2024 Annual

Sustainability Report
Reporting period: 1 July 2023 – 30 June 2024
 2024 ANNUAL SUSTAINABILITY REPORT

Contents

Glossary 3 Section 5: Climate change

and the net zero transition 50
Section 1: Overview 6
Climate risks and our commitment to
Note from the Board 7 emissions reduction 51
Message from our Chief Executive 8 Climate governance and strategy 53
The year at a glance 9 Our asset class specific approach 53
Section 2: About IFM 10 Our financed emissions disclosures 60
Our Purpose and approach to sustainability 11 Section 6: Sustainability at IFM 63
Financial highlights 13 Corporate sustainability 64
Section 3: Sustainable investing 14 Modern slavery risk management 76
Our sustainable investing approach 15 Section 7: Governance 77
Implementing our sustainable Committees, roles and responsibilities 78
investing approach 20
Reviewing our policies and processes 81
Infrastructure equity investments 22
Conflicts of interest 82
Listed equities 27
External tools and resources 84
Debt investments 34
Client reporting and engagement 87
Private equity 37
The year ahead 90
Section 4: Navigating market-wide risks 40
Risk management 41 Appendices 91
Industry and peer collaboration 41 Mapping to the UK Stewardship Code 92
Engaging with government bodies and IFM’s Sustainable Investing Guidelines 94
policymakers 46 Important disclosures and disclaimers 106

Acknowledgement of Country

IFM acknowledges the Traditional Custodians of Country throughout Australia and recognises their
continuing connections to lands, waters and communities. We pay our respect to Elders past and present and
extend that respect to all Aboriginal and Torres Strait Islander peoples today. IFM is committed to reducing
the retirement savings wealth gap between First Nations and non-First Nations Australians.

First Nations readers should be aware that this document may contain images or names of people who have
since passed away.

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 2024 ANNUAL SUSTAINABILITY REPORT

Glossary
asset classes Refers to the sum of our infrastructure equity portfolio, our listed equities portfolio, our
debt investments portfolio and our private equity portfolio (see Our capabilities | IFM
Investors for further details).

References to “products” within an asset class refers to specific types of funds and/or
managed accounts IFM manages or advises in such asset class, with a “product” being
one such fund and/or managed account. References to “mandates” within an asset class
refers to specific agreements with individual clients. References to a “team” in the context
of an asset class refers to the IFM team specifically supporting that asset class, with the
term “investment teams” referring to the relevant teams across asset classes.
debt investments See: Debt Investments | IFM Investors. Our debt investments portfolio includes global
portfolio infrastructure debt products, diversified credit products and treasury services.
greenhouse gas (GHG) As defined by the Intergovernmental Panel on Climate Change in its AR6 Synthesis
Report, greenhouse gases are those gaseous constituents of the atmosphere, both natural
and anthropogenic, that absorb and emit radiation at specific wavelengths within the
spectrum of radiation emitted by the Earth’s surface, the atmosphere itself, and by
clouds. This property causes the greenhouse effect. Carbon dioxide (CO2), nitrous oxide
(N2O), methane (CH4) and ozone (O3) are the primary greenhouse gases in the Earth’s
atmosphere. Humanmade GHGs include sulphur hexafluoride (SF6), hydrofluorocarbons
(HFCs), chlorofluorocarbons (CFCs) and perfluorocarbons (PFCs); several of these are also
O3-depleting.
IFM “IFM”, “IFM Group”, “we” and “our” refer to IFM Investors Pty Ltd (see https://www.
ifminvestors.com/en-au/about-us/) and its subsidiary undertakings. IFM Investors Pty Ltd
acts in a capacity as a diversified portfolio advisor or manager and any references to IFM
acting as an “asset manager” or references to “our investments”, “our portfolios”, “IFM’s
portfolios” or equivalent should be read as understood to be in this capacity.
infrastructure equity See: Infrastructure | IFM Investors
portfolio

listed equities See: Listed Equities | IFM Investors. Our listed equities portfolio undertakes a variety of
portfolio strategies including both active and passive strategies. Active strategies seek to achieve
higher returns than an index by carefully selecting stocks with specific characteristics.
This involves monitoring markets and economic trends, as well as research and
expertise, in order to identify opportunities to capitalise. Stocks are frequently traded
and held on a short-term basis. Passive strategies are designed to replicate market
performance by matching the same weights of an index. Typically, through these passive
strategies, the listed equities portfolio buys and holds stocks over a long-term horizon
resulting in minimal trading, lower risk and fees.
portfolio company / Refers to a public or private company where IFM holds an equity investment. This
companies excludes debt investments.
private equity portfolio See: Private Equity | IFM Investors.
Purpose IFM’s purpose is to invest, protect and grow the long-term retirement savings of working
people.

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 2024 ANNUAL SUSTAINABILITY REPORT

scope 1, 2 and 3 As defined by the GHG Protocol – Corporate Accounting and Reporting Standard: a.
emissions Scope 1 emissions mean the direct GHG emissions that occur from sources that are
owned or controlled by an entity, for example, emissions from combustion in owned
or controlled boilers, furnaces, and vehicles. b. Scope 2 emissions mean indirect GHG
emissions from the generation of purchased electricity consumed by an entity. Purchased
electricity is defined as electricity that is purchased or otherwise brought into the
organisational boundary of the company. c. Scope 3 emissions mean other indirect GHG
emissions from the activities of an entity, but that occur from sources not owned or
controlled by the company, for example, transportation of purchased fuels, use of sold
products and services.1
stewardship Refers to IFM’s use of various strategies, including the responsible allocation, management
and oversight of capital with the aim of creating long-term value for clients and
beneficiaries, leading to sustainable benefits for the economy, the environment and society.
sustainable business Refers to IFM’s sustainable investing activities combined with IFM’s overarching
organisational approach to sustainability across key areas of risk management, and
value building practices and activities (encompassing the integration of sustainability
considerations, stewardship, collaboration and advocacy, transparency and reporting and
corporate sustainability).
sustainability Considerations that relate to society and the environment, such as climate change,
considerations worker safety and labour rights. These considerations, and how they are integrated
into investment processes, can give rise to investment risks, opportunities and impacts
that may be financially relevant and ultimately affect investment performance. Our
assessment of relevant sustainability considerations and the approach we take varies
across asset classes, tenure of holding and degree of influence we have. References to
“sustainability opportunities”, “sustainability risks” and “sustainability impacts” shall be
construed as opportunities and risks associated with such sustainability considerations
(as applicable). Our definition and use of “sustainability considerations” and
“sustainability risks” differs from, and is not intended to refer to, the technical definitions
of “sustainability factors” and “sustainability risks” in Article 2, points (24) and (22)
respectively under the European Union’s Sustainable Finance Disclosure Regulation
(SFDR) or other applicable regulations.
sustainable investing Refers to IFM’s approach to integrating sustainability considerations into investment
analysis, decision-making, ongoing management and oversight of investments,
recognising the impacts these can have on investment performance, as well as wider
society and the environment. Our sustainable investing approach is tailored to asset
classes, tenure of holding and degree of influence we have as owners. Our definition
of “sustainable investing” differs from, and is not intended to refer to, the technical
definition of “sustainable investment” in Article 2, point (17) under the European Union’s
Sustainable Finance Disclosure Regulation (SFDR) or other applicable regulations.
social and Refers to the frameworks2 that identify 12 social foundations and 9 environmental critical
environmental earth system boundaries within which humanity can continue to develop and thrive. The
boundaries / planetary social foundations are internationally agreed minimum social standards and established
boundaries through the United Nations Sustainable Development Goals.3

1 Where the actual data on the electricity purchased is unavailable (i.e. market- based scope 2 emissions) we use estimations based on the average consumption in the
location where the asset or company is located (i.e.: location-based scope 2 emissions).
2 See https://www.stockholmresilience.org/research/research-news/2023-09-13-all-planetary-boundaries-mapped-out-for-the-first-time-six-of-nine-crossed.html for
further details.
3 See: Sustainable Development Goals: 17 Goals to Transform our World | United Nations

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2024 ANNUAL SUSTAINABILITY REPORT

Important Notes
This report provides activity updates for the 1 July 2023 – 30 June 2024 financial year (FY24) unless
otherwise stated.

This is the first year IFM is producing a single Annual Sustainability Report. The report combines a number
of our existing group level sustainability reporting, which have multiple areas of overlap. These are our UK
Stewardship Code Report, Climate Change Report and our Sustainable Business Report. By moving to one
combined Annual Sustainability Report, covering our stewardship, sustainable business and group level
climate change reporting, we aim to provide an integrated view of IFM’s approach, activities and outcomes
across sustainability considerations.

This report contains climate-related and other forward-looking statements and metrics which are not, and
should not be considered to be guarantees, predictions or forecasts of future climate-related outcomes,
financial performance or share prices. The statements are subject to known and unknown risks, uncertainties
and other factors, many of which are beyond the control of IFM. Readers are cautioned not to place undue
reliance on such statements in light of the significant uncertainty in climate and sustainability-related
metrics and modelling that limit the extent to which they are useful for decision-making, and the many
underlying risks and assumptions may cause actual outcomes to differ materially. Such uncertainties and
risks include (amongst others), and by way of example only, matters such as (i) evolving sustainability-related
metrics and methodologies; (ii) data challenges (e.g. availability, accuracy, verifiability and data gaps); and (iii)
new and evolving regulatory requirements imposed by relevant jurisdictions and policy changes. While IFM
has prepared the information in this report based on its current knowledge, understanding and in good faith,
it reserves the right to change its views in the future.

This important information should be read together with all of the important disclosures and disclaimers in
Appendix 3 of this report.

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2024 ANNUAL SUSTAINABILITY REPORT

Section 1

Overview

Picture: Naturgy
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 2024 ANNUAL SUSTAINABILITY REPORT

Cath Bowtell Deborah Kiers

Chair, IFM Group Board Chair, IFM Group Board Responsible
Investment and Sustainability Committee

Note from the Board

We are pleased to present IFM’s Sustainability This report provides an overview of IFM’s
Report for FY24. This report provides a detailed organisation-wide approach to sustainability,
update on our sustainability-related actions including our approach to sustainable investing
and their impact for our clients, owners and which guides our efforts to maximise long-
wider society. term risk-adjusted returns for our clients and
owners. We remain focused on the role we can
In a year marked by modest economic growth play in addressing the broader economic and
and persistent inflation, we are proud of the social environments that affect the long-term
performance we have delivered for our clients. stability of the systems in which we invest and
operate. We see significant opportunity to work
Our organisation continued to grow during collaboratively with investors, governments
FY24. Our funds under management grew 1.8% and civil society to have an impact on policy
to USD 145.8 billion, the number of clients we development and market practices that can
serve grew 7.8% to 717, and the IFM team now support the health of these broader systems and
comprises 850 staff4 across 13 offices globally,5 deliver long-term value for our clients.
each of whom contribute to delivering on our
Purpose: to invest, protect, and grow the long- We extend our gratitude to our clients and
term retirement savings of working people. owners for their continued support and
collaboration.

4 Full time equivalent.

5 Figures stated as at 30 June 2024 as compared to 30 June 2023.

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 2024 ANNUAL SUSTAINABILITY REPORT

David Neal
Chief Executive

Message from our Chief Executive

FY24 was a breakthrough year in many ways for These values guide our behaviours and actions
IFM’s sustainability-related practices. to deliver on our Purpose, by placing clients, our
people and communities we operate in at the
Throughout the year we refined our sustainable heart of what we do.
investing approach, through which we aim to
deliver long-term value for our clients, in doing This report not only provides details on our
so recognising that this can create sustainable investment approach but also on how we as a
benefits for the economy, the environment and business address sustainability considerations
society. Our updated Sustainable Investing and the commitments we have made with
Guidelines6 detail our seven focus themes which regards to our corporate operations. We are
cover both environmental and social issues, excited by opportunities to lead businesses across
and the principles which underpin them. These our asset classes by example and to demonstrate
themes and principles support our focus on our sustainable business approach across our
maximising long-term risk-adjusted returns by geographies of operation.
seeking to build resilient portfolios to invest,
protect and grow the long-term retirement This report also provides details of how we meet
savings of the working people that our clients the twelve principles of the UK Stewardship
represent. Code under the four broad areas of: purpose and
governance, investment approach, engagement
We believe the case studies throughout and exercising rights and responsibilities. We
this report exemplify our dedication to our support the aims of the UK Stewardship Code8
sustainable investing approach across our asset to promote transparency and accountability in
classes. Highlights from the year include our the market and enhance stewardship outcomes
partnership with GrainCorp on the creation across all asset classes to help improve long-term
of a Sustainable Aviation Fuel supply chain returns to clients and beneficiaries.
in Australia, our partnership with industry
superannuation funds to explore opportunities to Additionally, this report aims to provide
invest in social and affordable housing at scale, transparency about our approach to
and our Memorandum of Understanding with the managing climate change, in line with the
UK Government.7 recommendations of the Task Force on Climate-
related Financial Disclosures (TCFD).
Over the last 12 months we also refreshed our
core values. What we value says a lot about Thank you to our colleagues for the great efforts
our conduct and drives it. Our values guide the this year, and to our clients and partners for their
decisions we make, how we work and the culture continued support and advocacy.
we continue to build together. We now have
four values: Prioritise Client Outcomes, Achieve
Together, Value Everyone, and Embrace Growth.

6
The Sustainable Investing Guidelines can be found on our website: Governance and reporting | IFM Investors and at Appendix 2 to this report.
7
See here for further details: IFM Investor signs MoU with UK government, intends to invest £10 billion in UK by 2027 | IFM Investors
8
UK Stewardship Code (frc.org.uk)

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 2024
SUSTAINABLE
ANNUAL SUSTAINABILITY
BUSINESS REPORTREPORT
2023

The year at a glance9

Funds under management (USD) Growth in global clients

FY23 143.2bn FY23 665

+1.8% +7.8%
FY24 145.8bn FY23 717

Investor Satisfaction Questionnaire (ISQ) Growth in staff numbers10

FY23 8.4 +8.8%

FY24 8.5 781 850

FY23 FY24

9
Figures as at 30 June 2023 and 30 June 2024 respectively.
10
Full time equivalent.

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2024 ANNUAL SUSTAINABILITY REPORT

Section 2

About IFM

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 2024 ANNUAL SUSTAINABILITY REPORT

About IFM
Owned by pension funds. Inspired by their members.
Investing in what matters. Our Purpose is to invest, protect
and grow the long-term retirement savings of working people.
The interests of working people are at the heart Our sustainable investing approach integrates
of our heritage and our Purpose. Our 710+ clients sustainability considerations with investment
collectively manage the retirement savings of processes in a manner we believe benefits our clients
more than 120 million people11 around the world – and their beneficiaries. We aim to engage with our
everyday people like nurses, teachers, construction investments in order to help manage sustainability
and hospitality workers. We’re focused on investing, risks and pursue opportunities to maximise their
protecting and growing the long-term retirement net performance while minimising our portfolios’
savings of these working people. We aim to do investment risk. This reflects our broader sustainable
this in ways that create benefits for them and business approach which considers sustainability
the communities in which they live, now and for on an organisation-wide basis across key areas of
generations to come. risk management and value building practices and
activities as further detailed below and throughout
IFM acts in its capacity as a diversified portfolio this report.
advisor or manager for investments across our
infrastructure equity, debt investments, listed equities As a signatory to the United Nations-supported
and private equity portfolios. Where possible, we Principles for Responsible Investment (PRI)12 and the
aim to build a real and lasting impact by focusing on UK Stewardship Code, we seek to actively engage on
investments that we believe combine excellent long- sustainability considerations with the companies in
term risk/reward characteristics with broad economic, which we invest, noting that the level of engagement
environmental and social benefits to the community. and our approach is tailored depending on the
asset class, type of investment and the level of
Large institutional asset managers like IFM can be governance rights.
regarded as universal owners, as our portfolios cover
a broad cross-section of the economy. This means we We remain focused on the role we can play in
are exposed to systemic risks that affect the entire addressing the issues that affect the long-term stability
economic system, which have the potential to result of the broader systems in which we invest and operate.
in lower investment returns over the long-term. We We see our collaborative engagement and policy
believe universal owners have a role in identifying advocacy activities as key opportunities to do this.
and helping tackle systemic risks. We seek to do
so by applying our overall sustainable investing We believe that cultivating a unifying and purpose-
approach including integrating sustainability aligned culture across our organisation is a key
considerations within our investment processes. factor to our success.

Trusted with the retirement savings of more than 120 million people worldwide, we’re using what
makes us different to make a difference.

120+ million 13 offices 17

(the number of working we operate from globally, in Industry
710+
institutional
people whose retirement Melbourne, Sydney, New York, superannuation investors
savings are managed by Houston, London, Amsterdam, fund owners
our clients and owners) Berlin, Milan, Zurich, Tokyo,
Hong Kong, Seoul and Warsaw

11
As at 30 June 2024.
12
The Principles for Responsible Investment is a United Nations-supported international network of asset managers, asset owners and service providers working
together to promote and implement six principles for responsible investment incorporating Environmental, Social, and Governance (ESG) issues into investment
practice. What are the Principles for Responsible Investment? | PRI Web Page | PRI (unpri.org)

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 2024 ANNUAL SUSTAINABILITY REPORT

Our Purpose and approach to sustainability

Our Purpose is to invest, protect and grow the long-term retirement savings of working people.
Our values set out below, together with our Purpose, guide our people and our work.13

Prioritise Client Achieve Value Embrace

Outcomes Together Everyone Growth
We are trusted partners, We work together as We all play our part in We are curious and
making the delivery of One IFM - collaborating shaping an environment agile, always learning
superior and sustainable to get things done and that's inclusive, caring and thinking of ways to
outcomes for clients and make a lasting, positive and respectful of one evolve to deliver long-
their beneficiaries our difference. another. term value.
priority.

We believe these values align with our Purpose and Our values also inform our actions across IFM’s five
help us to navigate economic ups and downs, build strategic sustainability pillars – Clients and Owners,
the long-term prosperity of our portfolio assets and Investments, Workers and Communities, Policy
support our actions to assist the communities in and Markets Ecosystem and Our Colleagues and
which we operate. By focusing on our core values, Operations.
we seek to demonstrate leadership in the workplace
and promote a fairer, safer and more inclusive
environment, which we believe can lead to better
long-term outcomes for our clients.

Strategic sustainability pillars

Clients and Investments Workers and Policy and Our Colleagues

Owners Communities Markets and Operations
Seek to maximise
Ecosystem
Be a TRUSTED long term Strive to ensure Be a LEADER BY
PARTNER for RETURNS by our assets Advocate for EXAMPLE to the
our clients and delivering value have STRONG regulatory, policy assets we hold.
owners, aligned to and effecting RELATIONSHIPS and financial
their sustainability positive REAL-
with their services systems to
priorities. WORLD CHANGE be fit to ADDRESS
workforces
via sustainable THE SYSTEMIC
and with local
investing. SUSTAINABILITY
communities.
RISKS relevant
to us today and
tomorrow.

In March 2024 we transitioned to four core values from our previous five cultural foundations and behaviours which were in place in FY23. These cultural foundations
13

and behaviours were: Prioritise investors, Achieve excellence, Respect each other, Inspire innovation and Lead by example. Further information on our four core
values can be found here: https://www.ifminvestors.com/about-us/our-purpose/.

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 2024 ANNUAL SUSTAINABILITY REPORT

Financial highlights

USD 145.8 billion funds under management across four asset classes

infrastructure debt investments listed equities private equity

equity portfolio portfolio portfolio portfolio

USD 73.6bn USD 32.9bn USD 38.7bn USD 0.6bn

Targeting core We are a specialist Includes global listed With direct holdings
infrastructure, with credit, infrastructure equities across an represented by
interests in 41 portfolio debt, core bond and extensive range of investments in
companies operating cash manager. active, indexed and Australia in service
across 20 countries. smart beta options. sectors targeting
Includes global
globally. technology, healthcare
infrastructure debt
and business services.
products, diversified
credit products and
treasury services.

Funds under management (FUM) split by asset class FUM geographical split15

Infrastructure equity 50.5% Asia Pacific 49%

Listed equities 26.5% Americas 34%
Debt investments 22.6% Europe, Middle East and Africa 17%
Private equity 0.4%

Reflecting our heritage, pension funds constitute a significant proportion of our client base. We are continuing to
broaden our client base with investors that are seeking to maximise long-term risk-adjusted returns. This includes
sovereign wealth funds, endowments and charities, insurers, and private wealth clients, amongst others.

Percent of FUM by client type Percent of FUM by client geographical location

Superannuation 62.5%
Public Pension Fund 14.4%
Insurance Company 7.0%
Corporate 6.7% Asia Pacific 68.4%
Taft Hartley/ Multi Employer 3.7% Americas 23.2%
Government 2.2% Europe, Middle East and Africa 8.3%
Asset Manager 1.7%
Foundation 0.5%
Endowment 0.5%
Institutional Private Wealth 0.4%
Other16 0.4%

14
All figures in this graphic are as at 30 June 2024 and may not sum due to rounding.
15
Data is based on location of the headquarters of the asset or company invested in for our private equity and infrastructure equity portfolio assets and for our
infrastructure debt and listed equities portfolio assets it is based on the country of issue of the relevant security. The chart excludes cash and derivative investments.
The infrastructure equity data by location is valued as at 31 December 2023, rather than as at 30 June 2024.
16
Includes client categories: Bank, Aggregator, Investment Consultant

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2024 ANNUAL SUSTAINABILITY REPORT

Section 3

Sustainable
investing

Picture: Ausgrid
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 2024 ANNUAL SUSTAINABILITY REPORT

Our sustainable investing approach

Our sustainable investing approach guides our Our sustainable investing approach forms a key part
efforts to maximise risk-adjusted returns over the of our overarching global growth strategy. Under
long-term for our clients and owners. our growth strategy, we aspire to become a truly
global, diversified private markets investment firm
We have seven sustainable investing focus themes with a proud Australian heritage, while continuing to
covering both environmental and social issues. We deliver on our Purpose. We recognise the need for an
developed principles to underpin these seven themes, approach that reflects the expectations of our owners,
which are covered in detail in IFM’s Sustainable our clients and our people. We are also mindful of
Investing Guidelines17 created and published during the rapidly evolving regulatory environment and,
FY24. These principles serve as a framework to help importantly, the broad range of new investment
us make investment decisions to maximise returns opportunities that global developments, such as the
over the long-term and manage risks for our clients. transition to a low carbon economy, present to IFM
We aim to apply these principles across asset classes and our clients as we pursue our Purpose.
where practicable. The implementation process is
ongoing, with some areas more advanced than others.
We intend to update these principles at least annually.

Biodiversity Net Zero transition Efficient resource use

protection and
nature restoration

Environmental action

Creating Sustainable Value for our clients, owners and the wider society

Social inclusion

Labour rights Human rights Community Inclusive culture

engagement and
Indigenous people

17
Available on IFM’s website: Governance and reporting | IFM Investors and as Appendix 2 to this report.

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2024 ANNUAL SUSTAINABILITY REPORT

Net Zero We believe that climate change and the transition to net zero presents
significant risks and opportunities that can alter the risk return profile of
transition the assets in which our portfolios are invested in. Where appropriate, we
seek to integrate these considerations into our investment processes so
we can continue to deliver strong risk-adjusted returns for our clients.

Efficient use of With a growing global population and increasing consumption

rates, we believe the risk of breaching planetary boundaries in key
resources environmental systems is high and rising and that this necessitates
better management of finite resources and a focus on circular economic
activity. Where appropriate and depending on our level of influence,
we will seek to use our position to encourage portfolio companies to
consider, disclose, and manage risks and opportunities regarding
efficient resource use, reducing waste, and adopting a circular approach
to their products and operations.

Biodiversity We believe that there is a need and an opportunity to contribute

positively towards biodiversity protection and nature restoration.
protection and We believe the current rate of nature degradation is not sustainable,
nature restoration and there is a need to reduce the adverse impacts on nature where
practicable and a need to increase the positive interactions between
investment and nature conservation and/or restoration.

Human rights We seek to conduct our business in a manner that respects the human
rights and dignity of all people. We expect the same from our portfolio
companies. We strive to support international efforts to promote and
protect human rights, including opposition to all forms of slavery and
human trafficking.

Labour rights We aim to conduct our business in a manner that respects labour rights
and we expect the companies in which our portfolios invest to do so
as well. Our Purpose puts working people at the heart of our activities,
and this includes demonstrating workplace leadership, with a focus on
promoting fair and safe conduct.

Inclusive IFM believes that strong, diverse, equitable and inclusive cultures are
a value driver for companies in which our portfolios invest and that a
workplace lack of diversity can lead to poor company performance. Respect and
culture support of diversity and inclusion and avoiding discrimination in the
workplace is therefore one of our focus areas.

Community We believe in supporting collaborative engagement with communities

to create positive and mutually beneficial outcomes. We recognise that
engagement and engaging local communities can be an important part of companies
Indigenous people maintaining their standing and reputation locally.

