Asset Owners Research Articles

Automation, artificial intelligence and capital concentration – A race for the machine

ABSTRACT Since the industrial revolution, productive capital in the form of machines, structures and systems has assumed an ever more dominant role as compared to labour. The owners of non-human productive assets receive a growing share of market-sourced income, with an ever-smaller proportion going to the owners of human labour. The shift between factors of production in favour of capital is exacerbated by technological progress and its embodiment in automation. Academic work on labour’s declining income share has emphasised the role of capital accumulation and capital-augmenting technical change exacerbated by the fast developments of artificial intelligence. At the same time, we observe a peculiar disconnect between this phenomenon and public discourse and interpretation of its social and economic effects: the discussion of automation is focused on its potential effects on employment, micro- and macro-distributive effects are barely mentioned. the discussion of rising inequality is focused on issues of distributive justice; the role of the shift from labour to capital in concentrating wealth is mostly ignored. We argue that to offset the disadvantages of AI/automation and further capital concentration, all citizens should be enabled to (co-)own technology and benefit from the second income source capital ownership provides.

The Universal Classification system for assessing the embodied carbon of concrete in Canada

Concrete is known to be the most prevalent human-made material globally owing to its durability, versatility and affordability which; however, contributes significantly to global CO2 emissions. Consequently, efforts have intensified to reduce concrete's embodied carbon, with emerging or conventional alternative technologies aiming to mitigate emissions and produce "sustainable" and "low carbon" concrete; a set of terms which have been used inconsistently leading to potential greenwashing and confusion in the industry. Simultaneously, there is a pressing need for tools and policies to guide the design of low-carbon concrete structures and infrastructure. This paper introduces an embodied carbon classification system as a practical solution to address industry confusion and facilitate sustainable practices in the concrete construction sector. It consists of a universally applicable tool that can be used by designers, manufacturers, asset owners and policy makers to enable a robust evaluation of the embodied carbon concrete, develop pathways to concrete decarbonisation.

A short term multistep forecasting model for photovoltaic generation using deep learning model

Developed countries have substantial investments in renewable energy currently, particularly Photovoltaics (PV), for achieving net-zero emissions. But PV generation is highly volatile and hence achieving supply-demand balance is challenging. Robust forecasting models will help PV integration and penetration into the grid, making sure that there is an adequate supply to match the demand, ensuring reliability and stability of power systems. In this paper, a deep learning model is developed for PV generation multistep forecasting using a small subset of weather variables with a 15-minute resolution, with very low computation time. The forecasts very closely align with the actual generation, with a Normalized Mean Absolute Error (nMAE) of 0.04, much less than 1 kWh in terms of error in forecast generation. Direct and multioutput forecasting are combined here. Comparisons with Long Short Term Memory (LSTM) and Gated Recurrent Unit (GRU) show performance improvement, by ∼15% compared to LSTM and ∼17% compared to GRU in terms of average nMAE. The model can be used in urban environments for short term forecasting. Also, if an accurate forecast is available, PV asset owners can plan their generation better when they export power back into the grid, make better bids in the energy markets, increase their revenues and eventually increase the share of renewables in the energy market.

The evolving climate change investing strategies of asset owners

Asset owners will play a foundational role in how the financial system will respond to the immediate and long-term physical, transition, legal, and other risks and opportunities emerging from global climate change. We investigated how asset owners incorporated climate change in their investments using a process framework of organizational change. We conducted more than 50 interviews with asset owners with over $750B assets under management, and their stakeholders, including beneficiaries, lawyers, consultants, and asset managers. These asset owners included retail investors, high-net-worth family offices, pensions, foundations, endowments, trusts, and corporations. Interviewees discussed their investment strategies related to climate change, including mitigation, adaptation, profit, philanthropic finance, risks, and opportunities. We found that legal stakeholders sometimes drove conversations, that trustees gradually matured in their fiduciary identities, and that staff struggled to operationalize investment mandates. We summarize proposed interventions that will help asset owners better serve their commitments.

