Institutional investors matter
Customer stewardship is a means to a very important end, rebuilding trust that enables new investment and opportunities.
There are many challenges for investors in infrastructure. It has huge upfront investments, big focus on engineering and technology that defines its long term legacies yet these characteristics also make it hard to respond to customers and bring about change when needed – hence stewardship by customers.
The good news is that some Australian infrastructure firms are making the change in mindset and practice to get better at customer stewardship – rich in data, technology and innovation: driven by responsible people accountable for their actions.
These firms have gone beyond the basic compliance mentality of ‘ticking the box’ evident in so many annual reports where the reader can only be hopeful but not assured the right thing is being done.
Customer stewardship is an opportunity for infrastructure investors, owners, operators and policymakers to expand their toolkit of solutions for the nation’s problems from a pretty obvious starting place, the customer.
That means a determination to deliver good long-term outcomes, based on substantive relationships, where reciprocity strengthens performance and participation with stakeholders comes first.
This reflects a realisation among CEOs that not all our economic and social challenges can be addressed through reducing costs, lifting prices or through more funding.
Unfortunately the social licence to own and operate infrastructure by the private sector is drifting into troubled waters and must be corrected. Already there have been calls to renationalise major entities like Telstra and energy utilities. While that may seem absurd, nationalisation of broadband assets is exactly what has happened with NBN and UK is in the midst of maelstrom on similar issues.
Institutional investors can help buttress an enduring customer led, market based stewardship for infrastructure. That is where responsible owners are active in managing their assets to the shifting needs of customers, and are front footed in reimaging infrastructure to adapt and perform to higher standards of service and innovation over the long term.
While many investors are attracted to the infrastructure asset class because it is typically a safe haven from volatility and with inflation adjusted returns, it is important that they closely engage customers and community to ensure services are timely, scaled and feasible.
A plethora of challenges confront investors, owners and operators of infrastructure. On the one hand, pressure to payout dividends especially to retired security holders dependant on their investment to meet living costs has never been more acute, and on the other immense pressure to reinvest in assets and networks in response to climate, technology and social change. Public trust is delicately balanced as to how investors navigate these challenges.
Many western nations including Australia need a stronger ambition to an infrastructure future where customers, asset owners and operators exchange information, understand needs and preferences and are motivated to meet them in a way that lifts the entire system. This simple process of stewardship underpinned by respect and humility to the customer and the community from which they come has been lost, as infrastructure gets bigger and more complex.
Customer stewardship is a means to a very important end, rebuilding trust that enables new investment and opportunities. Integrity demonstrated through consistent behaviour towards the customer (and community) will be a big step forward. Too often communication with customers is not targeted, timely, clear or helpful and dressed with over-promise served on a platter of poor delivery.
The whole infrastructure sector must commit to being a beacon for exemplary customer stewardship. Its time to bring the customer and community in from the cold, and when they do not only will shareholders and customers be better off, so will Australia.