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 2024 ANNUAL SUSTAINABILITY REPORT

Sustainable investing integration

During FY24 we reviewed our sustainable
investment strategy, Environmental, Social The integration of sustainability considerations into
and Governance (ESG) Policy, and Responsible IFM’s investment management processes supports
Investment Charter, replacing these with IFM’s us in:
Sustainable Investing Guidelines to continue
to further refine and define our sustainable • Identifying, understanding and managing
investing approach. sustainable investing risks and opportunities
that can affect investment value and returns in
The principles in IFM’s Sustainable Investing the short, medium and long term (i.e. focusing
Guidelines guide us in making investment on how sustainability considerations impact our
decisions which aim to maximise returns and investments); and
manage risks for our clients. As part of this
approach, we seek to identify, understand and • Understanding the potential impacts and
manage a broad range of sustainability risks consequences of our investments on external
and opportunities that can materially impact environmental and social considerations (i.e.
the value of our investments. Our sustainable focusing on how our investments impact
investing approach varies across asset classes, sustainability considerations externally), given
as outlined in further detail below, and is based the potential of such impacts to become risks and
on considerations such as the holding period and opportunities.
the degree of influence we have.
We recognise that adverse impacts from investment
The review was undertaken by our Sustainable decisions may be wide-ranging and could pose
Investment team, with input from our investment future risks to our investments. For this reason, we
teams, Risk and Compliance and other teams, seek to engage, promote and improve the overall
seeking to ensure alignment with our wider asset awareness of these potential impacts including
management approach and that we meet the among our portfolio companies. We do this by
needs of our clients and owners. collaborating and consulting with a diverse range of
key stakeholders.
Client mandates and certain indirect investments
(such as derivatives) are not subject to IFM’s We consider the impact of sustainability
Sustainable Investing Guidelines18 and our considerations in our pre-and post-investment
sustainable investing approach as summarised in processes for our infrastructure equity, debt
this report may not apply to all these mandates investments, listed equities and private equity
and investments. portfolios, as appropriate, noting our approach
differs across the different asset classes and depends
on the nature of the investment. This assessment
helps us to identify and manage a broader set of
We use a combination of the following to seek to risks with a view to protecting and maintaining
ensure we implement our principles and minimise the long-term value of our portfolios. Investment
risk for our clients and owners: teams across asset classes also work closely with
our Sustainable Investment team to help ensure that
• Integration of sustainability considerations our practices align with IFM’s Sustainable Investing
throughout the investment process Guidelines.

• Engagement and voting (where relevant) at an We also believe that through our approach, as
asset level a participant in financial markets, we have the
potential to contribute positively to the overall
• Collaboration and engagement at an industry or sustainability of those markets.
national level

• Transparency and reporting

With respect to client mandates, certain listed equity mandates could be subject to the voting and engagement sections of the Sustainable Investing Guidelines
18

based on the specific client agreements.

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 2024 ANNUAL SUSTAINABILITY REPORT

Issue prioritisation Stewardship, engagement and voting

The issues we choose to pursue and act on will
depend on the asset, company and/or sector and our Stewardship
level of influence. However, we prioritise our seven Stewardship is the use of various strategies, including
sustainability focus themes as we believe these apply the responsible allocation, management and oversight
across many assets and geographies. of capital with the aim of creating long-term value
for clients and beneficiaries, leading to sustainable
Separate to our sustainability focus themes, we benefits for the economy, the environment and society.
use several criteria to prioritise companies for our
stewardship activities, namely: IFM believes that effective stewardship, incorporating
company engagement and exercising voting rights
• The size of our investment or the size of the asset, (where applicable and appropriate, and in line
portfolio company and/or property; with client mandates), can lead to better company
performance with a wide range of benefits for our
• The materiality of sustainability considerations on portfolios.
financial and/or operational performance; and
Our overarching approach to addressing sustainability
• Significant issue exposures identified through considerations with the companies in which
our due diligence and monitoring process, our portfolios invest is established at the IFM or
particularly where there appears to be a lack of investment advisor level, and then we seek to tailor
adequate controls. our stewardship practices to match the needs of
specific asset classes and strategies, considering
Investment time horizons the nature and tenure of holdings and the degree of
Investment time horizons vary by asset, strategy influence we have.
and by client, from relatively short term for certain
investment strategies, such as cash and bond funds Engagement
within treasury services, to medium and longer- Where we believe it is appropriate, we seek to engage
term, for other strategies, such as private debt, in direct dialogue with the entities where we invest
private equity and infrastructure equity. Our various our clients’ funds. We conduct this engagement
strategies are intended to meet the differing needs either on our own or in collaboration with others.
of our owners, clients and beneficiaries. IFM aims
to develop and manage investment strategies that Through this engagement, IFM seeks to:
generate attractive risk-adjusted returns and meet
the preferences of our clients. • Build strong relationships that facilitate the
transfer and flow of important sustainability data;
Our infrastructure equity portfolio investment
strategy centres on the long-term ownership and • Deepen our understanding of how a company
active asset management of core infrastructure / issuer / asset manages sustainability
investments (e.g. utilities, ports, airports and toll considerations;
roads) with long-term, stable cashflows. We believe
open-ended fund structures best-suit this investment • Influence positive change in sustainability-related
strategy in long-term infrastructure investment. practices, processes and behaviours regarding
For example, our longest held assets Brisbane19 and company / issuer / asset specific issues and
Perth20 Airports have been within our infrastructure broader industry, sector or thematic issues, where
equity portfolio for over 25 years. appropriate; and

• Escalate issues of concern where relevant.

19
For further details see: https://www.ifminvestors.com/capabilities/infrastructure/our-portfolio/brisbane-airport/
20
For further details see: https://www.ifminvestors.com/capabilities/infrastructure/our-portfolio/perth-airport/

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 2024 ANNUAL SUSTAINABILITY REPORT

Engagements and initiatives can be bottom-up at the During FY24, IFM commenced a review of our proxy
asset or portfolio company level or top-down where voting guidelines with an updated version expected
the focus is on a particular theme, such as safety in to be adopted in FY25.
the workplace. These engagements are an important
opportunity for IFM to have influence, as well as an Advocacy and collaboration
important source of information for the investment Public policy and regulation are important
teams to improve their knowledge of the portfolio contributors to portfolio risk adjusted returns. We
companies. seek to engage in policy advocacy as part of our
contribution to the management of systemic risks,
Engagement with issuers and investments in our as well as where there is another appropriate link to
portfolios is a core element of our stewardship our business or client interests. We aim to engage the
activities. When issues related to an investment’s broader investment market and stakeholder groups
risks or returns are under discussion, we seek to to share learnings on systemic sustainability risks
actively use our position with the aim of positively which have the potential to affect long-term returns
influencing corporate behaviour and driving a for our clients. We seek to achieve this by working
greater strategic understanding of sustainability closely with our clients and owners to build collective
considerations, risks and opportunities. solutions that meet their needs in domestic and
global private markets, and by engaging proactively
We work with portfolio companies to collect data in public affairs to support asset teams and the wider
about their sustainability-related performance and business where appropriate.
practices and to encourage continuous improvement
in reporting capabilities. This data informs our We believe that through our collaboration and
asset management approach and the creation of advocacy activities we can have a greater positive
organisation-wide sustainability strategies. impact on policy development and market practices
that support our Purpose. We are members of and
Engagement escalation signatories to a range of collaborative industry
Through our due diligence processes, we seek initiatives. Through these initiatives and our policy
to identify sustainability considerations at the advocacy activities, we work with other investors,
individual company and/ or sector levels that we civil society and governments to seek to drive change
may prioritise for engagement and escalation in our and promote sustainability-related practices in
stewardship activities. pursuit of our Purpose.

This approach reflects our different asset classes Transparency and reporting
and strategies, as well as the geographic locations To earn and maintain the trust of our owners, our
and jurisdictions in which we invest, the materiality clients, our people and our other stakeholders, we
of the relevant sustainability consideration, the seek to uphold principles of transparency including
initial period of engagement, and whether initial through supporting the application of sustainability
engagement efforts were direct, collaborative or via a reporting frameworks. In addition to this report, we
service provider. provide our clients, owners and other stakeholders
with a range of reporting, thought leadership and
Voting insights that aim to provide transparency about our
IFM has developed proxy voting guidelines which approach, practices and outcomes. See Section 7 for
we apply in relation to votes on Australian listed further details on our approach.
equities’ portfolio investments. For international
listed equities’ portfolio investments, we seek to
apply voting guidelines through an internationally
recognised provider, Glass Lewis.

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 2024 ANNUAL SUSTAINABILITY REPORT

Implementing our sustainable investing approach

IFM’s investment teams integrate sustainability Each investment team tailors its sustainable
considerations within investment decision-making investing approach to match its specific strategy, the
processes and seek to engage with companies and/ tenure of holdings and our degree of influence as
or borrowers to understand the materiality of outlined in further detail in the following pages.
sustainability considerations to investments both
during investment due diligence and as part of post- The interaction between the Sustainable Investment
acquisition asset management plans and annual asset team and the investment teams during the
reviews, where appropriate. The investment teams are investment process is illustrated below.
responsible for the implementation of data collection,
risk management and roll out of sustainability
initiatives. Where applicable this involves working with
our portfolio companies or borrowers to collect data
about their sustainability performance and practices.

Integrating sustainability considerations throughout the investment process

To help ensure a comprehensive assessment of risks and opportunities, we incorporate a range of sustainability
considerations in our investment analyses and decision-making processes as applicable to each asset class.

Investable How we connect to We are connected to global investment opportunities via broad relationships
universe global investment with global investor institutions, investment banks and advisors.
opportunities Investment teams identify investable assets, informed by intelligence provided
by the SI team about emerging areas of sustainability risks, opportunities and
impacts.
Sustainable Investment team involvement

Initial Identification Over the course of pre-investment analysis investment teams identify key
analysis of relevant sustainability considerations for investment opportunities to inform the
sustainability investment decision.
considerations Where appropriate and applicable, screening overlays are applied to help
ensure alignment with IFM’s Sustainable Investing Guidelines.21

Due diligence Assessment of The Sustainable Investment team and investment teams work together on
opportunities and assessment of sustainability considerations, applying any pre-existing asset
risks, including class specific due diligence toolkits. This forms part of our overall assessment
mitigation of investment risks.
measures, The Sustainable Investment team provides support and serves as a sounding
in relation to board and peer reviewer, when applicable. Investment teams may also draw on
sustainability external party analytical tools and research, as required.
considerations
Where appropriate, investment teams seek to identify and incorporate
mitigants for any identified risk.

Investment Investment A final analysis of relevant sustainability considerations is prepared by

decision decisions based on the investment team and included in investment committee papers. The
robust analysis Sustainable Investment team provides support where required during this
process. Sustainability considerations are identified in order to support the
investment team’s objective of making investment decisions which are aligned
with our clients’ mandates and with our Purpose.

Ongoing Monitoring of Where practicable, sustainability risks and opportunities across our portfolios
stewardship sustainability risks are monitored by investment teams with the support of the investment team
and opportunities sustainability specialists and/or the Sustainable Investment team, in efforts to
protect and enhance value.
Where appropriate, IFM engages with portfolio company or borrower
management teams to seek to influence activities and decisions that may
impact investment value and returns.

IFM does not stipulate screening and exclusions at a firm-wide policy level. Investment teams apply them, as relevant, in response to individual investor mandates
21

and in accordance with IFM’s Sustainable Investing Guidelines.

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 2024 ANNUAL SUSTAINABILITY REPORT

Sustainable investing specialists and, where required, they develop asset class specific
We have integrated sustainable investing specialists sustainability procedures, standards, guidelines and
within both our infrastructure equity and debt work instructions.
investments portfolio teams, providing tailored
expertise for each asset class. Such implementation is supported by the Sustainable
Investment team’s expertise on sustainability
Defined responsibilities considerations that may be applied to investment
Our Sustainable Investment team and asset class screening, analysis and due diligence.
sustainable investing specialists have clearly defined
responsibilities as they work together throughout the The primary responsibility within IFM for developing
investment process as illustrated above. and implementing sustainability-related asset-level
activities is held by the asset class investment teams.
The Sustainable Investment team is tasked with
developing IFM’s overarching firm-wide sustainable With respect to reporting, metrics and data, asset
investing approach and related policies and class investment teams are responsible for managing
organisational guidelines, which are implemented by asset and portfolio-specific data, where available. The
teams in each asset class as appropriate. The asset Sustainable Investment team collaborates with the
class sustainable investing specialists are responsible asset class investment teams to collate this data for
for operationalisation of these group-wide policies external client and regulatory reporting purposes.

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 2024 ANNUAL SUSTAINABILITY REPORT

Infrastructure equity investments

Our approach • Board directors: Where applicable we appoint
For new infrastructure equity investments, we directors to investee company boards (and
have a toolkit22 and risk matrix to seek to ensure board committees) who we consider are suitably
we incorporate sustainability considerations in the qualified. We believe board diversity supports
due diligence process, as appropriate and in line building and maintaining a viable, profitable
with client mandates. While the toolkit and risk and efficient company over the long-term and
matrix have been regularly updated23 since their in turn also seek to contribute positively to the
initial creation more than a decade ago, the purpose diversity of boards through our appointments.
remains the same: to help identify sustainability We regularly undertake activities which seek to
risks and opportunities associated with potential improve the knowledge of our directors so they
investments; provide input into IFM Investment can perform more effectively in their roles. Where
Committee decision-making; and help inform the necessary, we will look externally to find the right
development of business plans following acquisitions. nominee director. IFM has policies and procedures
regarding the appointment of investee company
Our infrastructure equity portfolio team works with directors which seek to reinforce good governance.
the Sustainable Investment team on a collaborative
basis to regularly update the toolkit to seek to ensure • IFM investment teams: Each board director
that this remains an effective tool. appointed to an investee company is supported
by a team of investment professionals which
For our existing infrastructure equity portfolio, we monitors and analyses asset information and
strive to work collaboratively with management performance, often contained in board reports,
teams and other stakeholders to support sustainable and provides investee company directors with
investing initiatives and business practices, with research on support and insights into the
a view to preserving and enhancing the value investment.
of these businesses. We believe this helps to
build resilient businesses that deliver benefits to • Asset Management Specialist Team (AMST): The
multiple stakeholders over the long-term, including AMST consists of approximately 30 investment
shareholders, workers and local communities. We professionals (as of 30 June 2024) who support
seek to evaluate and engage with portfolio companies the broader investment team’s asset management
across a number of areas including strategy, capital and governance activities and who lend their
structure, industrial relations, risk management skills to investment teams or portfolio companies
frameworks, capital expenditure and executive to address a specific initiative. For example,
selection and remuneration. the AMST team has worked closely with some
portfolio assets to undertake deep dive health
The effectiveness of our stewardship relies on a and safety reviews where hazards were known
number of governance features in our team which to be high. The AMST develops an annual asset
support the management of our infrastructure equity management and sustainability plan which
portfolio: contains portfolio-wide initiatives and asset
management initiatives which are unique for each
asset. The plan’s progress is monitored regularly
throughout the year.

22
The toolkit was completed and implemented from October 2023.
23
Minor updates were completed in 2024 to address user feedback. We intend to annually assess required updates as part of our operational business as usual activities.

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 2024 ANNUAL SUSTAINABILITY REPORT

How we engage
We aim to identify and define material sustainability considerations that inform our asset management activities
through the following processes:

Post acquisition planning – an

asset specific plan is developed and
implemented, usually focused on the
first-year post-acquisition, reviewing Post
sustainability considerations as well acquisition
as risk, regulatory, return and capital planning
expenditure plans. This planning
process focuses on improvement
planning post-acquisition across a
range of activity areas. Post-acquisition asset reviews –
typically between six to 12 months
Post- after an asset is acquired, a formal
report is prepared for IFM’s
acquisition Investment Committee and Board
asset Investment Committee (if applicable)
reviews outlining changes and progress and
identifying new issues or changes to
planned initiatives.
Regular valuation and reporting
process – IFM reviews each
investment’s performance on a Regular
quarterly basis, through our quarterly
valuation and reporting processes.
valuation
While not the primary objective, and reporting
Formal asset reviews – Reviews are
assessing sustainability risks and process performed by our investment team
opportunities is an important on an annual basis, as part of our
component of this process. ongoing asset management program.
The identification and analysis of
sustainability considerations, as well
Formal as risks and opportunities, identified
as material are documented as
Engagement relating to sustainability asset part of this process. In certain
considerations is implemented through reviews circumstances, IFM investment
IFM’s asset management framework, professionals will be seconded to
which is focused on developing and portfolio assets when specialist skills
executing tailored asset management are required. The asset reviews are
strategies for each portfolio company. then shared with the IFM Investment
The framework has three key objectives: Committee so that the committee
is able to apply the learnings
1. To Protect – seek to manage risks gained through operations to future
and deliver expected returns by acquisitions it might evaluate. The
promoting minimum standards for asset reviews are only one aspect
key management practices. of a number of internal asset
management activities undertaken
2. To Enhance – seek to achieve on an annual basis as part of our
superior returns from individual ongoing asset management process
portfolio assets by challenging asset- across the infrastructure equity
level management teams to achieve portfolio. Examples of these activities
‘best-in-class’ performance. include periodic operational updates,
review of annual budgets/business
3. To Exceed – seek to deliver plans, annual planning and quarterly
competitive performance from asset management initiative reviews.
individual portfolio assets by
leveraging our global strengths in
synergies, scale and relationships.

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 2024 ANNUAL SUSTAINABILITY REPORT

Our teams engage directly with portfolio Engagement escalation with our infrastructure equity
company management teams and IFM appointed portfolio companies is determined on a case-by-
representatives on investee company boards, where case basis. IFM prefers to support and work with
they exist. This helps the team to maintain an the companies in our infrastructure equity portfolio
understanding of sustainability risks and mitigation in partnership, as opposed to undertaking formal
programs and initiatives. escalation, and our level of involvement will depend
on the particular circumstances and issue.

CASE STUDY

ERG repowering of wind farms

Rationale and improve the asset’s efficiency and load factors.
ERG plans to upgrade wind farm assets currently It is equivalent to organic capital expenditure on
equipped with relatively obsolete technologies the existing asset base and hence provides lower
for the latest generation turbines – a technique execution risk due to:
called “repowering” with the potential to
multiply generating capacity, increase electricity • Absence of new land acquisition (already secured);
production, plant efficiency and to leverage the • Pre-existing connection to the network;
quality of the most productive sites. • No further development costs incurred;
• Less complex permitting relative to building a
Revenues of repowered wind farms would be new wind farm; and
secured through incentive auctions or through • Strong foundation with local communities,
long-term Power Purchase Agreements. For given they are familiar with the assets’
ERG, repowering is seen as an innovative way to presence and have experienced positive
maximise the benefit of technological advancement externalities related to wind farms.
and make its asset base more efficient whilst
seeking to contribute to decarbonisation targets Outcomes
set within the European Union. Repowering existing wind farms can also be
carried out with the efficient use and re-use of
IFM action materials. There is an active market for the resale
Through our board engagement and capital of decommissioned wind turbines, either whole
expenditure support, ERG completed two onshore or as parts for maintenance, while the masts are
wind repowering projects in Italy in 2023 (Partinico- suitable for recycling. At Partinico-Monreale and
Monreale and Camporeale – see the below table for Camporeale wind farms, 100% of the existing wind
details), doubling production through the installation turbines and masts have been recycled or sold
of state-of-the-art Vestas turbines. These newer and for re-use. Please find more details of recycling
larger units can capture a wider wind blow spectrum potential here.

REPOWERING ERG’S WIND FARMS

PARTINICO-MONREALE CAMPOREALE

Pre-repowering Post-repowering Pre-repowering Post-repowering

Turbines: 19 units 10 units 24 units 12 units

Capacity: 16 MW 42 MW 20 MW 50 MW

Production: 27 GWh 94 GWh 31 GWh 86 GWh

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 2024 ANNUAL SUSTAINABILITY REPORT

Monitoring and assessing effectiveness Data and information relating to our infrastructure
Due to the direct nature of their investments, our equity portfolio is maintained in data systems
infrastructure equity portfolio stewardship activities managed by the investment team. This information
are monitored and tracked directly by our investment is reviewed in collaboration with the AMST to help
and asset management teams, and/or via the IFM ensure data consistency and quality. We do not
appointed directors on the investee company board. currently engage external auditors for sustainability
data, however some of the portfolios’ larger assets
Material risks which are identified during due do undertake independent external verification of
diligence are fed into asset management plans for sustainability-related indicators.
risk assessments and monitoring. Portfolio assets are
reviewed at least on an annual basis and portfolio
and asset priorities and plans are updated frequently,
depending on the level of progress.

CASE STUDY

Operationalising engagement with industrial stakeholders

Rationale • Regular and structured engagement with the
Engaging with key stakeholders at the sectoral, relevant unions;
national and global levels helps us understand our
obligations and manage risks and opportunities. • Ensuring that our appointed directors on
We aim to promote fair, safe, and inclusive asset boards understand labour relations and
workplaces, and protect workers’ rights during workplace issues;
transitions like automation and global energy
shifts. We believe effective workforce management • Identifying the key issues for engagement for
is crucial for both worker fairness and business workers, including health and safety, workplace
effectiveness during and after transitions. changes such as automation, protection of
human rights and inclusion and diversity; and
IFM action
In 2019, we signed a Memorandum of • Ensuring that workers at assets can exercise
Understanding (MoU) with the International Trade their internationally recognised rights to
Union Confederation (ITUC) to respect labour union membership and collective bargaining,
rights. This MoU emphasises our commitment to in accordance with the OECD Guidelines for
social dialogue with labour unions. Multinational Enterprises and the UN Guiding
Principles on Business and Human Rights.
Since signing the MoU with the ITUC, sectoral
charters for Seaports (2022) and Airports (2023) In FY24, these charters were fully operationalised,
have been developed with the Australian Council with meetings held with unions for each of the
of Trade Unions (ACTU) and applicable unions, charters. Two meetings were held in FY24 (one for
demonstrating our objective to implement the each charter), with further meetings planned in
MOU. These charters aim to facilitate mutually FY25.
beneficial engagement between IFM and the
ACTU, as well as identify priority areas for focus, Outcome
including workers’ rights, protecting human We believe the meetings held with unions for each
rights, safety and industry transitions such as of the charters have been important for identifying
automation. areas of multi-stakeholder collaboration including
safety, modern slavery and the development of
Through these charters, we emphasise our minimum standards for cleaning contracting. We
support for: expect these standards to be finalised in FY25.

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 2024 ANNUAL SUSTAINABILITY REPORT

“With our heritage and our ownership, labour rights and

the decent treatment of the people who work in our assets
is core to who we are” – Cath Bowtell, IFM Chair 24

CASE STUDY CASE STUDY

Value creation through inclusion

Socially sustainable workplaces
and diversity
Rationale
Workplaces today face significant social risks due to Rationale
megatrends such as rapid industry and occupational shifts, We believe that strong, diverse, equitable
workforce transitions, climate change and the rise of artificial and inclusive cultures are a value driver for
intelligence. We believe that fostering socially sustainable companies in which our portfolios invest
workplaces is crucial to mitigating these risks and capitalising and that a lack of diversity can lead to poor
on opportunities. company performance.

We believe social connection in the workplace not only promotes In addition to this a number of
wellbeing but also boosts workplace productivity. A socially infrastructure equity portfolio companies
sustainable workplace seeks to enhance its skill base while operate in industries where there are
reinforcing the social fabric that binds it as a social entity. It also challenges for recruitment of appropriate
takes steps to control the tendency towards work intensification workers. We therefore believe it is important
that compromises skill development and ultimately impacts quality to support our infrastructure equity portfolio
of service. Social capital metrics for assessing and driving change companies to become employers of choice.
in this area are, however, limited.
IFM action
IFM action In FY24, we engaged the Wharton Business
To seek to address this, our infrastructure equity portfolio School, University of Pennsylvania, as a
team began collaborating with academics from the University specialist advisor on inclusion and diversity
of Sydney Business School and the Faculty of Medicine and for our infrastructure equity portfolio.
Health in 2022 to develop metrics to define socially sustainable
infrastructure workplaces. The project is mapping the impact of The Wharton Business School facilitated a
megatrends, such as artificial intelligence and climate change number of discussions with IFM executives
on infrastructure workplaces. The aim of this work is to aid and hosted roundtables with a number of
investment and asset management decisions. our assets to discuss topics such as fighting
bias in hiring, why diversity contributes to
Alongside tracking these metrics, we conducted a social risk the bottom line and value creation, and how
mapping project applying a risk assessment framework to help to begin understanding the challenges and
identify and understand social risks across our infrastructure opportunities our assets may be facing in
equity portfolio companies. This involved both a bottom-up asset- this regard.
level analysis of social risks, and a top-down identification of
certain systemic and sectoral risks. We believe this positions us Outcome
well to understand and focus on material risks and to implement The roundtables have facilitated learning
portfolio-wide and asset management initiatives to manage them. and sharing of knowledge between
attendees. As we move into FY25 we
Outcome intend to build on the engagement with
We believe our continued collaboration with the University the Wharton Business School with a view
of Sydney and developing an approach to measuring social to identifying opportunities to help our
sustainability at our infrastructure equity portfolio companies infrastructure equity portfolio companies
will allow us to strive to systematically prioritise, identify and remain employers of choice.
respond to risks more effectively.

The collaborations with the Wharton and University of Sydney Business Schools reflect a commitment to evidence-
based approaches to understanding and improving the long-term social sustainability of infrastructure workplaces.
We believe these collaborations with the universities can play an important role in rigorously challenging our
thinking and enhancing our strategies.