Reactivation of public–private partnership (PPP) models for rural water supplies in Rwanda: strengthening operation and maintenance systems

ABSTRACT The responsibility for operation and maintenance (O&M) in rural piped water supply systems in Rwanda has been transferred from the community to private operators (POs) during 2004. However, water supply services were suspended in many cases because of a lack of proper rehabilitation and regular maintenance due to technical and institutional capacity gaps of POs and other key stakeholders. As countermeasures, this project used the following six approaches: elaborating the O&M framework including the adoption of a licensing system for POs, establishing a drinking water quality monitoring framework, developing stakeholder capacity, developing inventory data and facility mapping, strengthening data management systems, and installing the necessary equipment for water supply management. As a result, the annual downtime of water supply services in the model districts was reduced by 41%. The result was inferred to be mainly related to the establishment of a licensing system for POs, improved reporting mechanism and royalty payment strategy, dedicated bank accounts for water, and the development of an asset inventory. To reactivate the public–private partnership models, it was important to identify specific issues from the national guidelines and contents of the contract between asset owners and POs to activities in the field and to work on improving them realistically.

The Expansion of Incentive (Performance-Based) Regulation of Electricity Distribution and Transmission in the United States

I examine developments in the application of performance-based regulation (PBR) to electricity distribution and transmission in the United States. Applications of comprehensive PBR to electricity distribution had been slow to diffuse in the U.S. prior to roughly 2000. PBR mechanisms are now being applied more frequently to electricity distribution, which reflects the changing structure of the electric power industry and the increasing obligations that are being placed on electric distribution companies. The new obligations are a consequence primarily of aggressive targets for decarbonizing the electricity sector in nearly half the states and the goal of using “clean” electricity to electrify transportation, buildings, and other sectors. PBR should be viewed as a set of “building blocks” that can be adopted in various combinations and should recognize that PBR and traditional cost-of-service regulation (COSR) are properly viewed as complements rather than substitutes. Recent reforms in the regulation of distribution companies in Great Britain—“RIIO”—have been influential in the U.S. The main reforms contained in RIIO are discussed. There has been essentially no application of PBR by the Federal Energy Regulatory Commission (FERC) to owners of transmission assets or to independent transmission operators. FERC has applied targeted incentives to encourage investment in transmission facilities and membership in independent system operator organizations. However, the regulation of transmission rates relies primarily on COSR in the form of formula rates and has poor incentive properties. Regulation of independent system operators is a challenge because they are non-profit organizations with no equity to put at risk. Reforms here are suggested.

Working Smart versus Working Hard: Wireless UT Sensors for Asset Integrity Monitoring

In the 21st century of NDE technology and deployment, monitoring technologies and strategies are completely different than inspection technologies and strategies. Monitoring is no longer sending a technician to a location to take repeated manual data – this is still inspection, just more frequently. Monitoring takes place after a manual/automated inspection has located an anomaly and instrumentation (a sensor in this case), is installed to take recurring readings at that precise location to gather a large sample size of data to be analyzed. These two strategies, when employed in concert, even only on the most critical (10%) circuits/tanks/units, are optimizing asset health, reducing unplanned downtime, and eliminating the need to have people in potentially unsafe situations to the tune of tens of millions of dollars per year. This article will provide real life examples of the ~20% of the best run refineries, chemical, paper, and power plants which have cracked the code and are successfully using an inspect to monitor strategy to change the game of how they implement asset integrity in the 21st century. As you read this article, ask yourself the question, is my facility a part of this ~20%? If not, what can I start doing, and what incremental step changes can I make to my legacy inspection & asset integrity strategy, to use technology to spend my precious budget and resources to be a part of this ~20% in 2024 and beyond? Many asset owners struggle to identify the root cause of fluctuating corrosion rates due to unreliable, infrequent, or sheer lacks of quantity (and quality) of inspection data to make informed decisions on asset health. Facilities worldwide are tasked with monitoring thousands of Condition Monitoring Locations (CMLs) with established NDE techniques such as manual ultrasonic testing and radiography. While these techniques can provide valuable “snapshots” of the condition of particular locations, limitations and inherent errors can compound leading to ill-advised decision making. Manually taken thickness data can vary greatly and result in unwarranted complacency or excessive and costly inspections. Utilizing long range wireless continuous monitoring systems have drastically improved operators understanding of how process changes influence corrosion rates. Installed UT sensors provide near real-time data with a 0.001” accuracy. This influx of data provides a trend line whereas with manually taken data, sometimes only taken a few times a year, only provides a few points scattered across a graph. Asset owners have realized they can use this wealth of new information to validate and discover the effects of operational changes on corrosion rates and make more informed decisions to impact asset extension, retirement, and increasing the efficiency of assets during its useful life.

