ESG – A performance multiplier for infrastructure investors

Michael Bessell, Executive General Manager, Infrastructure, Dexus
16 December 2025

Infrastructure has always been about assets that keep economies moving and communities connected. Today, it means more than engineering strength or regulatory compliance – it means considering Environmental, Social and Governance (ESG) principles in every decision, given their power as a performance multiplier and force for good.

Why ESG matters for investors

Institutional investors prize infrastructure for its long-term, stable returns. Yet the forces shaping those returns are changing. Climate risk, social expectations, and governance standards are no longer peripheral – they’re central to sustaining long-term asset value. Global capital markets are pricing sustainability risk into valuations, and regulators are tightening disclosure requirements.

The numbers tell the story. According to the Global Infrastructure Outlook by Oxford Economics, the world will require US$94 trillion of infrastructure investments by 2040, but based on current spending levels, there will be a US$15 trillion gap. Much of the capital available will flow to projects that meet sustainability criteria. Conversely, those that lag in this area risk stranded value, higher insurance premiums, and reputational damage¹.

The ESG value premium

Evidence is clear: ESG performance correlates strongly with financial success. Research by the Center for Sustainability and Excellence found a 92% correlation between medium-to-high ESG ratings and profitability among 210 leading firms across 21 sectors².

Similarly, Deloitte analysis shows companies with higher ESG scores enjoy significantly higher valuation multiples. A 10-point increase in ESG score is associated with approximately a 1.2x to 1.8x higher EV/EBITDA multiple, underscoring that markets reward ESG improvements³.

These findings suggest ESG scores not only mitigate risks but also signal operational quality, financial resilience, and market competitiveness – all drivers of superior returns.

Dexus: Sustainability in action

At Dexus, sustainability is embedded through commitments to customer prosperity, climate action, and enhancing communities across our infrastructure assets. More broadly, our actions include pioneering solar-plus-battery integrations in industrial precincts like the 127-hectare Horizon 3023 project in Melbourne, positioning it as a frontrunner in decarbonisation and resilience, and through Powerco, which deployed New Zealand’s first low-voltage Battery Energy Storage Systems, storing off-peak energy for use during demand.

Our leadership in this area continues to be recognised through global benchmarks.

In the 2024 GRESB Assessment, Dexus Diversified Infrastructure Trust (DDIT) achieved a historic score of 97, earning a 5-Star GRESB rating as the first fund in the Oceania Diversified Private Equity category to reach this milestone.

Building on this success, in the 2025 GRESB Infrastructure Assessment, DDIT again set a record with a score of 98 and again securing a 5-Star rating for the second consecutive year, reinforcing our commitment to sustainability. Our individual assets also delivered outstanding results:

· Reliance Rail: Scored 100/100, ranking first globally among 650 infrastructure participants and first in its PPP category. Through a Green Sustainability-Linked Loan, Reliance Rail tied financing terms to ESG performance, incentivising continuous improvement. Initiatives delivered a 33% reduction in waste, advanced solar trials, and workforce capability programs⁴.

· Powerco: Also scored 100/100 for the third consecutive year, reinforcing its leadership in energy distribution. Powerco has cut Scope 1 emissions by over 30% since 2021 and Scope 2 emissions by 29%, with more than 90% of electricity sourced from renewables. It is investing heavily to support New Zealand’s EV charger rollout target of 10,000 chargers by 2030 and facilitate double-digit growth in residential solar⁵.

The research underscores a simple truth: ESG excellence correlates with operational resilience and durable returns in an era of systemic uncertainty. Assets with robust ESG frameworks deliver lower volatility, stronger cash flows, and enhanced exit multiples.

The road ahead

As disclosure standards tighten and capital flows favour sustainability, ESG will increasingly become a core component of portfolio strategy. Investors who embrace this shift can capture upside – not just mitigate downside – and be a force for good.

At Dexus, we see ESG as a catalyst for value creation. Our commitment is clear: to continue raising the bar and delivering infrastructure assets that are resilient, high-performing, and aligned with the expectations of investors, communities, and future generations.