Hear more from IFM’s Chair, Cath Bowtell, here: Managing Social Risks in Unlisted Infrastructure | IFM Investors
24

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 2024 ANNUAL SUSTAINABILITY REPORT

Listed equities
Our approach Our listed equities portfolio does not have a
IFM’s listed equities portfolio has several different designated investment team located outside
investment processes and portfolio construction Australia, so our international engagement and
methodologies, with the majority of these being voting efforts in support of our listed equities
determined by the contents of Investment portfolio are limited. For our listed equities portfolio
Management Agreements (IMAs) between IFM companies outside Australia, we use the advice from
and our clients. These range from purely passive international proxy advisor Glass Lewis. At all times,
investment strategies where the goal is replicating our clients are able to advise us of their individual
the performance of an index, to low tracking error voting position for the portfolios we manage that are
approaches where the portfolio holds securities under an individual client mandate.
based on a specific investment criterion, with the
goal to deliver a return that closely tracks an index. How we engage
In addition, we manage active long-only and active Our listed equities portfolio engagements aim
long-short mandates. Our overall approach is to to reinforce our expectation for companies to
partner with clients with a view to understanding strategically recognise and manage all material risks
their requirements and working together to develop and opportunities to help protect and enhance long-
an investment approach that seeks to satisfy their term shareholder value.
requirements. As a result, engagement and voting
are important tools used to integrate sustainability Our engagement activities for Australian investments
considerations in the asset class, as appropriate and in our listed equities portfolio include:
where they are in line with our client mandates.
• Direct company engagement by our team
Our engagement activity in our listed equities managing the active strategies within our listed
portfolio primarily focuses on Australia, as the equities portfolio via attendance at company
majority of our listed equities portfolio products are briefings and meetings with management. The
invested in Australian listed companies. We engage objective of these engagements is to understand
directly with Australian companies or through business strategy and future direction, as well as
collaboration with other investors, primarily via the financial performance, valuations and resilience.
Australian Council of Superannuation Investors Identification and discussion of sustainability
(ACSI), as outlined below. considerations the investment team view as
material is a feature of many company meetings.
We manage all our voting on Australian listed
companies in-house and consider and deliberate on • Direct one-on-one company engagement by our
all resolutions pertaining to the top 20 companies Sustainable Investment team, which is generally
(by market capitalisation), all ‘Say on climate’ focused on issues IFM considers to be material,
resolutions, resolutions that we designate as being follow ups from prior engagement requests or
contentious, and on all shareholder proposed issues arising from the previous proxy voting
resolutions. Our voting decisions are informed by our season. These meetings will also typically include
company engagement activities, internal and external representatives from our listed equities portfolio
research, and we also consider proxy advice received team.
from ACSI and Glass Lewis. Our voting decisions
are governed by our Proxy Voting and Engagement • Collaborative engagements are sought where we
Committee (the role of which is outlined in Section 7). believe there is benefit to engaging collectively
with other investors, rather than (or in addition
We also participate in several thematic engagement to) individually with a company, on an issue that
initiatives alongside other major Australian a broad range of investors are concerned about.
shareholders through industry collaborations such An example is IFM’s participation in the Climate
as Climate Action 100+.25 Our team managing Action 100+ initiative. We believe that the power
our active Australian strategies within our listed of collective engagement based on independent
equities portfolio also engage directly with portfolio decision-making elevates issues and can signify to
companies’ management on business strategy and companies that the issues raised are important to a
performance. broad cohort of investors. We also draw on insights

25
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 2024 ANNUAL SUSTAINABILITY REPORT

and benchmarking provided by the broader governance guidelines. Importantly, when ACSI
network of investors. We engage with priority engages on our behalf, it represents all of our
companies periodically as part of an engagement listed equities portfolio holdings in Australia
plan that is developed by the lead investor and and there is no differentiation between active or
agreed by the other participating investors. passive strategies. We see this as a key benefit to
our membership of ACSI.
• As members of ACSI, IFM representatives attend
a number of the engagement meetings that ACSI Information about our stewardship activities with
conducts with ASX 300 companies. ACSI engages regards to our listed equities portfolio in Australia is
on IFM’s – and other members’ - behalf and also publicly available on the stewardship page of our
communicates identified sustainable investing website.26
issues to these companies. IFM collaborates with
other members in setting ACSI’s engagement The outcome of engagement in our listed equities
priorities at the start of each year as well as in portfolio is challenging to measure due to the long-
the period when ACSI’s governance guidelines, term nature of engagements. We do not necessarily
which set out ACSI members’ expectations about think in terms of success or failure, but rather we
the governance practices of the companies in view our engagement as a continuum of ongoing
which they invest, are being updated. Should interactions with the companies in which we invest
IFM be unable to attend these engagements, to understand how they can evolve responsibly
ACSI makes its representation on our behalf. We and be as successful as possible. We recognise
believe engagements via ACSI are an important that positive outcomes are not necessarily due
element of IFM’s company engagement approach. only to IFM’s specific efforts and, usually, are the
ACSI members represent a significant proportion result of a number of driving forces contributing to
of the pension fund industry in Australia and the the outcome. However, IFM places importance on
expectations ACSI communicates to companies ongoing engagement as a key pillar in our ownership
are largely aligned with IFM’s, given IFM’s approach for the portfolio.
involvement in setting and updating the ACSI

CASE STUDY

Voting against MA Financial Group’s remuneration report

Rationale Group’s remuneration report at the March 2024
Remuneration concerns shaped a number of our Annual General Meeting (AGM) which received
engagements with companies in which the listed an overall vote against of ~24%. We subsequently
equities portfolio was invested in during FY24, met with members of the company’s board to
including with MA Financial Group, a global discuss remuneration with a view to further
alternative asset manager. We were concerned understanding their use of discretion. Specifically,
with the board’s use of discretion in determining we had concerns that the performance hurdles
executive short-term incentive (STI) awards for FY23 may not be fit for purpose given upwards
given the extent by which the corporate financial discretion and could create a disincentive for
objectives, being Earnings per Share (EPS) and management to hit those targets if they know that
Return on Equity, were missed by the company. The they can miss them but still be compensated.
estimated impact of the use of such discretion was
an additional AUD 1 million in annual bonuses to Outcome
disclosed executives. Furthermore, we had concerns The company was receptive to our points and
around the long-term incentive (LTI) award based on acknowledged that discretion should be modified
EPS as a single performance metric. and more formulaic. Regarding the LTI, the
company took on notice our suggestion that a
IFM action return on capital measure be included as a second
We have previously written to the MA Financial performance metric. We intend to continue to
Group board in FY23 over remuneration discuss the return on capital measure in future
concerns. IFM voted against MA Financial engagements with MA Financial Group.

26
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2024 ANNUAL SUSTAINABILITY REPORT

CASE STUDY

Engagement on safety
Rationale Perenti stated that its primary safety objective is
One of our portfolio companies, Perenti Ltd no adverse or life-changing events, and accepted
(Perenti), is a mining services company with over it has not achieved this objective. We spoke
11,000 employees and operations in over ten about the industry as a whole and the dangers
countries. During 2023 the company announced that exist, as well as the cultural differences and
two fatalities at the Dugald River Underground language barriers in some of the regions where
Mine in Queensland and in February 2024 the company operates. The ‘checkmate’ safety
announced a fatality at the Mana Mine in Burkina procedure that was recently introduced was also
Faso. This took the tally to eight fatalities in the discussed, including the status of the training on
last five years. this procedure for relevant staff and how the most
recent fatality occurred despite the procedure
Perenti’s governance and safety strategy has been being in place. Perenti noted that there was some
a continued engagement focus for us over several work to do to ensure that safety procedures are
years. In 2023 we voted against the remuneration always followed.
report and the re-election of two directors,
including the Chair. We took these positions as Outcome
we felt there was insufficient board oversight and We expect Perenti will continue to seek to ensure
accountability for the persistence of inadequate all staff have adequate training as a priority and
safety performance, and we communicated this to understand Perenti is also deploying innovative
Perenti in a formal letter after the AGM. (and in some cases) technology-based tools to
further assist staff in risk identification and
IFM action mitigation when on site.
Following the announcement of a fatality in
February this year, we met with Perenti in March We will continue to monitor the company’s
and May to discuss the nature of the incident(s), disclosures on safety, and we intend to meet with
implementation of safety at sites, the culture of the Perenti during FY25 to discuss the improvement of
company and intended steps to remediation. safety procedures and to assess whether the steps
which have been taken have been effective.

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 2024 ANNUAL SUSTAINABILITY REPORT

Proxy voting stakeholders. The pre-voting report contains the

For our listed equities portfolio, our ownership rights vote decision and rationale for the decision when we
are executed via our proxy voting program – as recommend a vote contrary to the recommendation
described below. provided by the relevant company. The pre-voting
report provides clients with an opportunity to review
We believe exercising our voting rights is important IFM’s decision and inform us of an alternative
to encouraging action on the issues we think are voting preference for an individual mandate, if they
material to long-term investor value. so choose. Pre-voting reports are issued only to
clients of our listed equities portfolio and are not
IFM reviews and votes on behalf of some of our publicly available because our listed equities portfolio
Australian listed equity portfolios’ clients. All products are not public-facing.
Australian clients of our listed equities portfolio
receive IFM recommendations, however they Following the issue of the pre-voting report, proxy
generally execute their own voting based upon their votes are lodged online via the Glass Lewis ‘Viewpoint’
individual policies and procedures. In FY24, IFM online platform. This platform provides relevant teams
voted on approximately 21% of our Australian listed and users with visibility of shareholdings in individual
equities portfolio. client mandates where we have voting authority,
as well as the wider portfolio. Glass Lewis receives
Proxy Voting and Engagement Committee (PEC) regular holdings files from our clients custodians
IFM’s PEC is responsible for the oversight and which are automatically uploaded into the platform.
implementation of proxy voting and engagement During the daily upload process, a reconciliation is
activity for our Australian listed equities portfolio performed within the system to match ballots and
companies. The role of the PEC is outlined in Section 7. verify holdings to ensure details are accurate. Glass
Lewis will flag any issues such as unrecognised
holdings, missing shares or incorrect data with
IFM Listed Equities Voting Guidelines the relevant custodian for investigation in the first
During FY24, IFM commenced a review of the proxy instance. IFM is contacted if any escalation is needed.
voting guidelines which we apply in relation to votes For monitoring purposes, Glass Lewis distributes
on Australian listed equities’ portfolio investments. weekly reports to selected IFM users which detail all
An updated version of these guidelines is expected to votes officially cast over the prior week. This provides
be adopted in FY25. assurance that votes have been executed correctly and
within the set deadlines. The platform also allows us
to download a report at any time which displays the
Voting process number of shares held and the number of votes cast
ACSI and Glass Lewis proxy advice is an input for any company historically.
to the decision-making process. IFM has, on
numerous occasions, voted against proxy advisor IFM does not undertake any stock lending directly
recommendations where the PEC has considered it for our listed equities portfolio clients. Some of
appropriate to do so. our clients do engage in stock lending, and in this
situation, they instruct their custodians to manage
The PEC executes votes in the following order of the stock lending program for them.
priority:
Voting terms
• In accordance with client directives and/or Voting terms and authorities for individual mandates
instructions; are agreed with the client and outlined in the relevant
IMA. Clients can give IFM delegated authority to vote
• The IFM view of the resolution, which occurs on their behalf via a mandated arrangement. In some
following an evaluation of the proxy advice cases, a client may request an alternative position to
received; and what IFM has proposed, in which case IFM is able to
cast this individual vote where delegated authority is
• Where there is no recommendation from ACSI, in place. Only shares where IFM has been granted the
we will review guidance from other proxy advisors right to vote on behalf of a client will appear in the
and make a final voting decision based on the Viewpoint platform.
principles contained within the ACSI Governance
Guidelines and IFM’s own voting guidelines. In terms of any listed equities pooled funds, IFM,
as trustee, would have full power to exercise its
Prior to casting votes, a pre-voting report is voting rights and do so in-line with our own voting
prepared and issued to all clients of our Australian guidelines. As at 30 June 2024, IFM does not have
listed equities portfolio and to relevant internal any listed equities pooled funds.

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 2024 ANNUAL SUSTAINABILITY REPORT

Voting summary statistics for FY24

FY24 Australian listed equities portfolio engagement and voting summary

324 1923 232 equivalent to

12.06%
AGMs resolutions votes were against management

With Against
Category Abstain Sum
Management Management
Audit / financials 60 0 0 60
Board related (other) 47 11 0 58
Capital management 122 16 11 149
Company statute changes 26 6 0 32
Corporate activity 65 0 0 65
Director elections 707 46 0 753
Director fees / grants 362 72 0 434
Remuneration 260 78 0 338
Say on climate 2 1 0 3
Shareholder proposals – Director Election 23 0 0 23
Shareholder proposals - Constitutional Amendment 4 0 0 4
Shareholder proposals – Climate Change 2 2 0 4
Total 1680 232 11 1923

VOTES AGAINST MANAGEMENT

Remuneration report 33.62%

Director fees / grants 31.03%
Director elections 19.83%
Capital management 6.90%
Board related (other) 4.74%
Company statute changes 2.59%
Shareholder proposals - Climate Change 0.86%
Say on climate 0.43%
Audit / financials 0.00%
Corporate activity 0.00%
Shareholder proposal - Director election 0.00%
Shareholder proposals - Constitutional Amendment 0.00%

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 2024 ANNUAL SUSTAINABILITY REPORT

FY24 international listed equities portfolio engagement and voting summary

3019 35,649 3,898 equivalent to

10.93%
AGMs resolutions votes were against management

With Against
Category Abstain Sum
Management Management
Audit/Financials 5282 129 70 5480
Board Related* 3699 665 81 4445
Capital Management 2120 327 9 2456
Changes to Company Statutes 1544 152 24 1719
Compensation 3274 590 57 3920
Director Elections 13182 1429 149 14760
M&A 337 12 0 349
Meeting Administration 894 82 32 1007
Other 465 249 2 715
SHP**: Compensation 78 12 0 90
SHP: Environment 135 24 0 159
SHP: Governance 128 149 2 279
SHP: Miscellaneous 9 6 0 15
SHP: Social 181 75 0 255
Total 31325 3898 426 35649
*excludes Director Elections
**SHP: shareholder proposal

VOTES AGAINST MANAGEMENT

Director Elections 36.66%

Board Related 17.06%
Compensation 15.14%
Capital Management 8.39%
Other 6.39%
Changes to Company Statutes 3.90%
Shareholder proposal - Governance 3.82%
Audit/Financials 3.31%
Meeting Administration 2.10%
Shareholder proposal - Social 1.92%
Shareholder proposal - Environment 0.62%
M&A 0.31%
Shareholder proposal - Compensation 0.31%
Shareholder proposal - Misc 0.15%

100% of eligible votes were cast in FY24 and the number of votes on which we abstained is shown in the table
above. All IFM voting decisions can be searched and viewed from our website at: IFM Investors Listed Equities –
Proxy Voting Activity (glasslewis.com)

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 2024 ANNUAL SUSTAINABILITY REPORT

Monitoring and assessing effectiveness

We record IFM’s direct engagements with listed Details of all ACSI engagement meetings are
Australian companies in our listed equities portfolio recorded within the member platform. The platform
and track them in a third-party online platform enables detailed tracking on the number of
which can be accessed by our listed equities portfolio engagements, method of engagement, level within
team and our Sustainable Investment team. This the organisation at which the engagement occurred,
enables a form of peer review and information topics discussed, detailed summaries of discussions
sharing which helps to ensure we are focusing our (together with observations of progress) and publicly
engagement efforts in the right areas. available materials/statements.

Engagement undertaken by ACSI on behalf In addition to tracking engagement progress and

of members is stored and tracked in a central voting outcomes, we also meet regularly with ACSI as
ACSI member platform. Representatives from well as proxy advisor Glass Lewis to discuss market
our Sustainable Investment team often attend issues and trends as well as significant events.
engagement meetings convened by ACSI for
members which allows IFM a level of scrutiny and IFM’s internal audit process (undertaken by an
direct involvement. external auditing firm) includes a review of our
stewardship voting activity and records against
the statistics reported and procedures described in
internal and external documents.

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 2024 ANNUAL SUSTAINABILITY REPORT

Debt investments
Our approach Transition risk
Given the nature of debt investments, our debt In parallel to our risk matrices, our processes for our
investments team places considerable emphasis on infrastructure debt and diversified credit products
the due diligence stage of the investment process, have integrated transition risk frameworks into their
where we have a more pronounced opportunity to respective diligence processes. Our infrastructure
engage and influence borrowers on sustainability- debt products team utilises the Cambridge Institute
related matters. for Sustainability Leadership Transition Risk
framework,27 with our diversified credit team
During the due diligence process, our debt incorporating assumptions from this framework into
investments portfolio team seeks to ensure that risks its enhanced climate diligence framework which
deemed material to the investment decision have is tailored to the materiality of climate risk to the
been assessed and addressed, with the diligence investment under consideration. Both frameworks
approach then tailored to the specific asset class leverage established third party scenarios in order to
and product. Across our infrastructure debt and quantitatively assess assets in higher risk sectors for
diversified credit products, our credit analysis for exposure to transition risks.
each investment opportunity is documented in a
Credit Assessment Memorandum, which contains
a section summarising any material sustainability
considerations. This assessment is underpinned
by an underlying risk matrix and represents the
documentary core of our sustainability analysis
for opportunities across these products. For the
infrastructure debt products, this matrix considers
18 discrete sustainability topics, (e.g. GHG emissions,
resource scarcity and degradation, labour practices,
community relations) that are individually assessed
in an iterative review alongside the Sustainable
Investment team where required for each new
investment and presented during our Investment
Committee process. Our diversified credit due
diligence process also leverages our due diligence
risk matrix, calibrated to the opportunity set
across 16 discrete sustainability topics. We believe
these matrices facilitate robust identification of
sustainability risks and opportunities. Where issues
are deemed particularly material or nuanced, we
may also draw upon third party data or expert advice
when making a credit assessment.

Across treasury services, we apply a rules-based

approach that excludes certain exposures in addition
to identifying sustainability risks and opportunities
we consider to be material in the context of our overall
objective of maximising long-term risk adjusted
investor returns. Any material items are summarised
and presented to the IFM Investment Committee as
part of the formal decision-making process.
Picture: Aleatica

27
For detail see: Climate risk | Cambridge Institute for Sustainability Leadership (CISL)

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 2024 ANNUAL SUSTAINABILITY REPORT

CASE STUDY

Sustainability linked loan – servicing vessels

Rationale The sustainability–linked margin adjustment
In certain investments, we have the opportunity mechanism has three KPIs:
to engage with borrowers on sustainability
considerations to a greater extent. For example, • Increase in revenue from offshore wind;
investments designed as sustainability-linked • Addition of vessels dedicated to offshore wind
loans provide the ability to encourage our servicing; and
borrowers to go beyond ‘business as usual’ in the • Maintenance of injury rates lower than
interest of improving sustainability outcomes over industry standards.
the life of the investment.
Outcomes
IFM action Offshore wind in the North Sea mandates bespoke
In FY24, we invested in a company providing servicing vessels, without which we believe the
safety services to offshore vessels in the North UK’s wind energy generation targets would
Sea. Prior to our investment over 90% of the not be possible. We believe companies like the
borrower’s revenue has been generated by borrower play a pivotal role in decarbonising the
services related to offshore oil & gas operations. UK economy, and by structuring the transaction
Our investment incorporates margin ratchets as a sustainability-linked loan, we have the
linked to amplifying the renewable energy- opportunity to help boost the firm’s positive
related operations of the company going forward. impact. Furthermore, we aim to foster the ability
Specifically, the debt financing provided is linked to engage through the lifecycle of the loan and
to increasing the firm’s revenue from offshore influence the company’s sustainability journey,
wind in the UK as well as upholding the firm’s seeking to enhance risk management in our
safety credentials. portfolio by fortifying the borrower’s resilience in a
decarbonising economy.

How we engage With respect to the issuance of credit more broadly,

In general, debt investments tend to provide less we may work with syndicate participants and the
scope to influence and drive impact than equity borrower directly on sustainability considerations
investments provide. As a result, we have sought to and lending controls, based on our independent
curate a robust pre-investment diligence approach assessment, to the extent that is practical and
that holistically evaluates the sustainability risk and applicable. This can include:
opportunity profile of a given investment opportunity.
• Assessing sustainability considerations in credit
Nevertheless, there are certain instances in which research;
we can seek to engage borrowers post-investment,
such as areas in which a risk identified at the • Engaging with management at the issuer,
pre-investment diligence phase materialises or arranger, or sponsor to seek sustainability specific
where a subsequent risk issue arises. Under these information, including sustainability criteria and/
circumstances the basis of our engagement will or reporting requirements in deal documentation;
typically be, first, to gain an understanding of the
issue, its materiality, and its potential to impact • Seeking risk mitigation actions be taken to
credit risk; secondly, we seek to determine whether address specific issues; and
mitigation actions are required, to the extent these
are available. Importantly, given we are not asset • Continuing to monitor progress of sustainability
owners and our investment horizons are limited, considerations post-investment.
available mitigation actions can be confined
to engagement only and then, as a last resort,
divestment.

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 2024 ANNUAL SUSTAINABILITY REPORT

IFM continues to strive to engage with industry The team engages with issuers post-investment
players to progress sustainability considerations in as part of the ongoing monitoring of issuers from
the debt investments asset class via participating a credit perspective. If a particular issue occurs
in discussion forums and seminars. An example of during the investment period, be it credit-specific
this is our involvement in the Infrastructure Debt and/or a sustainability-related issue, or if a previous
ESG Covenant Package Working Group28 alongside known issue becomes more material, the team will
other asset managers. The objective of this initiative engage with the issuer to seek more information
is to unify sustainability data collection by providing and clarifications. Depending on the terms and
a consistent set of requirements as ‘best practice’ obligations as detailed in the lending/credit
for borrowers when reporting to lenders, in pursuit agreements, the issuer may be required to report
of standardising and harmonising sustainability certain credit or sustainability-related information
considerations in loan documentation. to IFM. Sustainability-related information examples,
where applicable, include reporting of environmental
Risk monitoring and assessing effectiveness incidents or regular workforce safety performance.
The Risk Monitoring and Valuation team within Depending on how these reporting requirements
the debt investments portfolio team, reviews and are documented, failure to comply with these
monitors the asset performance including financials additional obligations may result in the triggering of
and covenant certification received from the issuers. review events.
As necessary, the team engages with the issuer’s
management via calls and when necessary face to
face meetings and site visits.

CASE STUDY

Retirement living provider – risk monitoring

Rationale Whilst comfort to invest was reached over the
Retirement living bears some inherent social- track record, existing state of the products and
related risks given the vulnerable customer cohort contractual disclosures from diligence, for the
and the nature of the services provided. These can investment team to advance the opportunity, the
manifest in the form of customer care outcomes, debt investments portfolio team identified that
potentially detrimental commercial outcomes for further oversight and controls were required to
residents and lack of transparent disclosures in ensure ongoing visibility over certain issues and to
commercial contracts. continue to drive positive management behaviour.

We analysed an investment opportunity with a Outcomes

retirement living provider which was viewed as As a result of the higher risk identified at the pre-
having strong credit credentials but inherent investment stage, additional review events were
social risks which had the potential of impacting built into the loan documentation, with a view to
investment outcomes. allowing us to conduct additional monitoring over
the course of the investment life.
IFM action
Diligence was undertaken on the business' s track
record in delivering care outcomes and regulatory
compliance as well as the governance framework
and the degree of oversight. Legal diligence was
also undertaken on the contracts themselves,
including the transparency of the contract
disclosures and their commercial construct.

28
https://giia.net/feedback-welcomed-on-new-esg-covenant-package/

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 2024 ANNUAL SUSTAINABILITY REPORT

Private equity
Our approach We believe that the IFM investment team and the
Our private equity portfolio team seeks to integrate relevant portfolio company boards can drive forward
sustainability considerations into analysis pre- and sustainability-linked objectives to support achieving
post-acquisition of portfolio companies to help long-term risk-adjusted investment returns. We
identify material risks and opportunities. aim to articulate sustainability-linked objectives and
deliverables in our investment strategies and seek to
Our private equity portfolio team assesses align them with the portfolio company’s purpose and
sustainability risks and opportunities in the deal culture. Portfolio company management teams are then
screening and due diligence stage, as appropriate. responsible for integrating these goals into company
This assessment includes the application of the IDEA strategy and planning processes with associated
(IFM Deal Evaluation Assessment) framework, which tracking and reporting (with our private equity portfolio
is a proprietary scoring system that IFM uses to team’s support). Through our ownership period we
rank all deals that enter the assessment process for regularly review and refresh these objectives. We
potential private equity portfolio investments. The maintain a dashboard of sustainability-related metrics,
IDEA framework aims to facilitate debate with a view which help to inform these objectives each year. We
to ensuring consistency with the investment strategy, report on these metrics and performance against these
identify focus areas for due diligence and enable objectives via our annual Private Equity Sustainable
discussion around portfolio construction. We also Investment Report distributed to our clients.
often meet with target company’s management teams
during due diligence to screen for sustainability risks
and opportunities and explain IFM’s strategy and Reviews are generally conducted twice a year. The
intentions post-acquisition. following measures are typically included in each bi-
annual review:
The private equity portfolio team also seeks to
consistently apply a sustainability due diligence • Carbon reduction: progress of carbon reduction
tool to identify potential sustainability risks initiatives;
and opportunities at the initial IFM Investment • Employee engagement: employee engagement
Committee meeting. The tool assesses a prospective surveys conducted to identify any areas for
investment opportunity according to a broad sub- improvement and track impact of any employee
set of sustainability-related criteria, which are initiatives;
considered as part of an IFM Investment Committee • Measurement of diversity and inclusion statistics
recommendation to conduct further due diligence or within portfolio companies and Workplace Gender
to decline the opportunity. Equality Agency29 compliance where applicable;
• Governance: Review of the implementation of
When a deal reaches the IFM Investment Committee, policies (for example, employee leave, codes of
the team seeks to identify and clearly articulate the conduct and corruption and whistle blower-related
relevant portfolio company’s key environmental or policies), business continuity and sustainability-
social objectives; discuss sustainability risks and related planning and board accountability; and
propose incorporating mitigations into the first 100- • External checks on disaster recovery plans and
day plan for the asset; along with setting up tracking data protection practices including design and
of the first-year sustainability-related deliverables in implementation of recovery simulation exercises.
the bi-annual portfolio review process.

How we engage Engagement escalation

During the ownership phase, sustainability-related Engagement escalation with our private equity
objectives are established as part of the value-creation portfolio assets is determined on a case-by-case
plan for individual investments and the IFM team basis, in the same way as our infrastructure equity
works in partnership with portfolio company boards portfolio companies are managed.
to seek to advance and monitor outcomes and value.
Topics include supporting emissions reduction plans; Monitoring and assessing effectiveness
enhanced employee value propositions to support The monitoring and assessment of our private equity
diversity; regular cybersecurity risk assessment; and portfolio companies follows the same approach as
consistency in our sustainability-related approach for our infrastructure equity portfolio companies. This
new investments for our private equity portfolio. is due to the direct nature of the investment and our
close working relationship with the assets.