Review and analysis of the failure risk mitigation via monitoring for monopile offshore wind structures

Structural health monitoring systems are gaining more attention in the offshore wind industry as they offer valuable insights into the integrity status of operating assets. Whilst most Class Society Rules and International Standards recognise the importance of implementing a condition-based maintenance strategy, they only provide theoretical guidance. Ultimately, it is the asset owner’s responsibility to determine how to integrate this strategy into their broader operation and maintenance planning, including identifying which components to monitor and which monitoring techniques to employ. The present paper applies the Failure Mode, Effects, and Criticality methodology to identify the most critical failure modes to prioritise for monopile offshore wind structures. Hence, the potential benefits of incorporating structural health monitoring systems within a condition-based maintenance strategy and exploiting lifetime extension possibilities are assessed. To achieve this, a novel 4-step methodology is introduced, involving understanding failure mechanisms (time-dependent behaviour and pattern), current regime (inspections at intervals), monitoring options (both direct and indirect), improvement potential evaluation through 5 key performance indicators relevant for optimal O&M, which is more comprehensive and realistic than considering only monetary consequence of failure. The study addressed the prevailing failure modes in 5 categories, namely fatigue, corrosion, deformation, buckling and displacement, and connection failure, aiming to demonstrate potential improvement in terms of risk mitigation against these failure modes. The results of this study can significantly help offshore wind developers optimise where and how to allocate their resources for structural health monitoring, resulting in long-term cost reduction opportunities.

DESG У ПРОЦЕСІ ПРИЙНЯТТЯ ІНВЕСТИЦІЙНИХ РІШЕНЬ

Introduction. Nowadays, there is a growing need to supplement the qualitative criteria of investment attractiveness, both on the part of businesses and investors. This has led to the actualization of ESG principles, which are becoming strategic national and international norms. In this context, European companies are required to submit non-financial reporting, which is becoming mandatory along with financial statements. Such trends facilitate global digitalization which is aimed at achieving sustainable development goals. The introduction of a new category - DESG (Digital, environmental, social and governmental) - reflects the need to combine digitalization and sustainable development principles to achieve synergy at all levels of society and business. Problem Statement. Assessment of the role of DESG in the investment decision-making process. The purpose is to substantiate the essential characteristics of each of the DESG components, to evaluate scenarios for integrating the digital component into the ESG principles system, to substantiate and develop recommendations for integrating DESG into the investment decision-making process, taking into account international experience in the investment process. Methods. General scientific and special methods were used, in particular: scientific abstraction and epistemological (content) analysis, synthesis, induction and deduction, analogies and systematization, system-structural analysis, expert evaluation method, index method and grouping method. Results. The article examines the typology of DESG application in the investment decision-making process, considers a number of approaches to the definition and differentiation of key terms of sustainable finance. Rating agencies and methods for determining the practical characteristics of ESG are considered. An algorithm for applying DESG in the investment decision-making process is proposed. In the context of substantiating the stages of the algorithm, the essential characteristics of each of the DESG components are studied, trends in changing their priority on a global scale are analyzed. As an analytical basis for the study, the author analyzes the dynamics of changes in the number of asset owners acting in accordance with the PRI principles; the structure of asset owners acting in accordance with the PRI principles in 2022; and the industry structure of companies that provide information in accordance with the SABS criteria. Conclusions. Thus, in modern conditions, DESG is an important factor in making investment decisions. Therefore, our study allows us to draw a conclusion about the structural components of DESG and their role in the investment decision-making process. In the structure of the algorithm for applying DESG we propose to distinguish the following stages, namely: determining the structural components of DESG and their essential characteristics, the relationship between DESG components, justifying the direction of DESG application (scenarios for integrating digital components into the ESG system). The primary allocation of each component will allow to correctly determine the priorities when making an investment decision for each individual project. This will strengthen the targeted nature of investments, which will have a positive impact on the effectiveness of the investment process and the compliance of results with expectations.

A Discussion of Building a Smart SHM Platform for Long-Span Bridge Monitoring.

