s portfolio generate either positive environmental or social impacts. The company rigorously screens potential investments for their contribution to a range of goals, including Good Health and Well-being, Quality Education, Clean Water and Sanitation, Affordable and Clean Energy, Industry Innovation and Infrastructure, Sustainable Cities and Communities, and Climate Action. For instance, 23% of INPP’s portfolio supports affordable and clean energy initiatives, while 19% is dedicated to advancing sustainable cities and communities.
Figure 1: Portfolio segmentation by SDGs contributions
Source: INPP’s 2025 Sustainability Report
Transparency and stewardship are also central to INPP’s responsible investment strategy. The company is committed to providing clear and comprehensive sustainability disclosures, and it works closely with public sector partners to ensure that its investments deliver long-term benefits for both current and future generations.
The company’s valuation suffered following the September 2022 Liz Truss mini-budget and the subsequent spike in longer term yields.
In response, management has introduced several initiatives aimed at narrowing the 19.8% discount at which the company’s shares currently trade relative to net asset value. These include buybacks, asset sales to validate valuations and balance sheet optimisation via debt reduction.
Although the market may take time to fully recognise these efforts, we find the company attractive today due to its compelling valuation, the reliability of cash flows from government-backed projects, and the potential for discount narrowing. It stands out as a portfolio asset that not only delivers attractive risk-adjusted returns but also creates a positive social impact today and for the next decades.
Tiziana Maida, CFA
Head of Research
Disclaimer
Please note, this asset has been selected as part of a portfolio comprising other assets. This report does not constitute investment advice, and this asset has not been reviewed for suitability against your particular circumstances in isolation. This report represents IPS Capitals opinions as at the date of publication, however, these opinions may change without notice. You should seek professional advice before investing into any financial asset.