The Workplace Gender Equality Agency is an Australian government agency responsible for promoting and improving gender equality in Australian workplaces.
29

https://www.wgea.gov.au/.
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 2024 ANNUAL SUSTAINABILITY REPORT

CASE STUDY

Novigi – Establishing enhanced governance

Rationale • Transparency of performance and risks:
Our private equity portfolio team seeks investments New finance and operations reporting, quarterly
in and works with high growth, entrepreneurial goals and the establishment of a risk register and
businesses and aims to build businesses that are cybersecurity audit process;
highly attractive to a range of buyers. Part of our
approach when onboarding a new investment is to • Engagement of clients: Monthly client KPI
seek to apply good governance practices that support reporting and a bi-annual satisfaction survey;
accelerated growth, nurture the culture of the
business and support continuous improvement and • Enhancement of talent & culture: A new
innovation. This begins in the due diligence phase talent review and succession planning process,
and then is an important part of the initial ‘100-day bi-annual engagement surveys and a range of
plan’ which we apply to our private equity portfolio policies to improve and measure diversity, seeking
investments. By taking early action, we seek to to enhance business outcomes for the company;
establish sustainability considerations within part of and
the way the relevant company operates as part of our
overall approach to seeking to maximise the relevant • Measurement of external impact: Baselining of
company’s long-term returns. emissions to be followed by an action plan to seek
to achieve net zero, linking sustainable business
IFM action activity to the company strategy and culture
Novigi is an IT Services business delivering data
and technology services primarily in the wealth Outcomes
management sector. Our private equity portfolio We have worked with Novigi to develop a framework
acquired a significant minority stake in Novigi to measure and improve the company’s approach to
in February 2024. Due diligence work identified integration of sustainability considerations that is built
opportunities and risks to address in the first into the overall governance structure and processes
hundred days and beyond, focused on strengthening of the company, including the annual board calendar,
cybersecurity maturity, building enhanced finance as it continues to scale. We believe this provides the
and reporting capability, and connecting diversity foundations for sustainability-related improvements
and emission reduction improvements to the through the life of the investment and cascades
business’s overall culture. Upon investment, measurement, risk management and performance
a new board and wider governance structure improvement throughout the company. As examples,
was established and in the first hundred days diversity metrics have already shown an improvement
the company board ratified and implemented a and the business believes it is on track to achieve both
governance plan based on four principles: SOC 230 and ISO 2700131 cybersecurity certifications
during FY25.

30
Home Page | SOC2
31
ISO/IEC 27001:2022 - Information security management systems

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2024 ANNUAL SUSTAINABILITY REPORT

CASE STUDY

Smart Urban Properties Australia (SUPA) – Impact during first year of ownership
(implementation of renewable energy initiatives)

Rationale • Increase the level of energy procurement that

We believe that by investing in companies that is attributable to renewable energy sources and
have unrealised, actionable opportunities for to also increase the number of environmental
decarbonisation and by aligning these companies’ certificate purchases, allowing SUPA to expand
products, services and operations with the the delivery of efficient and affordable energy
transition to a net zero economy, our private equity solutions to end customers and projects; and
portfolio aligns with our Purpose and supports
maximising long-term investor returns. • Partner with other infrastructure providers
and property investors to upgrade existing
Following investment, we seek to work closely with properties and deliver electric vehicle charging
assets in our private equity portfolio to support infrastructure.
their sustainability-related objectives including
emissions reductions. This can also extend to Outcomes
supporting portfolio companies in achieving One of SUPA’s flagship projects is supporting
decarbonisation within their broader ecosystems. Homes Victoria to deliver over 1,000 social,
affordable, specialist disability and market rental
IFM action housing apartments across Flemington, Brighton
In August 2023, our private equity portfolio and Prahran.
completed an investment in SUPA, Australia’s first
integrated infrastructure services provider that SUPA’s contribution to the project includes
owns and operates embedded energy, fibre and providing embedded electricity by supplying and
technology solutions for multi-dwelling properties funding advanced remote meters and centralised
in Australia. heat pumps for hot water services. SUPA
intends to also provide on-site renewable energy
Since investment, we have supported SUPA to: generation by funding, installing and operating
integrated solar PV systems.
• Complete a baseline measurement of its carbon
emissions and to develop an internal emissions
reduction strategy;

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2024 ANNUAL SUSTAINABILITY REPORT

Section 4

Navigating
market-wide
risks

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 2024 ANNUAL SUSTAINABILITY REPORT

Our investment teams identify, analyse, measure climate change. Our involvement helps us to stay
and monitor risks in our portfolios, including current on developments in the industry and to
market-wide and systemic risks through their risk collaborate with other stakeholders on identifying
identification processes during investment due and addressing systemic risks.
diligence and asset management. Systemic risks
related to economic, social and environmental Engaging with companies and regulators
matters are identified by multiple teams examining We engage with companies and regulators to gain
the range of inherent and operational risk factors insights into potential systemic risks. For example,
particular to assets, companies, sectors, systems and we may ask companies about their exposure to
regions. Systemic risks are challenging to manage certain risk considerations or engage with regulators
as they require us to work with or influence external through our industry bodies to understand potential
stakeholders to seek to make changes in the wider changes to regulation and work with them to improve
economy. the regulatory landscape where possible.

Risk management Utilising specialised tools and services

A key aspect of our process is the early identification There are a variety of tools and services available
and detection of risks. IFM’s Risk Management to help us identify, measure and monitor risks,
Framework and Strategy is designed to enhance our market volatility and liquidity. For example, our
understanding of risks and it supports us to adapt proprietary infrastructure equity portfolio risk
our business and processes accordingly. management system, InFRAME, enables us to
analyse the underlying revenue streams that drive
Some of the approaches that IFM is taking to identify the performance of infrastructure assets. InFRAME
and respond to market-wide and systemic risks, and synthesises risk profiling, scenario modelling and
help promote a well-functioning financial system portfolio optimisation to help identify and achieve a
include: target strategic asset allocation for our infrastructure
equity portfolio.
Conducting research and analysis
We utilise our in-house resources and occasionally Industry and peer collaboration
work with third-party partners to conduct research IFM participates in industry collaborations that seek
and analysis to identify market-wide and systemic to address systemic risks with potential to impact on
risks. This covers many areas, including (but not the financial system. We aim to be part of collective
limited to) analysing economic data and trends, efforts that seek to support actions that manage
changes in government and central bank policies and systemic risks and provide transparency about them.
key investment themes.
We are signatories to or members of a number of
Participating in industry associations and organisations and initiatives promoting responsible
networks and sustainable business principles globally.
We participate in industry associations and networks Examples of organisations or initiatives include:
that focus on systemic risk considerations such as

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 2024 ANNUAL SUSTAINABILITY REPORT

Australian Council IFM is a full member of ACSI, which focuses on engaging with ASX 300 companies on a range
of Superannuation of sustainability considerations and associated risks and opportunities. IFM is represented on
Investors (ACSI) the ACSI Member Council and the Board.32
In FY24, we were members of several ACSI working groups, including the Diversity other than
Gender Working Group, Social Factors Working Group, Climate Disclosures Working Group
and the Working Group on Rights and Cultural Heritage Risk Management.
Diversity other than Gender Working Group
By 30 June 2024, the working group had completed research into diversity, including policy
settings in both Australia and internationally, existing frameworks for diversity and inclusion,
and the current state of diversity reporting in Australia. Following this research, the working
group has also conducted interviews with companies, experts and regulators to understand
the types of opportunities that might be useful in the Australian context.
Social Factors Working Group
Research has been undertaken in FY24 to focus on developing a framework outlining
financially material workforce indicators that ACSI would like companies to disclose in relation
to their workforces.
Climate Disclosures Working Group
The working group informed ACSI’s work on mandatory climate-related financial disclosure
legislation and the Australian Sustainability Reporting Standards, and this work was
developed in the meetings and communicated in engagement with regulators during FY24.
Working Group on Rights and Cultural Heritage Risk Management
In February 2024, ACSI made a submission on the Federal Government’s First Nations Clean
Energy Strategy.33
In March 2024, ACSI also made a submission to the Federal Government’s consultation
on offshore oil and gas regulatory approvals, which was focused on the requirements for
companies to consult with affected stakeholders (including First Nations people). ACSI
recommended the Australian Government embed requirements that align with international
standards and principles, including free, prior and informed consent.

Australian Sustainable IFM has been a member of ASFI since its inception in 2021. ASFI's purpose is to realign the
Finance Institute Australian financial services system to support greater investment into activities that aim to
(ASFI) create a sustainable, resilient and inclusive Australia.
IFM is supporting ASFI’s initiative to develop an Australian Sustainable Finance Taxonomy.
IFM is a member of the ASFI and the Australian Government expert group established in FY24
to support the development of technical screening criteria, starting with three priority sectors:
minerals, mining and metals; buildings; and electricity generation and storage.

CERES Investor As an active member of the CERES Investor Network, we participate in the initiative’s Policy
Network Working Group in the US. In FY24, the Policy Working Group discussions centred on how group
members have been managing the implications of anti-ESG bills for their respective firms.

Climate Action 100+ IFM is a signatory to CA100+, an investor-led initiative that focuses on encouraging the world’s
(CA100+) largest corporate greenhouse gas emitters to take necessary action on climate change.34 IFM‘s
participation in this initiative involves engaging with several of Australia’s highest greenhouse
gas-emitting publicly listed companies. The CA100+ benchmark provides a consistent
framework of 11 categories that guides our discussions with companies that aim to encourage
improvements in their decarbonisation strategies.

FCLT Global FCLT Global’s mission is to focus capital on the long-term to support a sustainable and
prosperous economy. IFM is a member of FCLT Global, with our CEO and one of the IFM Board
members holding two FCLT Global Board seats. A number of our senior executives contribute
to and attend its work programs and events, contributing practice experience, including at
its summit. In FY24, IFM contributed a section to FCLT Global’s Blue Book35 and IFM’s CEO
participated in a podcast on long term investing.

32
For further details see: https://acsi.org.au/about/board-member-council/
33
First Nations Clean Energy Strategy | energy.gov.au
34
For further details see: http://www.climateaction100.org/
35
https://www.fcltglobal.org/wp-content/uploads/Blue_Book_2024_web.pdf

42
 2024 ANNUAL SUSTAINABILITY REPORT

Principles of IFM has been a signatory to the PRI since 2008 and representatives from IFM have
Responsible participated in a number of collaborative engagements and investment practice committees
Investment (PRI) over the years.
In FY24, IFM participated in PRI’s sovereign engagement working group, which brings
together Australian and global investors to engage with different parts of the Australian
Government to seek to better understand and influence the management of climate-related
risks at the sovereign level. We also participated in workshops on system-level risks and
attended a number of other events.

Institutional Investor IIGCC focuses on bringing the investment community together to help build a climate resilient
Group on Climate future. We are active participants in the group’s Policy Advocacy Group, providing analysis
Change (IIGCC) and information to support the IIGCC’s engagement with policymakers on the transition to a
low carbon economy and development of approaches for net zero alignment of investments.
We also use the IIGCC’s Net Zero Investment Framework to guide the development of climate
action plans across our asset classes.

Investor Group on The IGCC is a collaboration of Australian and New Zealand investors focusing on the impact
Climate Change of climate change on the financial value of investments. The IGCC operates through several
(IGCC) working groups which help shape its position on key issues through the collaborative effort of
members. IFM has been an active participant on the IGCC's Policy & Advocacy Working Group,
Investor Practice Working Group, and Corporate Engagement Working Group, providing input
and developing positions and practices to support the transition to a low carbon economy
including work specifically designed to inform the Australian Government’s development of six
first-ever sectoral decarbonisation plans.

Investors Against Through IAST APAC, we have the opportunity to lead and support engagement with a number
Slavery and of ASX companies, including large retailers, where we discuss how these companies are
Trafficking Asia- locating, fixing and seeking to prevent human rights abuses in their supply chains as well
Pacific (IAST APAC)
as their own workforces. We continue to consider ways to expand our involvement in this
initiative and other direct modern slavery focused engagements.

Net Zero Asset IFM is one of NZAMI’s 30 founding signatories and was one of Australia’s first asset managers
Managers Initiative to sign up to it. We have been working with a growing number of co-signatories to share our
(NZAMI) infrastructure expertise and assisting NZAMI’s aim of supporting the asset management
industry to commit to net zero emissions by 2050 or sooner.
In August 2024, we submitted our annual reporting update to the NZAMI. This provided an
opportunity for IFM to demonstrate implementation and progress against our own NZAMI
target. The information set out in the report will be publicly available.

Partnership for IFM signed a letter of commitment with PCAF in February 2022 and committed to disclosing
Carbon Accounting certain financed emissions using jointly developed GHG accounting methodologies by
Financials (PCAF) February 2025.

Responsible RIAA champions responsible investing and a sustainable financial system in Australia and
Investor Association New Zealand.
Australasia (RIAA)
Representatives from IFM are members of its Human Rights, First Nations Peoples’ Rights,
and Nature working groups, which help inform our stewardship approach and may also feed
into our due diligence process for new transactions.

UK Sustainable Our Global Head of Sustainable Investment sits on UKSIF’s Board, bringing the perspective of
Investment and a long-term capital investor. In FY24, the focus has been on supporting the industry with the
Finance Association implementation of the new UK Sustainability Disclosure Requirements36 and developing policy
(UKSIF)
positions and recommendations across the key parts of the real economy (such as energy,
housing and transport).

40:40 Vision The 40:40 Vision37 is an Australian initiative working towards gender balance in executive
leadership across all ASX 200 companies by 2030. Our Chief Executive David Neal sits on the
40:40 Vision Steering Committee.

36
UK Sustainability Reporting Standards - GOV.UK (www.gov.uk)
37
For further details see here: https://www.hesta.com.au/4040vision

43
 2024 ANNUAL SUSTAINABILITY REPORT

FY24 collaboration highlights

CASE STUDY

Super collaboration - Affordable housing Australia

Rationale IFM action

In 2022 the Australian Government agreed to a We worked with four superannuation funds to
National Housing Accord (Accord)38 with states collectively partner with Community Housing
and territories, local government, the construction Providers (CHPs) to support an initial investment
sector, institutional investors and IFM. This Accord in social and affordable housing through the HAFF.
aims to deliver on public objectives, in part by
enhancing the risk-return profile of institutional We have been working closely with these funds
investments in affordable housing. The public to explore opportunities to invest in social and
objectives include that Australians have access affordable housing at scale to deliver appropriate
to safe, stable and affordable housing, as well long-term risk adjusted returns to their members.
as better housing choices near work, schools
and transport. The Accord also recognised that Outcomes
Australia, which had the world’s third largest pool Through an IFM-managed investment structure,
of capital in its superannuation system, required we intend to seek to support applicants in the first
public policy intervention to make investments round of the HAFF program, by providing long-
in affordable housing at scale in pursuit of term debt to CHPs. We believe this is an important
stable returns over the long term for the benefit component of the third-party capital required to
of members. Among the policy interventions achieve the Commonwealth Government’s goal of
advanced by the Accord is the Housing Australia delivering 40,000 new social and affordable rental
Future Fund (HAFF), through which the Australian homes in the HAFF’s first five years.
government subsidises the investment return
outcome for qualifying projects.

We believe our participation in the Accord and

engagement with the HAFF program not only is an
opportunity to generate long-term risk-adjusted
returns, but also can help address the need for
affordable housing supply in Australia.

38
Delivering the National Housing Accord | Treasury.gov.au and National Housing Accord 2022 (treasury.gov.au)

44
 2024 ANNUAL SUSTAINABILITY REPORT

CASE STUDY

Memorandum of Understanding with GrainCorp Limited (GrainCorp) on Sustainable

Aviation Fuel (SAF)

Rationale Given the multiple airport holdings of our

We manage investments in major airports in infrastructure equity portfolio in Australia which
Australia and globally. We believe development and fall under an integrated regulatory environment,
production of SAF is key to the decarbonisation we made a strategic decision to focus on SAF in
of these assets and therefore the long-term risk Australia in the first instance.
adjusted returns of these assets.
IFM action
Emissions from aviation currently account for In November 2023, we announced a memorandum of
approximately 2% of global energy- related emissions understanding with leading Australian agribusiness
and are growing faster than other transport-related and processing company, GrainCorp. Together with
emissions.39 Aviation emissions are predominantly GrainCorp, we have commenced a feasibility study
caused by the combustion of kerosene-based jet fuel on the creation of a SAF supply chain in Australia.
and are considered ‘hard-to-abate’ due to the energy Central to the study is the structuring of a long-term
density requirements of fuels for medium and long- feedstock supply framework that is expected to see a
haul aviation and the compatibility of existing airline wide range of feedstocks (including crop-based oils,
fleets and refuelling infrastructure with alternate bio-organics, wastes and residues) converted into
methods of propulsion.40 SAF and other low-carbon fuels through large scale
refining infrastructure. In working with GrainCorp,
While it is likely that commercially mature hydrogen we are focused on seeking to build a long-term
and electric solutions for short haul aviation will and sustainable pathway for contributing to the
emerge, they are not anticipated to reach market decarbonisation of Australian aviation.
until 2035 at the earliest and will require significant
re-development of aircraft and airside refuelling Outcomes
infrastructure.41 We believe that, ultimately, this We see the development of a SAF industry in
positions SAF as the only reliable decarbonisation Australia as critical for our Australian airport assets,
solution for medium and long-haul aviation out to who we expect to have the opportunity to benefit
2050, which collectively account for c. 73% of aviation from a reduction in scope 3 emissions through
emissions.42 airlines’ use of SAF. More broadly, the Australian
Government has signalled the decarbonisation,
Aircraft emissions are considered scope 3 emissions economic and security benefits of developing a
for airports and account for at least c. 80% of an SAF industry in Australia, and we view our work to
airport’s total carbon footprint.43 As an owner date with GrainCorp as providing forward-thinking
of airports and midstream infrastructure, our leadership to the nascent industry.
infrastructure equity portfolio considers mitigation of
aircraft emissions through the use of SAF to be both
an investment and decarbonisation opportunity.

39
IEA 2024, https://www.iea.org/energy-system/transport/aviation
40
McKinsey 2023, https://www.mckinsey.com/industries/aerospace-and-defense/our-insights/decarbonizing-aviation-executing-on-net-zero-goals
41
IATA 2019, https://www.iata.org/contentassets/d13875e9ed784f75bac90f000760e998/fact_sheet7-hydrogen-fact-sheet_072020.pdf
42
ATAG 2021, https://aviationbenefits.org/media/167417/w2050_v2021_27sept_full.pdf, page 56
43
https://aviationbenefits.org/media/167417/w2050_v2021_27sept_full.pdf, page 12

45
 2024 ANNUAL SUSTAINABILITY REPORT

Engaging with government bodies and policymakers

We participate in industry forums and work with submissions to earlier reviews. The superannuation
other investors, civil society and governments performance test administered by the Australian
to promote and contribute to discussions about Prudential Regulation Authority assesses products
sustainable investing objectives, as well as advocate and seeks to ensure poorly performing products
for policy development that aims to maintain and are not offered to new members. IFM’s submissions
build economic, environmental and social value. made recommendations for addressing systemic
risks such as climate change in the design of the
During FY24, we continued our advocacy and performance test and sought to put the focus of the
government engagement activities across the key test on aspects of investment strategy and portfolio
regions in which we operate. We have advocated for construction which we see as major contributors to
public policy outcomes that we believe will help us long-term returns.
to invest, protect and grow the long-term retirement
savings of working people, including through Low carbon liquid fuels
strengthening the financial systems in which we IFM participated in the Australian Government’s
operate and reducing systemic environmental and consultation on the policy support for the
social risks to our investments. development of a low carbon liquid fuels industry
in Australia, which feeds into the Australian
We engaged with elected political representatives, Government roadmap for a net zero transport
government officials and industry stakeholders sector.45 We believe low carbon liquid fuels like SAF
directly and through participation in a range of will have an important role in transition strategies,
industry events and collaborative forums. offering a decarbonisation pathway for many hard-
to-abate sectors, such as aviation, shipping and
We have also continued to highlight the significant heavy transport.
opportunity of mobilising superannuation and
pension capital, for new infrastructure projects and, Treasurer’s Investor Roundtables
where practicable, for supporting the decarbonisation IFM has participated in the Australian Treasurer’s
of existing infrastructure, while continuing to deliver Investor Roundtables since inception. Working
reliable returns. with our industry superannuation fund owners, we
have advocated for a number of reforms to enhance
Regional advocacy activity long-term risk adjusted returns for superannuation
funds while contributing to national priorities,
Australia such as the energy transition. In December 2023,
the Treasurer announced an expansion of the
Improving long-term superannuation performance Australian Government’s support for a sustainable
IFM participated in the Australian Government’s finance taxonomy, a process to consider reforms
review of Your Future, Your Super (YFYS) measures44 to the superannuation performance test to reduce
in the first calendar quarter of 2024. IFM had the degree to which it may discourage investment
previously participated in the Government’s YFYS in certain asset classes, and key principles on the
Technical Working Group and made written development of sector decarbonisation plans.

44
Review of Your Future, Your Super Measures | Treasury.gov.au
45
Transport and Infrastructure Net Zero Consultation Roadmap | Department of Infrastructure, Transport, Regional Development, Communications and the Arts

46
 2024 ANNUAL SUSTAINABILITY REPORT

CASE STUDY

Super-powering the energy transition: A policy blueprint to facilitate

superannuation investment

Rationale significant investment into Australia’s energy

Australia faces significant climate-related risks transition while delivering strong risk-adjusted
as well as significant economic opportunities, returns for working people’s retirement savings.
thanks to its wind and solar resources, vast land
mass, reserves of critical minerals and strong These recommendations included fast-tracking
capital markets. We believe forward-looking policy planning, expanding transmission investment
action and coordination across the Australian opportunities, extending revenue and regulatory
economy will help reduce transition, technology support to a range of battery storage technologies
and other risks faced by long-term institutional and developing a local SAF industry.
investors such as superannuation funds and help
build a pipeline of investment opportunities with Outcomes
appropriate risk-return profiles. We believe the blueprint was well received
by the Australian Government as well as by
IFM action civil society stakeholders, clients and industry
On 30 November 2023, IFM along with eight major bodies. Since its release we have continued
profit-to-member super funds: AustralianSuper, to advocate for the recommendations, with a
Australian Retirement Trust, CareSuper, Cbus, number of initiatives consistent with some of our
HESTA, Hostplus, Rest Super and UniSuper, recommendations having already been adopted,
together managing a collective approximately such as the Commonwealth Government’s delivery
AUD 1 trillion – released Super-powering the of an expanded capacity investment scheme,
energy transition: A policy blueprint to facilitate the introduction of nationwide fuel efficiency
superannuation investment. standards to drive the uptake of electric vehicles
and a May 2024 Budget allocation of AUD 18.5
We supported the development of the blueprint million over four years to develop a certification
through research and engagement with scheme for SAFs and renewable diesel. The
investment teams and other stakeholders to Commonwealth Government has also identified
help understand investment challenges in the low carbon liquid fuels as one of five priority areas
Australian market and identify potential solutions. under its Future Made in Australia46 agenda.
The blueprint also has formed the basis for our
The blueprint made a series of policy advocacy settings on the development of a local
recommendations to Commonwealth and state SAF industry (see SAF case study).
governments that we believe could enable

United States

Closing the infrastructure gap We are active members of policy organisations such as
In FY24, we continued to advocate for legislation that the National Governors Association (NGA) and industry
we believe will help close America’s infrastructure groups such as the Global Infrastructure Investor
gap and facilitate the transition to renewable sources Association47 which afford IFM opportunities to:
of energy – a prominent theme carried through from
previous years’ advocacy activities. • Seek to advance the case for infrastructure
investment incentive grants;
IFM has engaged with the nation’s governors, • Engage in discussion about the effectiveness
Administration officials and Members of Congress. of renewable energy tax credits as part of the
We have been vocal about the need to pass federal Inflation Reduction Act; and
incentives to encourage the use of public-private- • Represent IFM’s growing presence in diverse
partnerships in US public infrastructure. assets across the United States.

46
https://treasury.gov.au/policy-topics/future-made-australia
47
Welcome to GIIA | GIIA

47
 2024 ANNUAL SUSTAINABILITY REPORT

CASE STUDY

Working with state governors to close the infrastructure gap

Rationale best practices and discuss ways in which Public-
As implementation of the Infrastructure Investment Private-Partnerships (P3s) can be a creative
and Jobs Act began, the NGA played an important solution to infrastructure financing challenges.
role in encouraging each of the nation’s governors
to appoint an ‘infrastructure coordinator’ focused Outcomes
on leveraging available federal financial resources Our presence at the NGA convenings has
and seeking to ensure they were put to use in supported us in securing several engagements
project implementation. The NGA convenes these from officials interested in the role public-private-
coordinators regionally for discussion and debate partnerships can play in their state. While we see
on progress in their respective states. such P3 arrangements as complex and requiring
effort that often transcends gubernatorial
IFM action administrations, we believe we have solidified our
As an engaged corporate partner of the NGA, we place as a trusted partner to the US Government
have had a presence at over half a dozen NGA- on infrastructure financing matters.
convened meetings with state officials to share

United Kingdom and Europe

Managing social considerations Engaging on legislation and regulations

Following the Department for Work and Pensions’ IFM has participated in UK public policy debates as
consultation on consideration of social risks and they pertain to the role of pension funds and pension
opportunities by occupational pension schemes, funds’ investments in contributing to economic
the Taskforce on Social Factors was established in growth. This has included responding to a number of
the UK in 2023 to help pension schemes address consultations across the three major dimensions of
social factors in their investment decisions. Chaired the pension fund system: corporate Defined Benefit
by IFM’s Chief Strategy Officer, Luba Nikulina, and schemes, the Local Government Pension Scheme
co-chaired by IFM’s Global Head of Sustainable and corporate Defined Contribution (whether single-
Investment Maria Nazarova-Doyle,48 in FY24 the employer trust based, Group Personal Pensions
Taskforce on Social Factors continued to develop or multi-employer Mastertrusts which serve the
guidance spearheaded by market practitioners across Automatic Enrolment market). Drawing on our
the investment industry, including pension funds, Australian system expertise, we have argued for
insurers, relevant membership associations and consolidation within each of these sectors to drive
non-governmental organisations and observers from greater allocations to unlisted assets, suggested that
government departments and regulators. the UK Government consider the case for setting up
a collective pension funds-owned vehicle for unlisted
The guidance aims to support UK pension scheme investments, and argued that AE should be regulated
trustees to further integrate social considerations into like a utility to ensure those for whom the policy was
their investment decisions and stewardship activities. intended to serve – low and middle income earners
– get the best possible quality service. In addition
The Taskforce also presented to a cross-party group to the consultation responses, we have made these
of Members of the UK Parliament about its work, arguments in meetings with government ministers
with an open consultation with the industry running and officials, and at industry/government events such
during October and November 2023. as at the Mansion House Conference organised by the
City of London Corporation (COLC) and in the Global
The final guidance and supporting materials were Investment Futures Steering Group of the COLC.
launched by the UK Pension Minister in March 2024.49
IFM also chaired a discussion at the annual
conference of the Global Infrastructure Investors
Association with the Shadow Minister for the Cabinet
Office, who has since assumed the role of Minister.