This paper explores the development of a smart Structural Health Monitoring (SHM) platform tailored for long-span bridge monitoring, using the Forth Road Bridge (FRB) as a case study. It discusses the selection of smart sensors available for real-time monitoring, the formulation of an effective data strategy encompassing the collection, processing, management, analysis, and visualization of monitoring data sets to support decision-making, and the establishment of a cost-effective and intelligent sensor network aligned with the objectives set through comprehensive communication with asset owners. Due to the high data rates and dense sensor installations, conventional processing techniques are inadequate for fulfilling monitoring functionalities and ensuring security. Cloud-computing emerges as a widely adopted solution for processing and storing vast monitoring data sets. Drawing from the authors' experience in implementing long-span bridge monitoring systems in the UK and China, this paper compares the advantages and limitations of employing cloud- computing for long-span bridge monitoring. Furthermore, it explores strategies for developing a robust data strategy and leveraging artificial intelligence (AI) and digital twin (DT) technologies to extract relevant information or patterns regarding asset health conditions. This information is then visualized through the interaction between physical and virtual worlds, facilitating timely and informed decision-making in managing critical road transport infrastructure.

Transitioning a hydrogen facility from project to operations

Preparing any hazardous facility for transition from project to operations requires a rigorous management process. In the area of hydrogen operations, hazards are heightened and there are limited examples of transitioning a hydrogen facility from project to operations outside of large-scale oil refineries. This paper highlights the unique challenges of managing hydrogen process safety through the project to operate phase while maintaining safety standards that meet or exceed the expectations of the asset owner, regulator and the community in which we operate. Our experience transitioning hydrogen operations started in Queensland which has arguably the toughest engineering and safety standards in Australia. This experience has informed our methodologies and the important points of this paper detail for both owner and regulator, what to expect from the operator and what the operator will need to demonstrate compliance with. Hydrogen operations traditionally were on oil refineries which may have been in local communities, unlike remote upstream gas and oil projects far from the major populations. Refineries are typically close to transportation hubs and end users. Our experience is that hydrogen or hydrogen transport fluids such as ammonia, methylcyclohexane (MCH) and others are more likely to reside near major international ports with close access to both clean energy and available workforce which heightens the environmental, social, governance and community risk management requirements. This paper intends to inform regulators, owners and operators of the unique challenges and aspects of getting a hydrogen facility up and running in a safe and community sensitive way.

Digital transformation maturity assessment framework for large infrastructure asset owners

This research project developed a framework for assessing digital transformation (DT) maturity in large government-owned corporations (GOCs), focusing on integrating building information modelling (BIM), digital engineering (DE) practices, value of information, data integration aspects, and critical information management competencies, relating to asset management, asset delivery, and asset performance. Recognising DT’s strategic importance in asset lifecycle management, researchers created a practical DT maturity assessment tool applied to an Australian GOC. The framework and Excel assessment tool outline DT maturity across seven categories and 56 indicators, using the analytical hierarchy process (AHP) to rank indicators based on expert input. The tool enables straightforward data input and DT maturity evaluation, helping organisations understand their current DT status and set improvement targets. Workshops with DT professionals validated the tool’s effectiveness through a case study, offering insights into DT maturity levels and a roadmap for technological integration and data-driven decision-making. The research highlights DT’s role in enhancing efficiency, innovation, and safety, emphasising the need for strategic alignment with organisational objectives.

The contradictions of unconventional monetary policy as a post-2008 thwarting mechanism: financial dominance, shadow banking, and inequality

The global financial crisis (GFC) of 2008 has triggered profound changes in the macro-financial regulatory architecture. Ever since, the interplay between political, institutional, and macroeconomic developments has received increasing attention in political economy, as in the evolutionary macro-financial approach of institutional super-cycles with its concept of thwarting mechanisms. While these institutional structures aim to stabilise the macro-financial system, they may also contradict each other due to unintended side effects. This paper argues that the understanding of thwarting mechanisms can be enriched by further integrating it with political economy literature on finance within the post-GFC institutional setup. It conceptualises unconventional monetary policy as a novel thwarting mechanism and analyses the contradictory implications for overall macro-financial stability with a particular focus on aggregate demand. It suggests three reasons why this thwarting mechanism failed to restore sustained economic growth in the post-crisis decade: First, sustained large-scale asset purchases perpetuate the structural drivers of financial dominance in political power relations, entrenching the role of the shadow banking system within the macro-financial order and impairing the development of other thwarting mechanisms. Second, unconventional monetary policy maintains the tenets of the inflation targeting regime and thereby sustains neoliberal macroeconomic governance with restrained fiscal policy. Third, it exacerbates preexisting wealth and income inequality by redistributing wealth towards asset owners, undermines consumer demand, and thus contributes to stagnation tendencies. Thus, this paper suggests that the contradictions of this novel post-GFC thwarting mechanism contribute to weaken economic growth and thus fail to restore macro-financial stability.

