UK - Infrastructure should no longer be considered a single asset class but instead broken up into sub-divisions, including green infrastructure, UKSIF has said.

Penny Shepherd, who was appointed to the advisory group for the UK's Green Investment Bank last month, also said the asset should appeal to UK pension funds, as it "strengthens the contract" between schemes and society.

Speaking at a conference hosted by the UK's National Association of Pension Funds earlier this week, Shepherd estimated that of the $30trn (€22trn) in infrastructure investment required globally between now and 2030, around $5trn would come from a 'green' background.

"Within that context, does it make sense going forward to have only a general infrastructure mandate?" she asked.

"Or, either now or in the future, will it make sense to separate that into different infrastructure asset classes and seek exposure specifically to green infrastructure, as well as to other infrastructure funds?"

She said there was potential for infrastructure to match the liabilities of pension funds going forward, as well as allowing it to strengthen the societal contract between itself, members and the general population - rather than financial institutions simply targeting the highest returns and schemes aiming to guarantee pension payments.

"What infrastructure investments offer is the ability to support the contract between pension funds and society in an additional way by actually investing in assets clearly of value to society and that society needs to successfully make the transition to a low-carbon economy," Shepherd said.

She stressed the significance of the Green Investment Bank's role in the UK, saying proposals would "accelerate" low-carbon infrastructure, allowing pension funds to invest "initially alongside" the institution.

However, Shepherd stressed the importance of consistent government policy when it comes to cultivating infrastructure investments, citing the Spanish government's change of tariffs on the solar power industry as one that made investors uneasy.

At the time, three Danish schemes with assets of around €30bn warned that retroactive changes to state-backed prices could undermine investor confidence in the sector.

"It's fair to say there is a lot of lobbying going on to say 'You need to reassure the market'," she said.

"You need to set up structures to convince the market it is not possible to make retroactive changes, which affect the business case for an investment."

However, she said there was a recognition that governments needed the flexibility to respond to price changes in the market - such as a fall in solar-panel prices after a contract was agreed, but before these had been acquired by the investor - to prevent previous "excessive" profits by investors.

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