48
These Chair and Co-chair roles with the Taskforce are voluntary positions in addition to their roles at IFM. Maria Nazarova-Doyle joined IFM in September 2023.
For further details see: https://www.gov.uk/government/publications/considering-social-factors-in-pension-scheme-investments-a-guide-from-the-taskforce-on-
49

social-factors

48
 2024 ANNUAL SUSTAINABILITY REPORT

CASE STUDY

Memorandum of Understanding with the UK Government

Rationale The MoU intends to facilitate collaboration
We believe partnerships between governments between IFM and UK Government departments to
and long-term investors are necessary to unlock provide greater understanding of policy priorities
the potential of pension funds to invest to help and the ongoing development of the infrastructure
mitigate system-level risks such as climate change. and energy transition sectors.
We opened an office in London in 2006 and
are continuing to build our presence in the UK, Outcomes
including through our infrastructure equity and We believe the MoU signed during FY24 will assist
debt investments portfolios. in driving our investment in the UK across large-
scale infrastructure and energy transition projects
IFM action by working with the government to identify
In November 2023 we signed a Memorandum of commercially viable opportunities for investment.
Understanding (MoU) with the Government of
the United Kingdom, announcing our intention to
invest £10 billion in the UK by 2027. Supported by
our major shareholders, the MoU is between IFM
and the Department for Business and Trade of the
Government of the UK.

Picture: Swift Current Energy

49
2024 ANNUAL SUSTAINABILITY REPORT

Section 5

Climate change
and advancing
our net zero
transition

Picture: Stansted Airport

50
 2024 ANNUAL SUSTAINABILITY REPORT

Climate risks and our commitment to emissions reduction

Climate change and the energy transition 1.97mtCO2e as against the adjusted 2019 baseline of
Climate change poses a systemic risk to the global 6.0 mtCO2e. As of 30 June 2024, the infrastructure
economy and long-term investment returns. We equity portfolio represents approximately 50.5% (USD
believe that the most efficient way to contribute to 73.6bn) of IFM’s assets under management across all
mitigating this risk for our clients is to consider asset classes.
whether, and if so, how the assets within our
portfolios can transition to a net zero economy For our private equity portfolio, we are targeting a
in a manner in line with the goals of the Paris 45% reduction in scope 1 and scope 2 emissions by
Agreement. Echoing the agreement reached at 2030 (from a 2020 baseline).
COP28, we believe that long-term investors benefit
if this transition happens in a just, orderly and IFM’s debt investments portfolio team and listed
equitable manner to maximise long lasting benefits equities portfolio team continue to evaluate net zero
throughout the global economy. targets across their portfolios.

IFM is working closely with a cross-section of our

Our net zero target clients and wider industry stakeholders to seek
IFM has set a target to reduce greenhouse gas feedback on these interim targets as they evolve.
emissions, targeting net zero across our asset classes
(scope 1 and scope 2 emissions) by 2050. This target Net Zero Investment Framework
does not apply to client mandates.50 The work to Since 2020, we have sought to improve our ability
determine our approach to deliver on this target is to measure our progress on the pathway to net zero
ongoing, tailored across asset classes and aligned for our assets, and we continue to both monitor and
with our priority to maximise risk adjusted returns contribute to the evolution of NZIF 2.0, the Net Zero
for our clients. Investment Framework52 (Framework) of the Paris
Aligned Investment Initiative and its four investor
Our overarching climate strategy focusses on networks (AIGCC, Ceres, IGCC and IIGCC), with
transition, adaptation and climate solutions our own strategy and targets being guided by the
investment, rather than divestment. We also Framework where practicable and relevant. The
recognise that our ability to achieve our net zero Framework was developed and adopted by a number
targets will be dependent on advances in technology, of asset managers and owners in collaboration with
alternative energy sources being available at scale data providers and investment consultants and
and policymakers and portfolio companies making offers asset class specific guidance on net zero target
and delivering on their own net zero commitments. setting, strategies and transition plans.
Decarbonising a portfolio and its underlying assets
cannot be achieved in isolation and will always Principally, monitoring the development of the
be linked to the local political, technological and Framework allows us to consider actions and
geographical context in which assets operate. levers available at the firm, portfolio and asset
levels to assess the extent to which assets under
management are aligning to, aligned to, or achieving
Interim target net zero as defined in the Framework.53 We believe
In 2021 IFM set an initial decarbonisation reference understanding this distribution will allow us to more
target51 to reduce scope 1 and scope 2 emissions efficiently monitor and guide our progress against
by at least 1.2 mtCO2e (million metric tonnes of our net zero target.
CO2 equivalent) across our infrastructure equity
portfolio by 2030, as against the 2019 baseline total IFM continues to work closely with a cross-section
portfolio emissions of 3.0 mtCO2e. As anticipated, of our clients and wider industry stakeholders to
when the initial target was set, the target has been support the evolution of the Framework, develop new
adjusted annually to reflect both divestments and guidance and address methodological gaps to seek
acquisitions of the infrastructure equity portfolio. It to provide investment managers with the tools to
was updated most recently in 2023, to a reduction of support their transition journeys.

50
Our listed equities client mandates are based on specific arrangements with our clients and reflect their own approach to sustainability considerations.
51
IFM Investors Pty Ltd – The Net Zero Asset Managers initiative
52
Net Zero Investment Framework updated: NZIF 2.0 (iigcc.org)
53
Please note that assets under management mapping is applicable only to assets committed to being managed in line with net zero (i.e. bespoke client mandates are
excluded from this exercise at present).

51
2024 ANNUAL SUSTAINABILITY REPORT

The IIGCC's Net Zero Investment Framework 2.0

ssessment &
t Level A Tar
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Governance & Strategy Asset Level Assessment & Targets

Establishing the basis, legitimacy, and actions Helping investors shift the alignment of underlying
required by investors to address climate-related holdings (assets) to be consistent with net zero goals
transition risks. and objectives.

Objectives Stakeholder & Market Engagement

Establishing net zero objectives over a ten-year Facilitating the availability of data, mandates, and
period, enabling net zero strategy and target investment advice necessary to achieve net zero
performance assessment. objectives.

Strategic Asset Allocation Policy Advocacy

Integrating net zero objectives into the asset Addressing barriers to, and captures opportunities
allocation process, complementing traditional for, net zero alignment created by the wider policy
risk/return objectives. and regulatory environment.

The above is adapted from IIGCC’s NZIF 2.0, ‘The Wheel’, on p.11 of NZIF 2.0 Report PDF.pdf (iigcc.org). The
‘Policy Advocacy’ and ‘Stakeholder & Market Engagement’ components are covered in Section 4 of this report.

52
 2024 ANNUAL SUSTAINABILITY REPORT

What is net zero?

Net zero is a global goal to reduce greenhouse gas risks by aligning our portfolios - over time - with
(GHG) emissions to zero or a residual level, with a lower-carbon economy, thus helping to protect
any residual emissions balanced by absorbing an investments from future climate-related disruptions.
equivalent amount from the atmosphere, while In turn, this supports, our overall aim of maximising
limiting global warming to below 2 degrees Celsius long-term risk-adjusted returns for our clients.
(while pursuing efforts to limit the increase to 1.5
degrees). We believe that companies and assets that are
aligning with net zero goals are likely to be more
Why does net zero matter to our clients? resilient in the long term. By investing in certain
Climate change can put our investments at increased businesses that are resilient and adapting to a
risk through physical impacts (e.g. extreme weather transitioning future, we seek to drive sustainable
events) and transition risks (e.g., policy changes and growth and help to deliver long-term returns.
technological shifts). Limiting the global temperature Additionally, transitioning to a net zero economy
rise to below 2 degrees Celsius from the 1990 level presents new investment opportunities in existing
reduces the risks and impacts of climate change. A and emerging renewable energy, green technologies
net zero target helps us consider and manage these and sustainable infrastructure.

Climate governance and strategy

Governance of IFM’s climate strategy is consistent In addition to the efforts to transition our current
with that set out in Section 7, with the IFM Board portfolios, we have continued to invest in businesses
setting the strategy to build on existing work already with sustainability-related objectives through our
achieved and continue to improve outcomes related existing products as highlighted by some of the case
to climate change, and with the Board Responsible studies contained in this report.
Investment and Sustainability Committee (BRISC),
a sub-committee of the IFM Board, maintaining We continue to enhance our public and client-specific
oversight of climate-related initiatives, performance sustainability and climate-related disclosures,
and actions. consistent with changing regulations relating to
climate-related financial disclosures, such as SFDR
Consideration of climate risks and opportunities is a and more recently the International Sustainability
responsibility of IFM’s investment teams, supported Standards Board (ISSB) standards,54 and changing
by internal and external sustainability professionals. stakeholder expectations.
The asset class-specific net zero approaches and
targets are determined and implemented by the Targets and objectives
respective asset class investment teams and are To support our asset class specific transition
informed by the asset-class specific guidance set out approaches and decarbonisation targets, we continue
in the Framework. Details of these approaches and to enhance our financed emissions reporting, which is
the actions taken are set out below, with progress detailed at the end of this section. Information on IFM’s
and achievement of key milestones factored into staff corporate emissions footprint and details of steps
remuneration through the Sustainability Scorecard being taken to reduce this are set out in Section 6.
or additional objectives for teams and individuals as
set out in Section 7.

Our asset class specific approach

The following sections provide details on how we Working towards net zero in our infrastructure
have integrated the considerations of climate risks equity portfolio
and opportunities for each asset class. This is an We continue to recognise the role we can play in
ongoing and evolving effort. We also detail our the decarbonisation of global infrastructure assets
progress against Strategic Asset Allocation and Asset and continue to focus on taking action to reduce
Level Assessment, both of which are defined and set the scope 1 and scope 2 emissions of assets in our
out in more detail in the Framework. infrastructure equity portfolio where practicable.

54
IFRS - International Sustainability Standards Board

53
 2024 ANNUAL SUSTAINABILITY REPORT

We seek to invest in infrastructure assets where When managing our infrastructure equity portfolio
there is opportunity to have governance rights to help investments, we aim to focus on the following activities:
drive emissions reduction outcomes while creating
value and generating long term net returns. The • Collecting and monitoring sustainability data,
unpredictable pace at which the energy transition including emission performance and seeking
is unfolding requires us to frequently scrutinise our improvements in data quality;
existing portfolio’s adaptation strategy to seek to • Setting scope 1 and 2 decarbonisation targets
ensure our assets are prepared for the challenges where these were not previously in place;
presented by the global transition to a low-carbon • Working collaboratively with the directors and
economy. We also encourage our assets to explore management of the assets to share tangible
the opportunities associated with such a transition, transition strategies and practices; and
where practicable. • Re-baselining and adjusting portfolio level
emission reduction targets for significant
Our due diligence process takes a risk-based changes in the portfolio make-up, in line with
approach to assessing both physical and transition the GHG Protocol and the Partnership for Carbon
risk for new investments in our infrastructure Accounting Financials methodology.55
equity portfolio, with an aim to understand and,
minimise risk. As part of this assessment we Supporting these areas and achieving high
typically consider: coverage of sustainability-related data amongst
our infrastructure equity portfolio assets allows us
• Whether the company’s GHG pathway is aligned to consider our approach against the Framework
with IFM’s decarbonisation targets; requirements across ambition, targets, disclosure,
• Scenario analysis for both physical and transition governance, decarbonisation plans and emission
risks; performance as set out for the infrastructure asset
• Material transition and physical climate risks and class methodology. Ultimately, our active engagement
the time frame over which these might impact the reflects our heightened focus on strategy and
investment; practical measures to build transition planning
• If management has assessed physical and competency across our assets.
transition risks and if it has put mitigation
actions in place; The figure below illustrates the infrastructure equity
• Operating and capital expenditure in the business portfolio company target setting coverage obtained
plan to address physical impact from climate as at the end of FY23. The percentage of coverage
change; will be expected to fluctuate in future years as new
• The risk of the asset becoming a stranded asset; and assets, of differing emissions management maturity,
• Any climate-related opportunities that have been are acquired. Consistent with our work program set
identified. out above, we intend to work with new infrastructure
equity portfolio companies to set targets where they
Once we acquire an asset, we seek to work with were not previously in place.
the asset in areas which were identified in the
pre-investment due diligence stage as requiring
improvement.

% of emissions

Interim and Net Zero Target (95.2%) Either an Interim or Net Zero Target (0.2%) No Targets (4.6%)

% of net asset value (NAV)

Interim and Net Zero Target (94.7%) Either an Interim or Net Zero Target (3.3%) No Targets (1.9%)

55
Enabling financial institutions to assess and disclose greenhouse gas emissions associated with financial activities (carbonaccountingfinancials.com)

54
 2024 ANNUAL SUSTAINABILITY REPORT

In 2023, the infrastructure equity portfolio team The development of this playbook highlights our
developed an in-house maturity framework to assess focus on stewardship, strategy, and practical
progress of transition planning. This framework measures to build transition planning capacity and
utilises international guidance and contains five competency internally and across our infrastructure
pillars: climate governance, decarbonisation, equity portfolio assets.
transition risks, physical risks, and integration of
climate work within the wider portfolio company With respect to tracking our progress against the
processes. The underlying criteria of each pillar interim scope 1 and 2 reduction target set for the
were internally developed and are aligned with the infrastructure equity portfolio, the GHG footprint
six criteria defined in the Framework guidance for has been reduced by 1.03mtCO2e as of end of FY23.
infrastructure assets56 to help measure alignment This represents a 52% progress reduction in GHG
maturity. As part of this maturity assessment, we emissions in relation to our 2030 target (1.97mtCO2e
identified material transition issues sector-by- based on the 2019 baseline), which is approximately
sector and asset-by-asset, reflecting the diversity 37% ahead of the forecast for FY23 (0.75mtCO2e) from
of opportunities and challenges our assets face. We when the baseline and pathway were established.60
aim to continue to work on building on the transition
maturity of our infrastructure equity portfolio assets It should be noted that the progress in reducing
through FY25 and onwards. emissions in any one asset or across the full portfolio
is unlikely to be linear. As such, while the reductions
We seek to collaborate with our infrastructure equity demonstrate meaningful progress, future reductions
portfolio companies to progress their transition are not taken for granted and will continue to be
plans and strategies. We recognise that different influenced by factors such as changes in portfolio
geographies, sectors and assets have different composition and sector exposure, hence the
challenges and opportunities, so we work to ensure importance of IFM’s close engagement with portfolio
the portfolio companies are prepared for a variety companies to continually assess the credibility and
of transition risks. In line with this approach, we progress of GHG reduction plans.
developed a transition planning playbook specifically
tailored for infrastructure equity portfolio companies Our annual climate change report provided to our
which incorporates best practice from internationally clients on our infrastructure equity portfolio assets
recognised frameworks such as the Transition Plan outlines our progress against emissions reduction
Taskforce (TPT),57 Taskforce on Climate Related targets, and helps us showcase the ways we seek
Financial Disclosures (TCFD)58 and Carbon Disclosure to use stewardship in our management of our
Project (CDP).59 We made this playbook available infrastructure equity portfolio assets. We also report
to all our portfolio companies and hosted round progress annually to NZAMI as described in Section 4.
tables to discuss its application with sustainability
practitioners and senior leadership from the majority
of our infrastructure equity portfolio companies.

56
Guidance for infrastructure assets - complement to the Net Zero Investment Framework (iigcc.org)
57
Transition Plan Taskforce | Setting a gold standard (transitiontaskforce.net)
58
Task Force on Climate-Related Financial Disclosures | TCFD) (fsb-tcfd.org)
59
Home - CDP
60
FY23 is the latest calculation available at time of reporting.

55
2024 ANNUAL SUSTAINABILITY REPORT

CASE STUDY

Investing in the energy transition

Rationale led to a higher gas-fired power generation to
Naturgy is a leading global utility company and provide security of energy supply and meet energy
has been part of our infrastructure equity portfolio demand. In 2023, precipitation levels were more
since October 2021. The company’s diversified akin to as anticipated by Naturgy with Naturgy’s
infrastructure assets span over 20 countries and renewable power production then increasing –
service close to 16 million customers. We believe refer to the graph below for details.
the company has an opportunity to continue to
transition in line with our overall sustainable By the end of 2025, the company aims to increase
investing approach and our aim to maximise risk- its operational renewable capacity from the current
adjusted returns over the long-term for our clients. c. 6.5 GW to 10 GW. This expansion is expected to
focus on wind and solar power, with significant
IFM action investments in Spain, Australia and the United
Our asset management approach has included States. From July 2023 to June 2024, 953 MW
representation on the company’s board and of wind and solar projects came into operation,
engagement with co-shareholders, noting the increasing the renewable installed capacity to
listed nature of the company. 41.4% of total power generation capacity.

Outcomes In addition to renewables, Naturgy is investing in

Naturgy has a publicly stated goal of trying to biomethane production as a low carbon alternative
achieve net zero emissions by 2050 for scope 1 and solution to substitute and reduce dependence on
2 emissions and reducing its total scope 1 and 2 natural gas. As of June 2024, Naturgy owned
emissions by c. 50% by the end of 2025 (compared c. 3MW of combined biomethane production
to the 2017 baseline). capacity in three operational plants which allow
the injection of c. 0.30 TWh/year into the natural
As of end of 2023, Naturgy confirmed that it had gas network. Naturgy is expected to continue to
already achieved a 41% reduction of its scope 1 and progress the deployment of biofuels in Spain, with
2 emissions as compared to the 2017 baseline. 37 biomethane projects under different stages of
development as at the date of this report.
In 2022, Naturgy experienced an increase in scope
1 and 2 emissions. Naturgy have stated that this
was due to low rainfall during the period, which

25.0
21.8
19.4
15.0
Scope 1 & 2 emissions (million tCO2e)

16.5
15.4 15.1
13.5
12.9
10.0 2025 target: 11.0 million tCO2e
2.9
2022: Increase due to
low hydro production
2017: Baseline year

2019-20: Closure
of the coal-fired

5.0
facilities

0.0
2017 2018 2019 2020 2021 2022 2023

Emissions evolution

Source: IFM Investors

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 2024 ANNUAL SUSTAINABILITY REPORT

Working towards net zero in our listed equities Outside of portfolio construction and strategy, a key
portfolio focus area for our listed equities portfolio is company
Our listed equities portfolio is predominantly made engagement. As detailed in Sections 3 and 4 of this
up of client mandates which are currently outside report, we work with ACSI on a wide range of issues
the scope of IFM’s net zero targets. Nevertheless, including climate change. We are also members of
when required, we work with our clients to Climate Action 100+ and we use their benchmark
understand their needs and tailor IMAs to meet their which aims to encourage improvements in focus
decarbonisation strategies. This could, for example, companies’ decarbonisation strategies, as a guide for
include selecting investments that meet limits on interactions with companies when appropriate.
emissions compared to a benchmark.

CASE STUDY

Woodside Energy (Woodside) – “say on climate” vote

Rationale Outcomes
Our listed equities portfolio company, Woodside, We note that there are some improvements in
is one of the world’s largest oil and gas companies. Woodside’s climate strategy, namely in relation to
Woodside held its second ‘say on climate’ for its increased disclosure. At the FY24 AGM, however,
shareholders to vote on its climate strategy at we continued to vote against the climate strategy
its AGM in April 2024. The highly anticipated with the ‘say on climate’ receiving an even
vote came two years after it received a vote of stronger vote against than the previous one, with a
approximately 49% against its first ‘say on climate’ result of 58.4% against.
– the highest ever vote against a ‘say on climate’
in Australia at the time. We had been dissatisfied The high vote against Woodside’s climate
with Woodside’s climate strategy for some time strategy represents another clear message from
and last year we voted against two director re- investors that they would like to see the company
elections on climate grounds and wrote to the make further improvements. We will continue
company to formally communicate our voting the engagement with Woodside with a view to
rationale. supporting the continued implementation of
improvements expected by investors.
IFM action
In collaborative engagements alongside ACSI and
Climate Action 100+, we met with Woodside nine
times in the preceding 12 months to the April 2024
AGM, in an effort to work with the company on
improving its climate strategy.

Stakeholder engagement and policy advocacy is an investor-led initiative, coordinated by the

We recognise the importance of the role that policy PRI.61 The initiative’s aim is for investors to work
engagement plays in supporting IFM’s and the wider collaboratively to support governments to take all
industry’s net zero ambition. We actively engage possible steps to mitigate climate change, in line
and collaborate with government bodies, policy with investors’ duty to mitigate financial risk and
makers and industry groups on climate policy and maximise long-term value of assets.
methodologies. To support our efforts further, IFM is
a member of the Australian pilot of the Collaborative Further details of our stakeholder engagement and
Sovereign Engagement on Climate Change, which policy advocacy are set out in Section 4.

61
Collaborative Sovereign Engagement on Climate Change | PRI Web Page | PRI (unpri.org)

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 2024 ANNUAL SUSTAINABILITY REPORT

Working towards net zero in our debt Information and analytics

investments portfolio We recognise the importance of data and analytical
Our debt investments portfolio spans three distinct capabilities in climate risk management and
business lines: global infrastructure debt, diversified reporting. Over the course of FY24, the debt
credit and treasury services. Across the portfolio, we investments portfolio team expanded its procedures
invest in a broad range of sectors, public and private, seeking to improve access to and quality of data.
liquid and illiquid credit and direct and syndicated Additionally, we built out expertise within the asset
financing, which span infrastructure, corporate, class by integrating additional resources in the team
sovereign, and asset backed lending of varying with the aim to enhance our analytical capabilities to
scales, sophistication and market positions. assess climate-related risks and to seek to improve
related reporting for our asset owner clients.
The approach of our debt investments portfolio to
climate risk and its contribution to IFM’s overall net Examples include:
zero objectives varies across these business lines
based on a range of considerations and the nature • Pre-Investment Data Requests
of the different investment strategies. Further, the • We enhanced information requests to support
approach reflects our position as debt and credit analysis of climate risks and encourage
investors with a strong focus on pre-investment due stronger engagement with borrowers on the
diligence and risk management. topic of climate risks
• Where possible, we seek to include data to
Risk assessment and management support on-going risk management and
Where appropriate, we seek to invest in companies reporting in the investment’s reporting
and assets that are well-positioned for a transitioning requirements
economy as we believe this helps mitigate risks for
our clients and supports returns over the long-term. • Greenhouse Gas Emissions Data Campaign
• We conducted a portfolio-wide data campaign
For our global infrastructure debt and diversified to request and collect scope 1 and scope 2
credit products, our due diligence process takes a emissions data for the global infrastructure
risk-based approach to assessing climate risk within debt and diversified credit products
new investments. As part our investment processes,
where appropriate, we: • Carbon Accounting and Reporting Capabilities
• We implemented processes on carbon
• Capture climate data from investee companies accounting in accordance with the Partnership
or assets, including emissions footprints, climate for Carbon Accounting Financials methodology
policy responses, decarbonisation targets and • We built-out carbon reporting capabilities
progress against these; for absolute emissions scope 1 and scope 2
(tCO2e), weighted average carbon intensity and
• Conduct targeted scenario analysis to assess an emissions intensity (tCO2e per USD 1m invested)
asset’s or company’s exposure to transition risk on an asset-level and portfolio-level basis
based on a range of factors including sector,
geography, materiality and investment horizon; Engagement
As debt investors, we view engagement with
• Conduct targeted scenario analysis to assess an stakeholders across the markets in which we
asset’s or company’s exposure to physical climate invest to be an important tool in our climate risk
risks; and management approach. We interface with a range
of market participants, including our clients,
• Assess maturity of an asset’s or company’s consultants, borrowers, law firms, rating agencies,
climate risk management, including consideration banks and peer investors.
of the willingness of management to address
climate risks and their progress to date. Where Innovative structuring and climate solutions
possible, we will seek to engage with management The debt investments portfolio team has participated
to discuss climate risk planning, in particular the in innovative structuring to integrate climate risk
robustness of climate governance frameworks, management, and we are advancing our product
how risks and decarbonisation plans are development to expand our offering of climate
quantified, as well as the strategic management investment solutions. Please see earlier case study,
response to addressing climate impacts on both Sustainability Linked Loan – servicing vessels, in
physical assets and business viability. Section 3.

58
 2024 ANNUAL SUSTAINABILITY REPORT

CASE STUDY

Improving emissions data in our debt investments portfolio

Rationale Outcomes
We typically see that the availability of emissions The engagement exercise helped deliver an
data from debt investments is lower as compared increase in the number of assets providing us
to equity investments given the nature of the with greenhouse gas emissions metrics. With the
investments. data provided by our loan companies/issuers, we
have now achieved 91% coverage of emissions
IFM action data across our global debt investments portfolio
During FY24, our infrastructure debt team (excluding treasury services). We see this as
conducted an engagement exercise which sought an important step in the execution of the wider
to increase the availability and quality of scope sustainability strategy for the asset class, given
1 and 2 greenhouse gas emissions data across we believe this will enable better tracking and
borrowers for our infrastructure debt products. reporting of key sustainability indicators over time.
This in turn can allow us to better understand our
debt investments portfolio-financed emissions and
help to manage transition risk associated with the
portfolio’s assets.