Pension reform and wealth inequality: Theory and evidence

A growing literature explores reasons for rising wealth inequality, but is mostly silent on the role of pension systems despite their well-understood influence on life-cycle savings. This paper develops a simple life-cycle model to lay bare the primary theoretical mechanisms connecting pension systems, asset accumulation, and the wealth distribution. Mandated fully-funded plans transform individuals with lower incomes, often characterized as low savers, into asset owners, and may also imply a more equal wealth distribution than pay-as-you-go-based systems. To test the empirical validity of these predictions, the paper explores a pension reform in Denmark, a country that witnessed declining wealth inequality over the last decades. In a calibrated life-cycle model employing unique register data, the Danish pension reform emerges as a key factor explaining the downward trend in wealth inequality.

Unlocking effective ice-jam risk management: Insights from agent-based modeling and comparative analysis of social theories in Fort McMurray, Canada

Ice jams pose a major flood hazard in communities along northern rivers, resulting in high backwater levels and overbank flooding during ice-cover breakup. Mitigation measures, including large-scale projects by government agencies and individual actions by asset owners, can help reduce flood risk and protect human life and assets. This study examines ice-jam flood risk and explores the effectiveness of adaptive strategies in mitigating such risks in Fort McMurry, Canada. It evaluates the effectiveness of top-down (government-led artificial breakup) and bottom-up (resident-led flood-proofing) strategies, comparing the Rational Choice Theory (RCT) and the Protection Motivation Theory (PMT) models. The objective is to explore the potential enhancements to the ice-jam flood risk model through the integration of the PMT as a decision-making framework under uncertainty. This study seeks to assess whether and to what extent such integration can improve the modeling of ice-jam flood risk. The findings highlight the benefits of incorporating socio-economic factors in the PMT model. Economic factors, such as income tax and the cost of flood-proofing, shape overall flood risk, especially when artificial breakup measures are not implemented. The study emphasizes the importance of considering heterogeneity in decision-making processes and diverse characteristics of individuals when designing flood risk management strategies. Response efficacy and self-efficacy coefficients are significant factors influencing flood risk and the adoption of flood-proofing measures. Enhancing individuals' belief in their actions' effectiveness and their confidence in self-protection contributes to more effective flood risk management. These findings inform the development of more effective flood risk management strategies.

Collaborative investor engagement with policymakers: changing the rules of the game?

Purpose Applying universal ownership theory and drawing on a multiplecase study design, this study aims to analyze what drives institutional investors to engage with government entities and what challenges they find in the process. Design/methodology/approach The authors relied on document analysis and conducted 12 semi-structured interviews with representatives from asset owners, asset managers, investor associations and academia. Findings The authors identify a trend where investors conduct policy engagement to fulfill their fiduciary duty, improve investment risk management and create an enabling environment for sustainable investments. As for engagement challenges, investors report the longer-term horizon, a perceived limited influence toward governments, the need for capacity building for investors and governments, as well as the difficulty in accessing government representatives. Originality/value This research contributes to filling a gap in the literature on this new form of investor activism, as a growing number of investors engage with sovereign entities on environmental, social and governance issues.

BUSINESS MODEL TRANSFORMATION OF REITS IN THE SENIOR HOUSING SECTOR

This study examines the transformative impact of the REIT Investment Diversification and Empowerment Act (RIDEA) of 2007 on Real Estate Investment Trusts (REITs) and their partnerships with operating entities in the U.S. senior housing industry. We explore how REITs, functioning as both asset owners and managers, adapt their business strategies in response to the evolving business landscape. Employing a case study approach rooted in Zott and Amit’s (2010) conceptualization of business models, the study identifies and analyzes notable shifts in market participants’ recognition of value-enhancing approaches, encompassing not only traditional rental income but also the operational performance of property managers. The findings reveal an expanded risk and profit-sharing mechanism propelled by the newly implemented business framework based on RIDEA, fostering enhanced alignment of interests between REITs and operators compared to the traditional business framework. While this effect under the new model holds the potential for significant enhancements in operational efficiency for asset managers, it concurrently introduces complexities arising from heightened financial and market risks, as well as challenges related to workforce management. Our findings offer valuable insights to industry experts, including REITs, operators, investors, and policymakers, enriching their comprehension of the evolving business models within the senior housing sector.

