Expanding Heathrow and the Case for Sustainable Investment

By Javier Echave, Chief Financial Officer, Heathrow Airport Holdings, and member of the A4S CFO Leaders Network
 

In the business world, sustainability is often a buzzword, a “nice to have” section of your website that demonstrates how your business is taking the environment seriously. The reality is – sustainability is about taking ownership of all the externalities our activity generates to the environment and so much more.

A broader perspective challenges us to consider how we are planning for the future and the critical role businesses play in society. This allows us to consider what investment we are making to not only mitigate our impacts, but to grow our social and human capital. This is where the real choice sits, businesses can just lay back and wait for authorities and regulators to realize that those externalities shall be self-corrected through taxes; it could take months or years, but that day will certainly arrive. The alternative is to take action and factor those choices in today by adopting a more holistic approach and expanding the traditional appraisal of our investment decisions. A failure to do so, will stop us achieving the best outcomes for consumers, communities and investors.

We have a strong track record of sustainable investment and a unique opportunity ahead of us. Expanding Heathrow will be Europe’s largest privately financed infrastructure project. We have £14bn of investment decisions ahead of us, on top of the money we’ll invest to keep one of the world’s busiest airports running smoothly in the interim. We want to leverage this opportunity to drive a step change in how both we and other businesses approach investment, with sustainability at the forefront rather than the back of their mind. As just one example, our aspiration is to make growth from our new runway carbon neutral. Innovation to develop solutions will be key, as will systematically assessing the impact and incorporating into investment decisions.

We are starting to develop a Sustainable Investment Appraisal Tool in conjunction with expert valuation analysts Route2, a specialist supplier who will help us calculate the impact (either positive or negative) on natural, social or human capital based on simple input data. Once available later this year, the tool will slot into our internal investment processes to supply broader information on investment impacts, helping us to shape more effective decision making at Heathrow. It will embed sustainability into the fabric of our business model, supported by facts rather than just good intention. The decisions made will help us to build a credible and measurable case that we can share with the wider corporate world. This is a leading edge area of thinking when it comes to investing and I’m confident that it will put businesses that get it right ahead of their competitors. If we work together, we will show that a sustainable, holistic approach to investment isn’t just the right thing to do, but translates into tangible positive impacts on the bottom line in the long term.

 

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The A4S CFO Leadership Network

LONDON- UK- 17th Nov 2016. HRH The Prince of Wales convenes global CFO's and other leaders from the finance and accounting community for the annual A4S (Accounting for Sustainability) Summit at St James's Palace in London.
Photograph by Ian Jones

The Network brings together a group of leading CFOs from large organizations seeking to embed the management of environmental and social issues into strategy and business processes.