Working towards net zero in our private equity To facilitate and enhance this assessment, we added
portfolio a Decarbonisation Framework to our IFM Deal
When looking for prospective investment Evaluation Assessment (IDEA) scoring tool for our
opportunities within our private equity portfolio, we private equity portfolio investments in FY24. This
believe that companies with the potential to have framework helps us to identify where companies
a decarbonisation impact often have a resilient have unrealised, actionable opportunities for
business structure that consequently can strengthen decarbonisation, focusing on supporting energy
their ability to deliver long-term risk-adjusted transition rather than divestment. The tool helps to
returns for our clients. quantify the scale of the opportunity and to set up the
measurement approach to track the benefits through
In this context, we typically assess the potential for the ownership phase.
a prospective investment to have a decarbonisation
impact across two main dimensions: As part of the initial ownership phase, scope 1,
2 and 3 emissions are baselined in the first-year
1. Opportunities for a material reduction in scope 1, post-acquisition, companies are also subscribed to
2 and 3 emissions of the company itself; and an emissions reporting platform and we measure
certain sustainability metrics (such as, emissions per
2. The potential for the company to help facilitate full-time equivalent employees, gross emissions and
decarbonisation of other stakeholders with which renewable energy consumption) bi-annually, with
the company interacts (for example, through accountability for progress being held by the relevant
the development of technology and/or data portfolio company boards.
management solutions which may help facilitate
a third parties’ progress towards their own Where we hold positions on the boards of our
decarbonisation-related objectives). portfolio companies, this helps in facilitating our
support and challenge of their transition planning
activities. We see net zero transition planning as a
key area of focus which can help us as we seek to
maximise the value and productivity of our assets
long-term.

59
 2024 ANNUAL SUSTAINABILITY REPORT

CASE STUDY

Investment in Tally Group (“Tally”)

Rationale IFM action
Tally currently serves over 50 energy retailers We are investing approximately AUD 50 million
across Australia, New Zealand, Japan, the US in Tally alongside existing shareholders including
and the Middle East. The company provides an management, SilverTree Equity and Pioneer
integrated suite of innovative software solutions Capital in a growth equity round.
for energy billing, customer management and
compliance, catering to both residential and Outcomes
commercial and industrial segments.
This investment from our private equity portfolio
We believe Tally's software is well placed to play significantly bolsters Tally's balance sheet as
a major role in the global energy transition. it looks to support further innovation for its
Tally’s technology simplifies operations for customers and continue its expansion in support
energy retailers and supports its clients’ efforts to of the global energy transition.
empower households and businesses to actively
participate in the energy transition.

Our financed emissions disclosures

As part of our net zero targets, we measure both Our financed emissions are the most material of our
our corporate and financed emissions. Monitoring overall GHG footprint and we use a variety of metrics
our financed emissions is an important part of our to track and analyse these, including absolute
investment and asset management processes. We financed emissions (tCO2e), economic emissions
include our latest available emission data for each intensity (tCO2e per USD 1m invested) and weighted
asset class in the sections below. For detail on our average carbon intensity. We define these measures
emissions from our corporate operations, please see in line with the methodology provided by the
Section 6 of the report. Partnership for Carbon Accounting Financials. The
table below shows the definition of these measures.

Financed emissions are the GHG emissions

associated with the investment and lending Scope 1 emissions are those from sources that
activities of a financial institution. They consist a company or organisation owns or controls
of scope 1, 2 and 3 emissions of the underlying directly.
assets, as defined in the Partnership for Carbon
Accounting Financials, Financed Emissions 2nd Scope 2 emissions are indirect GHG emissions
Edition (2022).62 associated with the purchase of electricity, steam,
heat, or cooling.
Corporate emissions are the emissions
resulting from the organisations own activities, Scope 3 emissions refer to the indirect GHG
including direct and indirect activities, excluding emissions associated with upstream and
Financed Emissions. downstream activities in the value chain of a
company, not directly owned or controlled by that
company.

In this report we limit our disclosures on our

financed emissions to scope 1 and scope 2
emissions for our asset classes.

62
https://carbonaccountingfinancials.com/files/downloads/PCAF-Global-GHG-Standard.pdf

60
 2024 ANNUAL SUSTAINABILITY REPORT

Metric Definition Units

The total GHG emissions (scope 1 and 2) of an

Absolute financed emissions (scope 1 and 2) tCO2e
asset class or portfolio

The absolute financed emissions (scope 1 and 2)

Economic emissions intensity (scope 1 and 2) tCO2e / USD 1m of investment held
per each million dollars of value of the asset

Weighted average carbon intensity (WACI) The absolute financed emissions (scope 1 and 2)
tCO2e / USD 1m of revenue
(scope 1 and 2) per one million dollars of company revenue

Infrastructure equity portfolio

The below table outlines the GHG emissions associated with our infrastructure equity portfolio.63 The data is the
latest available from our infrastructure equity portfolio companies as at publication of this report – predominantly
30th June 2023 or 31st December 2023, depending on the assets annual reporting period and financial year
end. Data has been primarily collected directly from the portfolio companies and where this is not possible we
make appropriate estimates applying industry methodology. The majority of IFM’s infrastructure equity portfolio
companies have either third-party verified or internally audited GHG assessments.

Absolute financed emissions Economic emission Intensity Data coverage

Reporting period
(million tCO2e) (tCO2e per USD 1m invested) (on net asset value basis)

FY24 5.0 70.6 Greater than 99%

FY23 5.3 87.0 Greater than 99%

We are taking steps, such as holding workshops and providing guidance, to support our portfolio companies to
measure and improve the quality of their scope 3 emissions data so we can use the data insights to inform asset
management initiatives and prioritise action. The calculation still involves significant estimation, uncertainty and
assumptions and therefore has not been disclosed in this report.

Listed equities portfolio

The below table outlines the emissions for our listed equities portfolio. All listed equities portfolio data is taken
from our data provider, MSCI,64 at 30th June 2024. The data represents the latest available data, through our
third-party provider, for each company as at that date. Scope 2 emissions data is based on market basis data where
available, and on a location basis where it is not available.

Economic emission
Absolute financed WACI (tCO2e / USD 1m of Data coverage
Reporting period Intensity (tCO2e per USD
emissions (million tCO2e) revenue) (on net asset value basis)
1m invested)

FY24 2.2 131.2 57.9 Greater than 99%

FY23 2.2 159.7 71.3 Greater than 99%

In relation to 2019 baseline for the 2023 portfolio perimeter.

63

MSCI ESG Research LLC is a Registered Investment Adviser under the Investment Advisers Act of 1940 and a subsidiary of MSCI Inc. Neither MSCI nor any of its
64

products or services recommends, endorses, approves or otherwise expresses any opinion regarding any issuer, securities, financial products or instruments or
trading strategies and MSCI’s products or services are not a recommendation to make (or refrain from making) any kind of investment decision and may not be
relied on as such, provided that applicable products or services from MSCI ESG Research may constitute investment advice. MSCI ESG Research materials have not
been submitted to, nor received approval from, the United States Securities and Exchange Commission or any other regulatory body. MSCI ESG and climate ratings,
research and data are produced by MSCI ESG Research LLC, a subsidiary of MSCI Inc.

61
 2024 ANNUAL SUSTAINABILITY REPORT

Debt investments portfolio

The below table outlines our emissions data for FY24 for our infrastructure debt and diversified credit products
within our debt investments portfolio. We have not included the previous year’s data for our debt investments
portfolio as it does not provide an accurate comparison due to the change in the coverage of the data between
the two years. As in previous years, emissions data for our treasury services were not calculated in FY24 and are
therefore excluded from the figures in the table.

FY24 Financed Emissions (Scope Economic emissions Intensity Data Coverage

Absolute emissions (million tCO2e)
1 & 2) (tCO2e per USD 1m invested) (on net asset value basis)

Diversified Credit 0.8 133 88%

Infrastructure Debt 2.6 614 96%

Total debt investments portfolio

3.5 332 91%
(excluding treasury services)

Private equity portfolio

The table below outlines our emissions data for our private equity portfolio for FY24. Scope 2 emissions are
calculated using a market basis where this is available and location basis where market basis is not available.

The data provided is the latest available for each portfolio company as at the date of this report.

Our coverage is lower this financial year as the private equity portfolio acquired some companies during the
financial year and we are currently working with them to gather the data we require to disclose their emissions.

Economic emission
Absolute financed WACI (tCO2e / USD 1m of Data coverage
Reporting period Intensity (tCO2e per USD
emissions (million tCO2e) revenue) (on net asset value basis)
1m invested)

FY24 0.005 27.5 16.8 78%

FY23 0.007 28.6 14.2 100%

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2024 ANNUAL SUSTAINABILITY REPORT

Section 6

Sustainability
at IFM

63
 2024 ANNUAL SUSTAINABILITY REPORT

Corporate sustainability
Corporate sustainability refers to activities to improve As detailed in the FY23 PDS we purchased carbon
environmental and social impacts from IFM’s offsets from projects located in Australia, United
business operations, which form a key part of our States, Türkiye and Mexico. The selection of projects
sustainable business approach. This extends to how was informed by various considerations including
we build capability and seek to support our people project co-benefits that extend beyond greenhouse
to thrive, our environmental impact, our operational gas emissions mitigation, for example, projects that
systems and platforms and enterprise risk aim to support local job creation and biodiversity
management processes, and our community-facing protection.
activities that aim to contribute to the long-term
resilience of the communities and broader system in Progress in FY24 on the emissions reduction actions
which we operate. We believe our focus on fostering outlined in the FY23 PDS included:
a diverse and talented team with a respectful and
inclusive culture within our own operations, as • Continued purchase of 100% renewable electricity
noted below, further supports our stewardship and for all Australian offices having transitioned
investment activities. all IFM Australian offices to purchasing 100%
renewable electricity in January 2023;
Managing our global corporate operational
emissions • Engagement with our key suppliers seeking to
In FY24 we continued to progress targeting net zero ensure that by 2028, 50% of the suppliers for our
by 2050 for our global operational activities, as part purchased goods and services (by emissions) will
of our wider organisational goal to transition to a net have set science-based targets to reduce their own
zero economy by 2050 in a manner that achieves the climate impact. By 30 June 2024 we confirmed
goals of the Paris Agreement. 44% of suppliers are aligned with this target.
We will continue to progress this stakeholder
engagement work in FY25;
Emissions (tCO2-e) FY2365 FY2466

• Continued our work on a Supplier Code of

Scope 1 0.00 0.00 Conduct to require suppliers to consider
emissions reduction targets;
Scope 2 (Market-based) 241 130

Scope 3 (excluding
17,262 16,368 • Updated our leasing criteria for new tenancies to
financed emissions) include base building energy efficiency ratings,
Total 17,503 16,498
renewable energy procurement opportunities
and end-of trip facilities for employees using
The main drivers of our scope 3 emissions (excluding alternative modes of transport; and
financed emissions) are business travel by air, IT
services and equipment and professional services. • Successfully trialled a new waste reduction
Scope 2 emissions have been calculated using a strategy in Melbourne focused on improving
market-based approach. waste management practices and data. We now
intend to progressively roll this strategy out
Due to the increase of business travel and other across other global offices.
emissions sources as we returned to post-COVID
normal business operations, in our FY23 Public Social impact programs update
Disclosure Statement (PDS) we announced a reset for We believe we have both responsibilities and
our corporate emissions baseline year from FY22 to opportunities to engage with and contribute to
FY23, to ensure our baseline year is reflective of our the sustainability of the communities in which we
normal levels of business travel. This aims to enable operate. Our activities include a range of corporate-
more meaningful future year-on-year comparisons. led and people-led initiatives and programs.

65
FY23 corporate emissions data is certified under Climate Active. Our full report on our FY23 operational emissions, including the methodology used can be found
here: Guidance - Organisations - Public Disclosure Statement (ifminvestors.com)
66 
FY24 emissions are subject to final certification from Climate Active.

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 2024 ANNUAL SUSTAINABILITY REPORT

Supporting natural and humanitarian disaster relief • Support for those affected by floods in
In FY24 we continued our partnership with the Afghanistan; and
Australian Red Cross, providing AUD 300,000 in
disaster relief funding to communities impacted by • Disaster Response and Recovery Fund (Australia),
disaster. These funds supported humanitarian relief which set up year-round support for Australians
for people impacted by disasters including: before, during and after a disaster.

• Relief efforts for Tropical Cyclone Lola in Vanuatu; In these efforts we were guided by the Australian
Red Cross and a network of Red Crescent Societies67
• Humanitarian support in the Middle East worldwide to seek to ensure our funds are utilised
provided by The International Committee of the where they can have the greatest impact on the
Red Cross; ground.

• Assistance for victims of extreme weather in

Mongolia (Dzud Response Plan);

67 
About National Societies | IFRC

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 2024 ANNUAL SUSTAINABILITY REPORT

Support in the community Through Workplace Giving (payroll giving) globally

Through community programs, our people give time, we donated AUD 212,611. This figure includes both
skills and money to support organisations making a employee contributions and corporate matching.
difference in communities where we live and work.
These efforts are matched by IFM with various We also supported community organisations
forms of support, including financial donations and through our matched team fundraising and donation
employee time. programs. This year we provided AUD 65,817 to a
range of community organisations and fundraising
Each year IFM offers our people two paid days of events including, The Pinnacle Foundation (see
volunteer leave. In FY24 employees used this leave to case study below), Movember, Domestic Violence
contribute 700 hours to local communities, a substantial Collective, Ambitious About Autism and the Great
increase from the previous financial year (381 hours). Ormond Street Hospital Children’s Charity.

CASE STUDY

Fundraising for The Pinnacle Foundation

We support the work of The Pinnacle Foundation, The Pinnacle scholars shared their stories about
an organisation that empowers young LGBTIQ+ their motivations for applying for Pinnacle
Australians through scholarships, mentoring Scholarships, which provides financial support
and other opportunities. We have partnered to LGBTIQ+ students. We also heard about the
with The Pinnacle Foundation since June 2022, scholars’ achievements as advocates for the
through the creation of a three-year ‘IFM Investors LGBTIQ+ community.
Scholarship’.
Through the event, funds raised and matched by
In celebration of our partnership with The IFM totalled AUD 2,790, which were donated to
Pinnacle Foundation and in recognition of The Pinnacle Foundation to support the ongoing
IDAHOBIT (International Day Against Homophobia, delivery of its programs.
Biphobia, and Transphobia), we invited two current
Pinnacle scholars to speak to our people at events
in our Melbourne and Sydney offices.

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 2024 ANNUAL SUSTAINABILITY REPORT

CASE STUDY

IFM hosts students from the Social Mobility Business Partnership in our London office
We proudly support The Social Mobility Business • A presentation on the importance of
Partnership (SMBP),68 a volunteer-led charity sustainable investing; and
committed to supporting students from low-
income backgrounds or '1st generation to • A panel session on topics such as CV writing,
university' in their pursuit of a business career. job applications and interview techniques.
Participating students spend a week being hosted
by commercial organisations, professional services William Jones, a director within our commercial
firms and professional sports teams in towns and team welcomed the initiative, saying it was a
cities across the UK. The program aims to break matter of pride for IFM to be supporting this
down psychological ‘fitting in’ barriers to the initiative seeking to create real world opportunities
world of business through hands-on experience for students: “It was a delight to spend time with
and meetings with the professionals in these host the students discussing their future aspirations and
organisations. providing practical hands-on experience of life in
a professional services organisation. We hope the
Through our partnership we welcomed 21 students experience encourages them to pursue a business-
in August 2024 to our London office for a day of related career in their future.”
learning and skills development. This included:

• Learning about the asset management

industry and career options from our various
teams including infrastructure equity, debt
investments, commercial, risk and compliance,
people and culture and IT;

First Nations Corporate Strategy

In FY24 we continued to build on the foundational • We integrated an internal governance structure
work undertaken following the launch of our to support our Corporate First Nations Strategy
inaugural Corporate First Nations Strategy in execution;
Australia in early 2023. The overarching objective of
this work is to reduce the retirement savings wealth • We commenced development of a program of
gap between First Nations and non-First Nations cultural learning to build our internal cultural
Australians. capability; and

Data has shown that First Nations people retire • We identified education opportunities aligned to
with about half the savings of non-First Nations our Corporate First Nations Strategy and Purpose,
Australians and have shorter life expectancies that and engaged providers to deliver tailored cultural
restrict access to retirement savings. During FY24 learning sessions which were made available to all
we worked with stakeholders to identify how IFM can Australian employees in FY24.
contribute to closing this gap, and we took action on
an agreed list of priority actions, specifically:

https://smbp.org.uk/about/
68 

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 2024 ANNUAL SUSTAINABILITY REPORT

CASE STUDY

Engaging First Nations suppliers

A key pillar of our Corporate First Nations Strategy For the 'Acknowledgement of Country' related
is our workplace, with a focus on increasing internal objective, we partnered with a First Nations
understanding of First Nations issues and improving workspace designer. Our approach was informed
internal capacity to contribute to solutions. We believe by interviews with Wurundjeri Elders with strong
a crucial way we can do this is through engaging First ties to the region. We awarded the contract to a local
Nations suppliers. Wurundjeri artist with a history of producing murals
and public artworks.
In Naarm (Melbourne) we commenced an office
relocation project in June 2023, which prioritised Final designs include a designed rug in the reception
several objectives in relation to First Nations area, a display of a different moiety on each floor
procurement. This included 10% of spend during representing Bunjjil - the spirit creator, Balayang –
the construction phase to First Nations businesses the creator of women and Waa - the spirit protector.
and 'Acknowledgement of Country' visual elements Digital signage and meeting room screens provide a
incorporated within the design and layout. narrative around the installations and client meeting
rooms were given First Nations names appropriate to
We engaged with a range of First Nations businesses the location.
in relation to the 10% of construction spend objective,
including: We engaged the services of a Wurundjeri elder
to produce storyboards for client meeting rooms.
• Gambarra Building Supplies to supply partitions The meeting room names selected include iconic
and ceilings; Wurundjeri elders as well as Wurundjeri place and
• MGM Building Maintenance for general animal names.
construction;
• Indigenous Sign Company for signage and We exceeded our 10% of spend to First Nations
glazing; and organisations project objective. We have also learned
• Zenith RBA for workstations and office furniture. much about local First Nations cultures from the
people we have met and engaged with along the way.
These suppliers were required to participate in our
usual tender process and are Supply Nation certified The Naarm team moved into the new office in
or registered.69 September 2024. The office opening event included
a function showcasing indigenous catering company
Mabu Mabu and an official opening ‘Welcome to
Country’ event by Wurundjeri representatives.

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 2024 ANNUAL SUSTAINABILITY REPORT

Our Purpose-led inclusive culture

Cultivating diverse and talented teams with a
respectful and inclusive culture continues to be
The five pillars of Inclusion and Diversity at IFM:
a strategic focus area at IFM and important to
how we do business. We believe that championing
inclusion and diversity in our own business and our
investments supports fulfilling our Purpose.

We believe that an inclusive culture that embraces

diverse qualities, backgrounds and perspectives
leads to more innovative thinking, better decision
making and competitive business performance.
We believe this makes a significant contribution to
attracting and retaining a global team that works
collaboratively to develop, execute and improve our
sustainable business approach and outcomes, which
we believe in turn helps to deliver on our Purpose.

We continue to integrate our inclusion and diversity

strategy, defined by five pillars or focus areas as
illustrated below, across our operational practices
and to develop the ways we drive and measure
progress. Cultural & Ethnic Diversity
Fostering a culture of inclusion which celebrates
Our Inclusion Index70 aims to help us track and our diversity allows individuals to bring their
measure the inclusive experience of our people over distinct and valuable attributes to the benefit
time. The results of the May 2024 survey indicated to our team. Inclusion is a cornerstone of
a positive overall Inclusion Index response score of collaboration, with diversity of experience and
82%, maintaining our 2023 score. thought fueling innovation.

Mental Health & Wellbeing

The mental health and wellbeing of our IFM
community is a key focus for the refreshed
I&D Strategy.

Ability
IFM is committed to creating equal opportunity
Inclusion Index:
Participation and workforce diversity so people of all ages
rate and abilities can be productive and active
0 20 40 60 80 100
participants in our workplace and society.

FY21 76% 88% LGBTQI+

We will celebrate our LGBTQI+ community
members and provide for a workplace free of
FY22 75% 83% discrimination, harassment and stigma based on
sexual orientation or gender identity.

FY23 82% 81% Gender

Building on the success of the ‘attract, develop,
retain’ actions of our previous I&D strategy, this
pillar will extend building our pipeline of female
FY24 82% 82%
talent and future women leaders.

70
 he Inclusion Index has comprised part of our enterprise engagement survey since 2021. It comprises the same set of questions each year that seek the views and
T
experience of our people as it relates to inclusion at IFM.

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 2024 ANNUAL SUSTAINABILITY REPORT

Gender diversity (%)71

0 10 20 30 40 50 60 70

50
50
43
FY20
57
40
60

56
44
42
FY21
58
35
65

44
56
44
FY22
56
38
62

63
38
46
FY23
54
37
63

63
38
47
FY24
53
36
64

Board All Staff Director and above

Female Male Female Male Female Male

We acknowledge that the gender imbalance among Our firm-wide goal is to achieve no more than 55% of
directors and above has increased since FY22. any one gender at both the all-employee level and the
Each of our business units sets gender diversity director and above level by 2026.
goals tailored to their unique starting points and
complexities, and this can have an impact on our Our Australian certification by Family Friendly
enterprise results year to year. Importantly, each of Workplaces72 further underscores our commitment to
our business units, including investment teams, have removing barriers for women in leadership.
tailored strategies for the attraction, retention and
development of diverse talent. For more information on our practices related to
gender equality in remuneration, please refer to our
We know that increasing our female employee Workplace Gender Equality Agency gender pay gap
representation, especially in investment teams and response paper.73
at the senior levels, requires a long-term approach.

71
Figures are as at June 30 for the respective financial years, figures may not sum due to rounding.
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Family Friendly Workplaces Certification
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 2024 ANNUAL SUSTAINABILITY REPORT

Highlights of our inclusion and diversity-related activities in FY24 included:

• The IFM Investors Women in Infrastructure program the new environment is accessible for individuals
continued. The program, in partnership with with diverse sensory responses. Some examples of
Australian Universities, RMIT and Monash, offers two the considerations include: no fluorescent lighting,
female finance and or engineering students access to adjustable lighting, acoustic treatments, white noise
an AUD 20,000 scholarship and the opportunity for a in open floor plans and soundproofed meeting
paid internship in our infrastructure equity portfolio rooms. These design elements have been shared
team. In FY24 our two Women in Infrastructure internally as what we consider to be best practices
scholars spent three months within our infrastructure for potential adoption.
equity portfolio team and ended their internships in
February 2024. • Our Mental Health First Aid Officer training
continued and at the end of FY24 we had 44
• We made significant progress with our Corporate Mental Health First Aid Officers trained across our
First Nations Strategy including implementing First Melbourne, Sydney, London and New York offices.
Nations cultural learning sessions for our Australian
employees. Additionally, we gave our employees the • We continued the IFM Investors Pinnacle Foundation
Scholarship as part of our ongoing three-year
option to observe January 26th as a public holiday
partnership with The Pinnacle Foundation, which
or choose an alternative day. This choice reflects our
supports young LGBTIQ+ Australians pursuing
understanding of the sensitivity of Australia Day and
full-time tertiary studies. To further demonstrate
empowers employees to make decisions that align
our commitment to the partnership, we hosted the
with their personal values.
inaugural "Picnic for Pinnacle" fundraising event,
• We continued to welcome interns from the Australian featuring Pinnacle scholars as guest speakers in our
CareerTrackers program74 and US based Prep- Melbourne and Sydney offices. This event helped
for-Prep75 to support employment pathways for raise awareness and support for The Pinnacle
Indigenous students and students of colour. Foundation's mission.

• We have continued to collect employee diversity data • We are now a proud member of OUT Investors, the
on a voluntary basis. We believe this data is crucial Northern Hemisphere focused LGBTIQ+ network for
to informing how we evolve our efforts to further investment professionals. This initiative is dedicated
integrate inclusion and diversity into our corporate to fostering a more inclusive direct investing industry
practices and decision making. The data collection for LGBTIQ+ professionals through networking
initiative was rolled out globally in July 2023 and events, speaker series and mentorship programs.
we are reporting this data to the IFM Board and
continuously working on ways to further enhance • We received confirmation of our successful bronze
tier certification with the Australian Workplace
and expand this initiative.
Equality Index. This is a national benchmark on
• We delivered mandatory Respect, Equality and LGBTIQ+ workplace inclusion in Australia. We
Inclusion workshops across our global offices, believe this certification reflects the progress and
utilising a blend of in-person and virtual training focus we have had on LGBTIQ+ inclusion.
sessions. These workshops focused on identifying
and addressing harmful workplace behaviours such • Our three regional employee-led Inclusion and
Diversity Forums continue to amplify diverse
as sexual harassment, bullying, and discrimination,
voices across the business and sponsor key days of
as well as understanding the psychosocial impacts
significance observed both globally and regionally.
of these behaviours. Participants also learned how to
In FY24, we commemorated several global days
be active bystanders, empowering them to recognise
of significance with internal speaker events and
and intervene safely in situations of harassment or
campaigns, including International Day of Persons
discrimination, thereby supporting a respectful and
with Disabilities, 16 Days of Activism against
inclusive workplace culture.
Gender-Based Violence, International Women’s
• We became a silver member of the Australian Day, International Day for the Elimination of Racial
Disability Network (ADN) and are participating in Discrimination, Mental Health Awareness Month
their Accessibility & Inclusion Index. The report and Pride Month. Additionally, our regional forums
provided by ADN, including key recommendations, celebrated days of significance that held particular
will guide the development of IFM’s first Access meaning in their respective regions, aligning with
and Inclusion Plan. This plan is expected to lay our inclusion and diversity strategy and pillars.
the foundation for our ongoing efforts to improve
accessibility and inclusion for people with • We submitted our report to the Workplace Gender
Equality Agency in Australia for the 2023-24
disabilities in our workplace.
reporting year. Reporting covers our organisation’s
• Neurodiversity was considered in the design of our policies, strategies and actions on gender equality,
new Melbourne office. Various design considerations with the aim to improve gender equity and close the
have been incorporated with a view to ensuring that gender pay gap.76
74
CareerTrackers
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Prep for Prep | Preparing Students to Become Ethical and Effective Leaders
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 2024 ANNUAL SUSTAINABILITY REPORT

In early 2023, IFM was certified as a Family Remuneration

Inclusive Workplace by Parents at Work and To help deliver on our Purpose, we see the
UNICEF Australia. As part of this certification, importance of attracting highly talented, motivated
IFM committed to a 24-month action plan aimed at professionals and paying globally competitive
enhancing communication, leadership skills and remuneration. As such, our remuneration structures,
policies that support employees with parent and which are managed through our performance
carer responsibilities. During FY24, we successfully and reward framework, are based on market
met our one-year milestones. These achievements benchmarking and are designed to attract, retain,
included global process improvements for flexible motivate and align our people in support of our
work arrangements, enhanced parental leave Purpose, while taking into consideration external
checklists, the creation of a Keeping In Touch market conditions, the individual’s skills and
Day Guide for employees on parental leave, and experience and the performance outcomes to be
internal and external communications promoting delivered for our clients.
flexible work practices, family wellbeing and diverse
caring needs. Additionally, we have integrated Our remuneration structures are designed to:
detailed reporting on parental leave and caregiver
engagement into IFM Board updates. We believe • link individual outcomes to our Purpose and
this enables us to better understand where we need values;
to support our people and which areas require our • emphasise the importance of upholding our Risk
focus. Management Framework;
• ensure the independence of key risk and financial
control employees in carrying out their roles and
functions; and
• comply with legal and regulatory obligations.