The Study on Investors Attitude towards Mutual Funds as an Investment Avenue

There are several investment options available. We would categorise or put them into groups to make our lives simpler. There are many different investing opportunities in India. Some of them are liquid and marketable, while others cannot be liquidated. Some of them are also very dangerous, while others are essentially risk-free. Depending on his individual needs, risk preferences, and expectations, the person must select Proper Avenue from among them. Some investment options, such as PPF, NSC, post office savings, government securities, equity share market, life insurance, corporate bonds, and debentures, can be generally categorised. A mutual fund is a business model where many participants combine their money towards a common financial objective. The proceeds from the capital market investments made with the funds obtained are distributed to the owners of the different assets. The UTI Act laid the groundwork for the mutual fund industry in India by effectively creating a small savings division under the RBI. Due to the reasonable growth and favourable returns delivered to investors over a 25-year period, public sector banks and financial institutions were given permission to float mutual funds in 1989, and their success encouraged the government to allow the private sector to participate in this market.

Dynamic Amplification of Railway Bridges under Varying Wagon Pass Frequencies

Train configurations give rise to a primary wagon pass forcing frequency and their multiples. When any one of these frequencies coincides with the natural frequency of vibration of the bridge, a resonant response can occur. This condition can amplify the dynamic response of the bridge, leading to increased levels of displacement, stresses and acceleration. Increased stress levels on critical bridge structural elements increases the rate at which fatigue damage accumulates. Increased bridge acceleration levels can affect passenger comfort, noise levels, and can also compromise train safety. For older bridges the effects of fatigue, and being able to predict the remaining life, has become a primary concern for bridge engineers. Better understanding of the sensitivity of fatigue damage to the characteristics of the passing train will lead to more accurate remaining life predictions and can also help to identify optimal train speeds for a given train–bridge configuration. In this paper, a mathematical model which enables the dynamic response of railway bridges to be assessed for different train configurations is presented. The model is based on the well established closed from solution of the Euler–Bernoulli Beam (EBB) model, for a series of moving loads, using the inverse Laplace–Carson transform. In this work the methodology is adapted to allow different train configurations to be easily implemented into the formulation in a generalised form. A generalised equation, which captures the primary wagon pass frequency for any train configuration, is developed and verified by presenting the results of the bridge response in the frequency domain. The model, and the accuracy of the equation for predicting the primary wagon pass frequency, is verified using independently obtained measured field train–bridge response data. The main emphasis of this work is to enable the practicing engineer, railway operators and bridge asset owners, to easily and efficiently make an initial assessment of dynamic amplification, and the optimal train speeds, for a given bridge and train configuration. This is visually presented in this work using a Campbell diagram, which shows dynamic amplification and compares this with those calculated based on the design code, across a range of train speeds. The diagram is able to identify train speeds at which a resonance response can occur, and the wagon pass frequency, or its multiples, which are causing the increased dynamic amplification. The model is implemented in Matlab and demonstrated by analysing a range of short- to medium-single span simply supported plate girder railway bridges, typically found on the UK railway network, using the standard BS-5400 train configurations. The model does not consider the effects of the train mass and suspension system as this would require a non-closed form numerical solution of the problem which is not practical for the purposes of an initial assessment of the train–bridge interaction problem.

Sustainability matters : Best practices and challenges on sustainability data and how to integrate ESG and climate risk into your operating model and risk framework

Securities services companies need to respond to changing risks and the impacts they could have on operational resilience. Much of the focus has been on identifying risks relating to asset protection, or factors that can have an impact on revenue, such as falling interest rates. With the potential threat of climate change on asset prices, and the risk more broadly of climate change to financial markets, custodians need to rethink risk, both at an operational level and how they support asset owners and asset managers to help mitigate these risks.