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 2024 ANNUAL SUSTAINABILITY REPORT

Our performance framework seeks to balance what A portion of each IFM employee’s annual
our people deliver with how they deliver it. At the incentive plan outcome is dependent on our
beginning of FY24 we updated our performance Corporate Scorecard result, except for individuals
framework to better align our performance and in control roles.77 This helps to ensure reward at
reward philosophy to our Purpose. IFM is aligned to corporate performance as well
as individual contribution.
Under the performance framework our
employees’ performance is assessed on an annual The table below outlines the components of our
basis considering: Corporate Scorecard for FY24 which incorporated
a 10% weighting to the delivery of sustainable
• how they undertake the core requirements of investment outcomes. Our Board assessed our
their role in alignment with our values; and delivery of these outcomes for FY24 as “Strong”,
based on the delivery of asset management
• their contribution to the achievement of key targets, client feedback and performance against
goals in the context of the overall business our Sustainable Investment Scorecard.
unit performance.
Sustainability-related incentives in FY24
This assessment of performance is then linked In FY24, the Sustainable Investment component of
to the calculation of the annual incentive our Corporate Scorecard included goals such as:
plan outcome. This means our approach to
performance and reward is linked to promoting • updating and operationalising due diligence
the IFM culture as well as supporting the tools and processes for each asset class;
delivery of our business performance which we
believe helps ensure that our employees are held • recruiting required sustainable investment
accountable for their decisions, behaviours and capability within the Sustainable Investment
associated risk management. team and asset class teams; and

Achievement of targets in a year, in a way that • delivery of voluntary and mandatory

is aligned to our culture, should be expected to regulatory reporting requirements and
result in an annual incentive plan outcome of signatory commitments
100% of target. However, IFM employees have
the ability to earn up to a maximum of 150% of
their target annual incentive plan remuneration
for exceptional performance and exceptional
demonstration of our values.

Components of our Corporate Scorecard for FY24

Category Component % Weighting

Product Performance 50%

Client Outcomes ISQ 10%

Sustainable Investment 10%

Net Sales 10%

Business Outcomes Profit Margins 10%

Board Assessment 10%

For control function employees, any variable remuneration will have performance measures based on achievement of objectives linked to their functions, allowing
77

independence from the performance of the business areas they control to avoid potential conflicts.

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 2024 ANNUAL SUSTAINABILITY REPORT

Gender pay gap Learning and development

IFM seeks to eliminate unintended bias in our pay We aim to cultivate a learning culture at IFM with a
practices by regularly comparing the remuneration range of programs, tools and resources based on the
of men and women in like-for-like roles and when following principles:
compared to external market benchmarks.
1. Learning is a shared responsibility
Where material differences between the average pay 2. Leverage your strengths
of people of different genders in like-for-like roles 3. Learn from others
are identified, we seek to document, investigate and 4. Experience counts
take appropriate action. Recruitment, promotion and 5. Development is continuous
succession planning strategies are used to monitor
pay gaps and work towards pay equity over time. We follow the 70:20:10 Learning Model which is based
on the principle that people learn the most from on-
In Australia, we submit remuneration data for our the-job experience:
Australian employees to the Workplace Gender
Equality Agency (WGEA) to facilitate assessment of • 70% Experience or on-the-job learning allows
the gender pay gap in Australia, as required under employees to apply their knowledge and skills in
the Australian Workplace Gender Equality Act 2012.78 new scenarios, deepen their understanding of
different areas and navigate challenging projects,
For the first time in February 2024, WGEA published responsibilities and assignments.
gender pay gap data by firms submitted for 2023,
under the Australian Workplace Gender Equality • 20% Exposure or learning from others gives
Amendment (Closing the Gender Pay Gap) Act 2023. employees different perspectives that help them
solve problems more creatively.
It is important to note that the gender pay gap
as reported by WGEA compares the difference in • 10% Education or formal learning includes
earnings between women and men in the workplace79 learning opportunities that focus on developing
and should not be confused with men and women the skills, knowledge and capabilities necessary
being paid the same for the same or comparable job. for professional growth, effective role contribution
This is equal pay, and we have strategies in place to and career advancement.
help ensure we remunerate all of our people equally
for equal work or work of equal value, as noted above. In FY24, we offered the following learning and
development programs:
Industry
Gender Pay Gap IFM Comparison
Group • Nexus Leadership Program: a six-month
leadership development program to support
Median base salary 17.9% 23.4% directors and high potential associate directors/
Median total remuneration 23.7% 23.2% vice presidents to manage the challenges of
leading from the middle. 58 leaders participated
Source: Workplace Gender Equality Agency, WGEA Reporting Industry
Benchmark Report 2023
in online and in-person modules that we believe
helped equip them to be effective conduits
The primary driver of the difference in the median between strategy and execution, between their
total remuneration and median base salary figures teams and the senior leaders.
results from the over-representation of men in senior
investment roles where there are higher levels of • Leader Loops: 19 leaders were brought together in
variable, performance-based remuneration. small cohorts of four to six leaders and focused on
fostering collaboration, networking and exploring
We have strategies in place to improve gender balance diverse leadership challenges and business
across all levels and we have goals in place to hold matters during monthly gatherings.
ourselves accountable, as noted in the examples of
our activities in FY24 above, and in more detail in our
response to the WGEA reported outcomes published
on our website.81

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For further details see our most recently submitted report here: wgea-report-2023-2024.pdf (ifminvestors.com)
79
While WGEA collects data for those identifying as non-binary, these results are not published due to the small numbers and voluntary nature of reporting.
80
As analysed under the WGEA methodology. The median gender pay gap is the percentage difference between the median earnings of men and women. For details
see i) Publishing employer gender pay gaps FAQ | WGEA; and ii) Employer_Gender_Pay_Gap_Technical_Guide.pdf (wgea.gov.au)
81
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 2024 ANNUAL SUSTAINABILITY REPORT

• Mentoring Program: a six-month learning journey • Welcome to IFM eLearning Module: a refreshed
for employees to maximise and mobilise their 30-minute online module that introduces new
personal and professional development. We employees to our heritage, new values, culture
established 36 mentoring partnerships to share and future direction while providing insights into
knowledge and experience. our expertise and resources for career growth and
wellbeing, seeking to ensure smooth integration
• Leading People at IFM eLearning Module: a and effective contribution.
new 45-minute online module with supporting
workbook that brings together our values, • Oxford Leadership Program: A member of
leadership capabilities and the employee lifecycle. our Sustainable Investment team attended
The module focuses on the skills and knowledge the Stewardship and Engagement Leadership
we believe are required for people leaders to Program at Oxford University, a three-day
confidently lead their team(s) and reflects how they course designed to build skills to ensure effective
can develop their leadership through experience stewardship.
(70%), exposure (20%) and education (10%).
• Sustainability conferences: Members of our
• Sustainable Investment at IFM eLearning central Sustainable Investment team and asset
Module: a new 30-minute online module to class sustainable investment specialists attend
provide employees with a consistent level of sustainable investing and stewardship focused
understanding of sustainable investing and its conferences which in FY24 included attending the
importance to IFM. We are also developing a PRI, ACSI and IGCC conferences, among others.
program of structured sustainability-related
learning and development pathways for our • Modern slavery training: We hosted an
people over time, with opportunities relevant educational webinar for members of our debt
to specific roles and functions that provide investments and infrastructure equity portfolio
both technical and skills-focused content. teams on modern slavery in the supply chain of
Implementation of this programme, developed solar energy.
with the support of a specialist consultant, is
expected to commence in late 2024.

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 2024 ANNUAL SUSTAINABILITY REPORT

Modern slavery risk management

We continue to pursue improvements in our Reviewing the IFM Whistleblower Policy
approach to managing the risk of modern slavery The IFM Whistleblower Policy is reviewed
in our portfolios and supply chains, including annually. Following our last review, the policy was
targeting improvements for assessing and updated with a specific reference to human rights
managing our portfolios as well as monitoring our breaches including modern slavery and human
approach for IFM’s suppliers. trafficking, including within IFM’s supply chains or
investments, as examples of reportable conduct.
Some highlights of the activities undertaken in
FY24 are as follows: Uplifting capabilities in our investment
processes – identifying risks across the solar
Deep dive review of key facilities industry value chain
maintenance providers Together with specialist business and human
An independent analysis of our corporate spend rights advisory firm Pillar Two, IFM hosted an
indicated certain areas where modern slavery educational webinar for our infrastructure equity
could be more prevalent. These included facilities portfolio and infrastructure debt products team
maintenance and business travel, where some members. The session aimed to build awareness
supporting industries, such as cleaning services, of business and human rights issues, with a
are often considered to be more susceptible to particular focus on the identification of modern
modern slavery practices. We undertook a deep slavery risk areas across the solar industry value
dive analysis of our key facilities maintenance chain. The session addressed managing these
providers and progressed previous work we had risks in investment screening, due diligence and
undertaken on our business travel providers. asset management activities, with a focus on
While our deep dive did not identify any specific building familiarity with relevant tools, resources
areas of concern, we did identify some good and data to support our modern slavery risk
practices including a supplier having been a management processes. The session was recorded
foundation member of the Cleaning Accountability and is available on demand, as part of our broader
Framework,82 which creates minimum learning and development suite.
performance standards for cleaning companies
that are over and above legislative requirements. We annually produce a modern slavery statement83
which provides more detail on the work we have
undertaken this year.


82
Cleaning Accountability Framework Ltd.
Our modern slavery statements are publicly available on our website: https://
83

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2024 ANNUAL SUSTAINABILITY REPORT

Section 7

Governance

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 2024 ANNUAL SUSTAINABILITY REPORT

Governance
As we pursue our Purpose and continuously strive to This ownership model and the fact that our owners
support the creation of long-term value and meet the invest alongside our clients helps drive alignment
expectations of our stakeholders, we understand the between our Purpose and our owners' and clients’
importance of robust governance. We seek to ensure objectives and helps us as we seek to maximise
policies and procedures are in place throughout our returns over the long-term for the benefit of our
investment and corporate decision-making processes clients.
to bring rigour and accountability to our sustainable
investing practices. We conduct due diligence on potential clients
which takes into account considerations such
We believe the systems and governance throughout as whether they are institutional investors, the
our investment and corporate decision-making anticipated investment tenor, the extent of alignment
processes support rigour and accountability in our with our Purpose, reputational risks, structure
approach. From the boardroom to the investment and operational complexity. Combined with our
committee and our investment teams, we have stakeholder engagement, we believe this process
structures and policies in place that define, integrate helps ensure that we are aligned with the interests
and track our sustainable investing approach, as of our client base. The process is reviewed on an
set out in our Sustainable Investing Guidelines. We ongoing basis with a view to ensuring our approach
regularly review our risks, policies and processes to to due diligence remains robust.
seek to ensure our approach is effective as part of our
risk and policy governance as an organisation. Committees, roles and responsibilities
At IFM, our overarching sustainable investing
IFM was established in 1994 and is owned by a approach is established and monitored at the IFM
collective of 17 profit-to-member Australian industry Board level. Management supports the execution
superannuation (pension) funds. IFM operates as a of this approach, aiming to ensure sustainability
separate business entity with a focus on institutional opportunities and risks are appropriately reflected in
funds management for aligned investors. our risk management frameworks and plans at the
corporate and investment levels.

Sustainable investing roles and responsibilities

Board

Sustainable investing governance Investment oversight and review

Board Responsible Investment and

Board Investment Committee (BIC)
Sustainability Committee (BRISC)

Global Strategy Team (GST) Investment Committee (IC)

Global Sustainability Steering Group (GSSG) Sub-committees

Proxy Voting and Engagement

(PEC) Committee
Asset Management
Clients & Strategy Investment teams / sustainable investing specialists

Sustainable
Investment team Infrastructure Debt Private Equity Listed Equity

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 2024 ANNUAL SUSTAINABILITY REPORT

Board oversight – Board Responsible Investment Global Sustainability Steering Group (GSSG)
and Sustainability Committee (BRISC) The GSSG, comprising senior executives from each
The BRISC assists the IFM Board by providing an IFM business unit and chaired by the Global Head of
objective, non-executive view of the efficacy of our Sustainable Investment, helps coordinate and share
sustainability strategy and reporting framework. The information across IFM, supports multidisciplinary
Board approves (or delegates approval to the BRISC) projects and monitors progress against sustainability
IFM’s sustainable investing strategy, IFM’s Sustainable initiatives.
Investing Guidelines and our organisational
performance scorecard for sustainable investing Firm-wide sustainable investing responsibilities
and receives regular reporting on sustainable IFM’s Sustainable Investment team leads on the
investing-related developments from asset classes development and agreement of our overarching
and the central Sustainable Investment team. The sustainability strategy and associated policies and
BRISC monitors and oversees progress against key guidelines with each investment team and other
sustainable investing and wider sustainability-related IFM business units. These policies and guidelines
objectives and provides guidance on IFM’s sustainable are implemented and developed further by the
investing approach as proposed by management. investment teams through applicable procedures or
operating manuals. The Sustainable Investment team
Executive management responsibility – Global is divided into four functional areas: sustainable
Strategy Team (GST) investing integration, stewardship, governance/
The GST supports IFM’s Chief Executive in executing reporting/research and corporate sustainability.
overall responsibility for the management of IFM.
The GST is focused on ensuring high-quality support The team focuses on integrating the expectations
is provided to the IFM Board, by seeking to maintain of IFM’s clients and wider stakeholders into the
an efficient and collaborative workplace, fostering organisation’s sustainable investing approach and
a strong, coherent and inclusive culture, and works closely with investment teams to seek to ensure
developing IFM’s capabilities, including those related client voices are appropriately reflected in investment
to sustainable investing and stewardship. strategies and processes. The team also provides
support and specialised advice, collaborating with
Investment oversight and review - Board investment teams on their sustainable investing
Investment Committee, Investment Committee and stewardship approaches. Additionally, they also
and Sub-committees coordinate knowledge sharing between asset classes
IFM’s Board Investment Committee, Investment and across the broader business and provide specialist
Committee and Sub-committees have oversight of peer review support to the Investment Committee.
our investment program and portfolios, with a view
to ensuring our sustainable investing approach Investment & portfolio-level sustainable
and guidelines are appropriately considered investing responsibilities - Investment teams
during investment decisions and ongoing portfolio The Global Heads of each asset class and the Global
management. Head of Asset Management (Infrastructure) are
accountable for the execution and implementation
These committees are responsible for reviewing of the Sustainable Investing Guidelines in the
and approving new and follow-on investments investment and asset management process. They
(or divestments) for our infrastructure equity, are supported in this process by their investment
debt investments and private equity portfolios, teams and, where applicable, integrated asset
consistent with internal guidelines and procedures. class sustainable investment specialists and the
The approval process includes an assessment, Sustainable Investment team.
where relevant, of material sustainability risks
and opportunities as identified by the investment Each investment team considers sustainability
teams which have also been reviewed by integrated considerations and, to the extent practicable and
asset class sustainable investing specialists and the consistent with our duties, undertakes stewardship
Sustainable Investment team. The review and, where in their respective investment and asset management
appropriate, challenge on sustainability assessments processes (see Section 3). Investment teams, and their
helps with the appropriate consideration of integrated sustainable investment specialists where
sustainability risks in support of investment they are in place, lead on the design and execution
objectives (including the delivery of long-term risk of asset class-specific strategies, frameworks and
adjusted returns) as part of the approval process and reporting, in line with the Sustainable Investing
in the context of our overall Purpose. The Investment Guidelines and in consultation with the Sustainable
Committee is also responsible for monitoring the Investment team. Asset teams manage asset and
outcomes of past investment decisions. portfolio specific data, whilst the Sustainable
Investment team collates this data for external client
and regulatory reporting.

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Proxy voting and engagement – Proxy Voting Evolving our sustainability strategy
and Engagement (PEC) Committee In addition to working on operationalising IFM’s
The PEC provides oversight of proxy voting activity sustainable investing operating model in FY24, other
for the Australian companies within our listed strategic focus areas have included a refresh of our
equities portfolio and is completely independent of overarching sustainability strategy and the continued
proxy advisors. The PEC determines the approach to build-out of the Sustainable Investment team and
our Australian listed equities portfolio proxy voting. asset class sustainable investment specialists so that
The PEC also approves and monitors engagement we are well positioned to support our investment
activities that take place between IFM and our teams, owners and our clients, in delivering for our
Australian listed equities’ portfolio companies. The stakeholders across the world.
PEC delegates authority for day-to-day engagement
and voting on listed securities to representative An important part of our strategy work is the further
members in the Sustainable Investment team and enhancement of IFM’s ability to engage with a
our listed equities portfolio team. wide range of stakeholders and to seek to influence
systemic issues, such as climate change and human
Sustainability Scorecard rights. In doing so, we aim to contribute to improving
Given the importance of our sustainability-related the long-term stability of global social, environmental
pursuits, we believe it to be beneficial to explicitly and economic systems, which we ultimately believe
link our employee remuneration to achievement of helps deliver on our Purpose and supports the
sustainability-related goals. In FY24, we incorporated a performance of our portfolios for the benefit of our
standalone sustainability component into our broader clients and the millions of people they represent.
corporate performance scorecard for our people84 with
this aim in mind. Please see Section 6 of this report for
more details on our approach to remuneration.

Sustainable investment capability and resourcing

AVERAGE TENURE AND EXPERIENCE OF THE SUSTAINABLE INVESTMENT TEAM

Number in team Average tenure with Average sustainability Average industry

(people) IFM (years) experience (years) experience (years) 85

As at 30 June 2024 11 2.5 7.7 14.6

In addition, there are seven dedicated sustainability specialists within our investment teams.
Recent appointments include:
• Our Sustainable Investment team: appointment of a new Global Head of Sustainable Investment in the
UK in September 2023, and two Directors, one in the US in February 2024 and another in Australia in
June 2024;
• Our infrastructure equity portfolio team: appointment of two specialist Directors, Environmental
Sustainability in September 2023, joining the current specialist Director, Social Responsibility in the
infrastructure equity portfolio asset management team; and
• Our debt investments portfolio team: appointment of three new sustainability specialist Associate
Directors in July 2023, with one located in the Melbourne office and two in the London office.

AVERAGE TENURE AND EXPERIENCE OF ASSET CLASS SUSTAINABLE INVESTMENT SPECIALISTS

Number of specialists Average tenure with Average sustainability Average industry

(people) IFM (years) experience (years) experience (years)86

As at June 30 2024 7 2.1 11.6 14.3

IFM also uplifted our sustainable investment capabilities and capacity through our learning and
development approach, as we outline below.

83
Other than some risk and financial control employees. For such control function employees, any variable remuneration will have performance measures based on
achievement of objectives linked to their functions, allowing independence from the performance of the business areas they control to avoid potential conflicts.
84
Refers to experience in the sustainability and/or financial services sectors.
85
Refers to experience in the sustainability and/or financial services sectors.

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IFM’s Risk Management Framework approval authority is determined based on the type of
IFM’s Risk Management Framework provides the policy or procedure. This may include the IFM Board,
firm with the tools and processes to identify, assess, a Board Committee, a Management Committee or
manage and report on a broad taxonomy of risks, the relevant executive approval. The majority of
including climate related risks where appropriate. A frameworks and policies are subject to review and
number of internal and external sources are utilised initial approval by the Policy and Document Sub-
to validate the risk landscape including risk areas, Committee (PDSC), which is a sub-committee of the
topics and themes that IFM should focus on. These IFM Risk Committee.
are then assessed by applying methodologies from
the framework. Enterprise risk profile monitoring The PDSC is responsible for:
and reporting is informed by the risk assessments
and supported by an assessment of the business • Overseeing the application of IFM’s Policy
context as well as the mitigating controls where Governance Principles;
appropriate. These assessments are performed in • Approving frameworks and policies not requiring
conjunction with the respective business areas, IFM Board, Board Committee or Management
and final outcomes are shared with the IFM Risk Committee approval; and
Committee and the Board Audit & Risk Committee. • Approving procedures applicable to IFM.

Reviewing our policies and processes The PDSC is comprised of delegates from several
business units including Risk & Compliance, People
Our policy framework & Culture, Operations, Commercial and Investments.
Our sustainable investing integration and
stewardship approach is guided by the following key The IFM Policy Governance Principles are in place
policies and manuals: to support the application of a principles-based
approach to content, document type and policy
• IFM Sustainable Investing Guidelines (published governance, supported by the IFM Policy Governance
May 2024) Procedure which outlines the process for writing,
• IFM Group Corporate Proxy and Engagement reviewing and/or updating policy documents.
Committee (PEC) Charter
• IFM Group Listed Equities Climate Change IFM reviews policies in accordance with the related
Engagement and Escalation Policy risk rating, or per the regulatory or legislative
• IFM Group Sustainable Finance Disclosure requirement as relevant.
Regulation (SFDR) Policy
• IFM Group Sustainability Commitments Procedure In situations where major updates are needed, we
may engage the services of a third party to undertake
We also have detailed Operations & Compliance a gap analysis or benchmarking exercise to provide
Manuals that outline applicable policies and an external lens and help ensure our policies and
procedures for each asset class or investment team, procedures remain current. The same occurs for our
and for specific strategies where relevant. In addition process documents.
to our own policies and manuals, IFM is a member
of ACSI and adheres to many of ACSI’s policies, Assurance activities are performed regularly
including ACSI’s Governance Guidelines87 and throughout IFM, across three ‘lines of defence’
Gender Diversity Voting Policy.88 (consisting of all employees, our Risk & Compliance
Team and our Internal Audit function) as part of the
Policy and procedures review IFM Risk Management Framework. These assurance
Our policies define what, why and how IFM will seek activities take the form of attestations, self-
to manage risk and ensure regulatory obligations are assessments, control testing, compliance monitoring,
met. To support accuracy and currency, policies are risk assessments, internal audit, external audit, and/
subject to periodic review and update. The relevant or independent reviews.

87
ACSI Governance Guidelines | ACSI
88
ACSI Gender Diversity Policy | ACSI

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During FY24, we reviewed and updated our

Conflicts of interest
process for making voluntary commitments
on sustainable investing and corporate IFM’s Conflicts Management Policy and Conflicts
sustainability, including through frameworks, Management Procedure emphasise acting in our
standards, public letters collaborating with other clients’ best interests, including details on how
market participants, industry body membership IFM identifies, manages and discloses conflicts
and any other related initiatives. Our review of interest. IFM’s Conflicts Management Policy is
focused on how we identify, assess, consider accessible to all employees through IFM’s policy
and make decisions on our participation in library and restricted external parties such as
external commitments and memberships. Part regulators and auditors.
of this process included a 6-month ‘test and
learn’ period to examine the effectiveness of Conflict scenarios can arise when our roles, interests
the developing procedure, making change and or duties are in actual, potential or perceived conflict
improvements during this time. The approach with that of another. All employees are required to
was reviewed by stakeholders across IFM, with consider conflicts in every aspect of their role and
approval of the procedure by the PDSC. adhere to IFM’s Code of Conduct.89

Identifying potential conflicts

IFM’s Conflicts Management Policy and Market
Monitoring regulatory developments Abuse Policy capture the process of identifying
To seek to effectively manage our regulatory risks, conflicts. As part of IFM’s stewardship activities
working with external counsel, we have identified (including voting and engagement), guidelines are
and mapped out what we understand to be our adopted to recognise potential conflicts of interest.
key regulatory obligations across our operating These guidelines cover various scenarios, including
jurisdictions and captured them within a register. An personal conflicts (such as personal account trading),
external electronic tool is used to capture relevant investment conflicts (when different teams seek
amendments to existing compliance regulations and opportunities in the same asset) and corporate
alerts relating to new compliance regulations on the conflicts (including related party transactions).
horizon. In the event where legislation and regulation
fall outside of the capabilities of the electronic feed, Material non-public information through
manual monitoring of relevant regulator websites is stewardship activities
also used. Our Global Risk and Compliance team is informed
of any material non-public information obtained
Following analysis and identification of regulations through stewardship activities, and relevant controls
impacting IFM, a business impact assessment (BIA) are implemented, such as information barriers
is undertaken to determine the level of change placed on those with inside information. We
impact to IFM. The BIA process involves regular believe proper management of material non-public
communication and input from the business units information is critical to effectively manage conflicts
within IFM that are to be impacted by the regulation. of interest and to maintain the trust of our owners,
A regulatory change management process is in clients, regulators and the communities in which we
place that is governed by the IFM Group Regulatory operate.
Change Management Policy. This process seeks
to identify, assess, communicate and manage the We have implemented policies, procedures and
implementation of new or amended regulation in training that aim to ensure our staff understand the
all relevant jurisdictions. IFM’s Regulatory Change concepts of material non-public information and
Working Group (RWG) provides oversight for the insider trading, and the controls we must implement
portfolio of regulatory change activity across IFM. to manage and monitor the risk of unauthorised
The RWG operates under delegated authority from disclosure of material non-public information that
the IFM Risk Committee, meeting on a monthly basis. could lead to insider trading and undermine the fair
operation of financial markets.

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Managing conflicts of interest Examples of personal potential conflicts of interest

IFM’s Conflicts Management Policy also establishes include:
the core principles for managing conflicts of interest
between clients, employee personal conflicts and • having a close relationship with a service
conflicts between our business and clients as provider;
required by various laws and regulations. It also
provides guidance on situations where potential • holding outside employment or a directorship
conflicts may arise between and within investment with an investor or service provider; and
teams.
• situations where IFM or a representative are
The guiding principles followed by IFM with respect likely to make a financial gain from an investment
to conflicts of interest are that: decision, which may or may not be aligned with
the interests of clients.
• all clients should be treated fairly and equitably;
and In situations where the Conflicts Committee is not
deemed the appropriate management committee,
• IFM seeks to ensure that no investor is the matter may be referred to the IFM Board and/or
disadvantaged in the management or avoidance of Board Audit & Risk Committee.
the relevant potential or perceived conflict.
The IFM Conflicts Management Policy provides
The IFM Conflicts Management Policy is applicable detailed guidance for the following examples (not an
to all IFM staff. It is reviewed every two years or exhaustive list):
when material changes occur in the internal or
external business and/or regulatory environment • assessing conflicts when considering investments;
and approved by the IFM Audit & Risk Committee.
Potential conflicts are managed and reviewed by the • the appointment of external advisors;
Conflicts Committee which meets on an as-needs
basis. The Conflicts Committee is a sub-committee • managing conflicts arising from knowledge
of the IFM Risk Committee and comprises of two held by different groups within IFM and the
IFM Risk Committee members at a minimum, consideration of conflicts of interest between IFM
provided always that Conflicts Committee members entities (for example, where one entity provides
are not members of the business unit involved in the management services to another entity within the
potential conflict. IFM Group);

The Conflicts Committee seeks to ensure that once • conflicts which may arise through appointment to
a potential conflict scenario has been identified, a corporate or asset company directorships; and
process has been undertaken to mitigate or avoid
it. In the rare instance where a potential conflict • conflicts arising between IFM, our portfolios and
scenario cannot be avoided, the Conflicts Committee individual portfolio companies, related party
will review the controls that have been implemented transactions, deal allocations and common board
to evidence management should the conflict memberships.
materialise. Guidelines have been implemented as
part of this process to seek to ensure the Conflicts A conflicts register is maintained detailing instances
Committee remains consistent and independent of conflicts as they arise. The register is reviewed on
when assessing conflicts raised within IFM’s course an ongoing basis to ensure it remains up to date.
of business.

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CASE STUDY

Our private equity portfolio team examined a • the type of debt involved (whether held via a
potential acquisition and identified an existing fund or mandate);
relationship between the target entity and our debt
investments team. • the presence of any trigger clauses in the loan
agreement, such as change-of-ownership
Recognising the importance of conflict of interest clauses; and
protocols, the private equity portfolio team promptly
flagged the issue, formally raising the matter with • confirmation that no additional financial
the Conflicts Committee through its secretary. interests or relationships existed between
the target company and other IFM teams or
The secretary took action to investigate the nature entities.
of the relationship between the target company
and the debt investments portfolio team. Key Ultimately, the transaction did not proceed.
aspects reviewed included:

External tools and resources

IFM has internal teams supporting all our asset helps to inform targeted engagement as well as
classes and we rely on both this internal resource assisting investment teams with their view of the
and external resources to undertake sustainability underlying investment. Climate change research and
research, due diligence and stewardship. For our data are obtained from multiple sources, especially
infrastructure equity and private equity portfolios, through our membership of a number of investor
we are typically able to access sustainability-related bodies which are focused on climate change, as
data and information directly from portfolio assets/ well as external investment analysts’ research and
companies and engage directly with them to participation in climate-focused working groups
seek to understand sustainability considerations and round tables. We also commission climate
and influence change and sustainability-related assessments related to our infrastructure equity
performance. However, we also engage external portfolio from external providers such as BCG, Arup,
consultants to provide support on transaction due ERM and Pollination, among others.
diligence, undertake more specialised health and
safety, environmental or social assessments and to In addition to our own direct stewardship
assist with particular pieces of research or analysis. engagement with certain Australian listed
companies, IFM is a member of ACSI which engages
We also use several tools that help us store, manage with Australian listed companies on our behalf.
and consolidate sustainability related data. For ACSI provides pre and post meeting file notes and
example, our private equity portfolio team uses an ongoing engagement tracker which records
Pathzero to measure, analyse and guide on carbon company progress against material sustainability
emissions reduction options associated with considerations.
portfolio companies in order to encourage them to
set emissions reduction goals and commitments. We use Glass Lewis to execute our voting decisions,
We also subscribe to the MSCI ESG Manager portal providing us with proxy voting research and
to access ratings and underlying carbon and other recommendations, and the Glass Lewis Viewpoint
sustainability data and analytics for listed equities’ online platform to manage all our proxy voting
portfolio companies. These data points help us activity. More details on this can be found earlier in
identify portfolio companies that are lagging behind the report in Section 3.
their peers on sustainability considerations and
define the issues we may target for engagement. Research and recommendations from two proxy
advisors provide IFM with alternate views with
We believe these tools are useful because they regard to voting recommendations. See Section 3 for
support IFM in quantifying what we consider to details on our approach to exercising voting rights in
be the material sustainability-related risks of a companies within our listed equities portfolio.
particular company on a case-by-case basis. This

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Third-party data and research providers and platforms that support our sustainability integration and
stewardship activities

Service provider Description

MSCI ESG Manager ESG data, research and ratings acts as an input into proprietary analysis and screening.

S&P Individual company data is used on a case-by-case basis by our debt investments portfolio team.
During FY24 we have also selected S&P to provide physical climate risk modelling for both our
listed and private assets.

Arabesque Provides an assessment of a company’s performance on certain sustainability criteria and is

used as an input in our proprietary investment process in active strategies within our listed
equities portfolio.

RepRisk We use RepRisk to identify and assess potential sustainability risks faced by companies and
investments.

PathZero Pathzero is an online platform that we use to measure and analyse a company’s carbon emissions.

PWC DataKit A data collection platform for assets within our infrastructure equity portfolio, covering SFDR
and other sustainability data requirements.

Ownership Matters Provides bespoke governance and accounting risk analysis for ASX 300 companies.

ACSI Company engagement service and proxy voting research and advice for the ASX 300.

Glass Lewis Proxy voting research and recommendations and the provision of the Viewpoint online voting
management platform.

In addition, IFM works with a number of consultancies We have a number of ‘Preferred Advisors’ in certain
across our global locations to supplement our internal areas of expertise and we ask teams to source
resources and seek specialist advice on an ad hoc basis. from this list in the first instance. These firms have
demonstrated satisfactory performance in the past
Monitoring external advisors and service and have agreed terms in advance with us. The
providers Preferred Advisor list is reviewed periodically by the
relevant business unit. The IFM Group Policy for
External advisors and consultants the Engagement of External Advisors outlines the
IFM does not use the services of external portfolio process which must be undertaken in appointing any
managers – we manage all of our investment portfolios external advisors.
internally or provide relevant advisory services to
portfolios on behalf of our institutional clients. Outsourcing and supplier oversight
Our procurement team, combined with business
However, we have established and work with a global unit representatives, oversees our suppliers and
network of external advisor partners to supplement the procurement of outsourced relationships. The
our internal resources when and where we believe IFM Group Outsourcing Policy outlines our process
this is necessary. These external providers assist and assurance requirements for outsourcing
with general operations and the delivery of projects, arrangements. Our relationship with each service
as well as provide specialist expertise and support to provider and the associated review and oversight
our investment teams during various phases of the processes are dependent on the degree of IFM’s
investment and transaction process. reliance on that provider and the criticality of the
service to IFM’s ongoing operations and activities:

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• Primary outsourcing relationships are where the increasing obligations that IFM has in relation to
service provided is integral to the operations of sustainability and regulation, including those of the
IFM or our investment portfolios. supply base. We are in the process of segmenting
suppliers into different categories to help distinguish
• Secondary relationships describe providers where strategic (more critical) suppliers from those that
a change in provider is likely to have minimal or are more easily substituted. For example, corporate
no impact on the services offered by IFM. These advisory services would be described as operational
are typically support and ad hoc consulting or transactional in nature, as opposed to those
services. advisors who assist with strategy or portfolio advice.
This segmentation allows us to increase our focus
When appointing key external providers, depending on the assessment and oversight of more material
on the type of relationship (as above) or nature of the or strategic suppliers. These include suppliers that
contract, we typically carry out an initial assessment are involved in the provision of custodial services,
across a range of criteria outlined in the IFM Group valuation, fund administration, core technology
Outsourcing Policy or the IFM Group Engagement of services and internal audit.
External Advisors Policy, including but not limited
to financial, human and technical abilities, systems We believe a more structured approach to our
and capacities, as well as the ability to support management of suppliers will help drive improved
the implementation of our sustainable investing performance, enable better risk control, create
approach and Sustainable Investing Guidelines. greater alignment with strategic suppliers and enable
us to more effectively demonstrate to regulators, our
A new Supplier Code of Conduct is also continuing clients and owners how we are managing those key
to be developed to provide further rigour around relationships.
supplier appointments. This document intends to
set out the high standards and behaviours we expect Listed equities portfolio engagement and proxy
from our suppliers relating to human rights, ethical voting services
sourcing, bribery and corruption, labour standards, ACSI undertakes engagement with ASX 300
inclusion and diversity, health and safety and the companies on behalf of members including IFM and
environment. provides us with proxy voting research and advice.
Our representation on the ACSI Board and Member
Monitoring of service providers is undertaken on Council provides IFM with oversight and helps the
a regular basis depending on the relationship to alignment of ACSI’s engagement priorities with our
gauge whether performance and service levels are own. IFM is also a member of ACSI’s governance
consistent with expectations. We recognise it is guidelines working group, established every two
important that we retain sufficient capacity (skills years, to review, update and redraft ACSI’s Corporate
and knowledge) to be able to supervise ongoing Governance Guidelines. We engage with ACSI on
service delivery and performance. Monitoring may a regular basis through attendance at meetings,
involve: one-on-one engagement with their team members,
as well as attending ACSI-led conferences and
• Meeting with key personnel of the service information sessions.
provider or agent;
We subscribe to the Glass Lewis voting platform
• Monitoring changes to key personnel of the ‘Viewpoint’ to manage and track all our proxy voting
service provider or agent; and activity. We disclose our voting decisions publicly
on our website via a searchable voting database
• Receiving performance reports and/or provided by Viewpoint.90
presentations from the service provider or agent,
and periodic onsite and offsite reviews. The Sustainable Investment team and our listed
equities portfolio team meet with and monitor ACSI
Supplier performance management framework and Glass Lewis respectively to seek to ensure their
We have developed, and continue to improve upon, services remain fit for purpose for IFM. This occurs
a supplier performance management framework during the ongoing course of business and more
which was implemented with some of the key formally through contract renewal processes. We
vendors supplying IFM in FY23 and was extended to also engage an external auditor, who assists with
further vendors in FY24. This framework was built our monitoring requirements by undertaking annual
in response to our growing supplier base and the reviews. Proxy voting records are assessed with a

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view to ensuring applicable internal IFM control Investor Advisory Committees

procedures are followed and that authorised voting IFM’s Investor Advisory Committees (IAC’s) are also
accounts are being implemented in line with their important forums for consultation between IFM and
associated policies. our clients on matters including our sustainable
investing approach. These committees exist for our
Sustainability data providers infrastructure equity portfolio, our private equity
We use a range of sustainability data inputs, portfolio and our infrastructure debt products within
analytics and research providers in the management our debt investments portfolio. We seek broad
of our listed equities and debt investments portfolios investor representation on these committees which
which include MSCI, Arabesque, S&P, RepRisk and are designed to provide a forum for consultation
Ownership Matters, as well as obtain engagement between IFM and our clients on a variety of issues
and proxy voting advice from ACSI and Glass Lewis relating to their investments. The IAC platform
(where applicable) as outlined above. We also use enables the sharing and discussion of feedback,
credit ratings agencies where coverage is available. requests and advice amongst committee members.

For our infrastructure equity and private equity The following are examples of some of the functions
portfolios it is still challenging to access an relating to the IAC platform for our infrastructure
appropriate level of relevant data and research equity portfolio:
provider coverage. We use the RepRisk database for
ongoing portfolio screening of our infrastructure • Discuss and consider the impact of changing
equity portfolio companies and diligence screening circumstances and market conditions on the
for our infrastructure debt products within our debt strategy and performance of the infrastructure
investments portfolio. Generally, our infrastructure equity portfolio.
equity and private equity portfolio companies
independently engage their own data and service • Review conflicts of interest and related party
providers and provide relevant information to our transactions.
portfolio managers.
• Discuss and consider opportunities as to how IFM
We regularly monitor the quality and depth of and our clients and owners, where appropriate,
sustainability data and research from external may influence stakeholders to contribute to the
providers by undertaking a comparison across opportunities available to the portfolio.
different data providers for investments where
possible, frequently reviewing new data offerings and Aligning our investment management approach
trialling new data solutions. We also formally review to our clients’ needs
service contracts annually with a view to ensuring Our approach of seeking to align our investment
they continue to meet our needs. management approach with our clients’ needs
includes focusing on understanding their priorities
Client reporting and engagement and using this information to inform our actions,
working hard to build long-term, constructive
We engage frequently with our owners and clients. investor relationships and acting as a trusted advisor
Our engagement is two-way and provides us the and steward of our clients’ money.
opportunity to seek feedback via the following formal
and informal channels: During FY24 we have continued to build our
understanding of our clients’ and owners’
• Shareholder Advisory Board; sustainability-related priorities, starting with
• Investor Advisory Committees; the largest clients. Our program of research,
• Our Investor Service Quality survey; and which included desk-based analysis and direct
• Direct interaction via investor forums, regular engagements with our owners, highlighted a number
briefings and client meetings. of sustainability-related priority areas for our owners,
major clients and broader market trends, such as
Shareholder Advisory Board climate change, labour rights, modern slavery, as
The Shareholder Advisory Board consists of well as emerging areas of focus such as nature and
representatives from IFM’s major shareholders biodiversity, and artificial intelligence. We believe
who meet to discuss IFM’s performance, business ongoing engagement with our clients and owners
planning, governance, results, leadership and other and the priority areas identified thus far, will help
agreed topics of interest including sustainable to inform the future development of our sustainable
investing matters. investing approach and areas of focus.

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Our Shareholder Advisory Board and IACs enable us This is complemented by engagement and outreach
to regularly engage in a formal way with our clients undertaken by IFM’s Chief Executive and senior
and learn more about their needs and concerns. The executives, including investment team heads. As a
information obtained from these interactions is used result, IFM can stay close to our clients and respond
to inform our business decisions and the types of quickly to market developments, investment trends
products and services that we offer our client base. and sustainable investing themes.

We seek to develop new investment strategies Investor Service Quality survey

that take into account the changing needs of our Our Investor Service Quality (ISQ) survey uses
clients. These strategies incorporate sustainability independent qualitative research via interviews
objectives and aim to support our clients who have with chief executives, chief investment officers, key
set their own net zero commitments. These were investment team members and asset consultants
developed in consultation with clients, to strengthen to assess our investor service quality on an annual
alignment to their investment policies with respect to basis. This assessment includes a critical assessment
sustainability considerations. of IFM’s sustainable investing approach.

At the individual client level, we can develop The ISQ provides IFM’s clients the opportunity
bespoke mandates and sustainability strategies in to give feedback about their experience with
collaboration with clients that are tailored to their IFM. The areas covered in the 2024 ISQ review
direct needs. These bespoke solutions can also be included: overall satisfaction with IFM, investment
adjusted over time, for example, as a client’s climate performance, strategic alignment, client engagement,
goals evolve. consultant feedback, onboarding, legal and related
documentation, client meetings, reporting and
We value the feedback we obtain from our owners sustainable investing policy, process and reporting.
and clients as part of our annual Investor Service
Quality survey and regular interactions, and we use
this information to help improve our approach and
The results for the 2024 ISQ survey continued
better meet client needs.
to reinforce the momentum we have seen in
previous years, with the “overall satisfaction”
The collaborative efforts in which we participate
score increasing from 8.4 to 8.5 (out of 10).
also result in us engaging alongside some of our This represents the strongest score IFM has
clients. While client engagement is not the primary received to date and reflects a continued level of
objective of our involvement in these collaborations, achievement across all dimensions measured in
it nonetheless helps provide another channel to the ISQ.
determine the range of issues our clients consider
important. IFM’s overall sustainable investing reporting
scores have remained high, with IFM’s
Client forums, regular briefings and client Sustainable Investment team, capabilities,
meetings alignment, stewardship and overall delivery at
Our clients and owners are regularly provided the highest levels since measurement began.
with investment performance, fund information,
qualitative commentary, quantitative indicators,
sustainable investing approach considerations Reporting
and market developments through the following We believe transparent reporting about our
channels: sustainable investing approach, actions and
outcomes is important to earning and maintaining
• Monthly statements and quarterly reports the trust of our clients and other key stakeholders.
detailing performance and market developments; We aim to ensure our reporting is fair, balanced and
understandable. We seek to do this through internal
• Regular conference calls, client updates and client reviews of our reporting before publication and via
briefings; reviews and benchmarking of our reporting against
peers and competitors. Formal and informal feedback
• Publication of thought leadership whitepapers; from clients and other key stakeholders also informs
our consideration of improvements to our reporting.
• Masterclass sessions to share investment
insights; and Below we outline publications we provide our clients
and owners and other key stakeholders explaining
• Customised client deliverables, as agreed. our approach, activities and outcomes.

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IFM’s sustainability reporting and disclosures

Sustainable Investing Guidelines: Defines our Listed Equities Stewardship reports and voting
sustainable investing approach.91 records: We publicly report every six months on
our Australian listed equities portfolio stewardship
activities, covering our proxy voting and engagement
Annual Sustainability Report: Reports on how we activities and outcomes for the period. We also
are delivering on our Purpose for our clients and provide a real-time list of voting activities on our
owners via our investment, stewardship, advocacy website. These are available via the stewardship page
and corporate activities. on our website.95

PRI Transparency and Assessment Reports: Modern Slavery Reporting: We publicly report
We publish our PRI Transparency and Assessment on our processes and controls to prevent modern
reports on our website.92 slavery within IFM operations, investment activities
and third-party providers.96

Net Zero Asset Managers Initiative: We provide a

submission on our progress for inclusion in NZAMI’s EU SFDR Disclosure: We provide annual disclosure
annual report on signatories’ target disclosures. of environmental and social considerations for our
global products within our infrastructure equity
portfolio that are in scope of the European Union’s
GRESB:93 IFM’s GRESB submission for 2024 marked Sustainable Finance Disclosure Regulation (SFDR).
our fourth consecutive year of participation in
the assessment process. In 2023 two of our three
infrastructure equity portfolio products made Infrastructure Climate Change Report
submissions and in 2024 submissions were made (distributed to our clients): We report carbon
by all three products in our infrastructure equity footprint data and outline our decarbonisation
portfolio for the first time. One product achieved pathways and progress towards our 2030 emissions
the maximum 5-star rating in its first year, with reduction targets for our infrastructure equity
the remaining two maintaining their management portfolio to our clients via annual reports and
GRESB scores from the previous years, achieving 30 periodic client updates.
out of 30.

Private Equity Sustainable Investment Report

Insights: We produce a range of thought leadership, (distributed to our clients): We review and disclose
white papers and regular updates for our clients and our progress regarding sustainability objectives
other stakeholders which include topics relating to and priorities and highlight focus areas for the year
our stewardship activities and outcomes. We publish ahead for our private equity portfolio.
these on our website.94

91
Available on our website Governance and reporting | IFM Investors and as Appendix 2 to this report.
92
Available on our website Governance and reporting | IFM Investors
93
GRESB is an internationally recognised global ESG benchmark for real assets. It aims to provide validated ESG performance data and peer benchmarks to support
investors’ and investment managers’ engagement and decision-making. GRESB Members are able to access our portfolio Management Scores and Asset Scores for
portfolio companies that have exited the ‘first 12 months’ grace period.
94
Thought Leadership | IFM Investors
95
Engagement & Proxy Voting Reports | IFM Investors
96
Modern Slavery | IFM Investors

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2024 ANNUAL SUSTAINABILITY REPORT

Maria Nazarova-Doyle
Global Head of Sustainable Investment

The year ahead

As we look ahead, we have a wealth of initiatives underway at IFM aiming to continue to meet our Purpose:
to invest, protect, and grow the long-term retirement savings of working people. We are particularly
focused on further enhancing the application of sustainability considerations across our business and our
portfolios, as we continue to grow our assets under management and expand our client base globally. It’s
going to be another busy year as we concentrate on new and ongoing initiatives highlighted in this report.
Below are some of our key focus areas for the year ahead.

Our partnership on Sustainable Aviation Fuel (SAF) blueprint for the UK, which is a first-time
As part of our partnership with GrainCorp to collaboration between IFM, UK and Australian
develop a SAF refinery market in Australia (as pension funds, and the UK Pensions and Lifetime
outlined in Section 4 of this report), our work Savings Association (PLSA). This blueprint calls on
has been progressed to include the signing of a the government to take an active and coordinated
Memorandum of Understanding between IFM, approach across fiscal, planning, climate, renewables
GrainCorp and Ampol, Australia’s largest transport and industrial decarbonisation policy to give investors
energy provider. Ampol and IFM intend to progress of pension capital greater clarity and confidence in
the feasibility assessment of a renewable fuels the UK market. We are looking forward to working
facility at Ampol’s Lytton Refinery and to work with with a wide range of parties representing private
GrainCorp to explore the supply of homegrown and public sector aiming to support these policy
feedstocks to supply canola oil to the future plant. recommendations being put into action.
This exciting work between IFM, GrainCorp and
Ampol is expected to continue throughout the Social and Affordable Housing
current financial year and beyond. During the last year IFM and a number of Australia’s
leading profit-to-member superannuation funds
Climate modelling developments have collaborated to provide long term debt to
During the new financial year we intend to continue Community Housing Providers to enable them
improving our climate modelling. We plan to focus to participate in the first round of the Housing
both on implementing a new physical risk tool into Australia Future Fund. Details of this collaboration
our asset class processes and also advance work can be found in Section 4 of the report. Should the
to assess portfolio-wide risk across both transition bids be successful, in the year ahead we will work
and physical risk. We believe the work we are with these funds and Community Housing Providers
undertaking this year will allow us to refine our aiming to move to financial close on the successful
risk management approach as well as help us get social and affordable housing projects. We see
ahead of future regulatory changes. this collaboration with superannuation funds as a
long-term partnership to support addressing this
Sustainability-related data capabilities systemic issue.
Later in the new financial year we intend to
commence a large program of work to improve our Modern slavery
sustainability-related data management capabilities. During the year ahead we intend to further develop
This is expected to allow us to be more efficient as a our approach to identifying modern slavery risks
business when monitoring, assessing and reporting in our portfolios, upgrading our due diligence
on our exposures to sustainability risks and on our capabilities across a number of areas.
progress towards our net zero targets.
We look forward to reporting on these and many
Mobilising pension capital for net zero: a policy other initiatives in our report next year.
blueprint for the UK
In October 2024 we announced our blueprint,
Mobilising pension capital for net zero: a policy

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Appendices

Picture: DCT Gdansk Port

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Appendix 1: Mapping to the UK Stewardship Code

PRINCIPLE 1: Section 2: About IFM

Signatories’ purpose, investment Section 3: Sustainable investing - Our sustainable investing approach
beliefs, strategy, and culture enable
Section 6: Sustainability at IFM - Corporate sustainability
stewardship that creates long-term
value for clients and beneficiaries
leading to sustainable benefits for the
economy, the environment and society.
PRINCIPLE 2: Section 3: Sustainable investing - Implementing our sustainable
investing approach
Signatories’ governance, resources and
incentives support stewardship. Section 6: Sustainability at IFM – Corporate sustainability

Section 7: Governance – Reviewing our policies and processes,

External tools and resources
PRINCIPLE 3: Section 7: Governance - Conflicts of interest
Signatories manage conflicts of
interest to put the best interests of
clients and beneficiaries first.
PRINCIPLE 4: Section 4: Navigating market-wide risks
Signatories identify and respond to Section 5: Climate change and advancing our net zero transition -
market-wide and systemic risks to Climate risks and our commitment to emissions reduction
promote a well- functioning financial
system.
PRINCIPLE 5: Section 3: Sustainable investing - Our sustainable investing
approach – Transparency and reporting
Signatories should explain how they
have reviewed their policies to ensure Section 3: Sustainable investing - Implementing our sustainable
they enable effective stewardship. investing approach – monitoring and assessing effectiveness

Section 7: Governance - Reviewing our policies and processes

Section 7: Governance - Client reporting and engagement

PRINCIPLE 6: Section 2: About IFM - Financial highlights
Signatories take account of client and Section 3: Sustainable investing - Our sustainable investing
beneficiary needs and communicate approach – sustainable investing integration
the activities and outcomes of their
stewardship and investment to them. Section 3: Sustainable investing - Our sustainable investing
approach – Transparency and reporting

Section 7: Governance - Client reporting and engagement

PRINCIPLE 7: Section 3: Sustainable investing

Signatories systematically integrate Section 5: Climate change and advancing our net zero transition
stewardship and investment, including
material environmental, social and
governance issues, and climate change,
to fulfil their responsibilities.

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PRINCIPLE 8: Section 7: Governance - External resources and tools

Signatories monitor and hold to
account managers and/or service
providers.
PRINCIPLE 9: Section 3: Sustainable investing
Signatories engage with issuers to
maintain or enhance the value of
assets.
PRINCIPLE 10: Section 3: Sustainable investing - Our sustainable investing
approach – Advocacy and collaboration
Signatories, where necessary,
participate in collaborative engagement Section 4: Navigating market-wide risks - Industry and peer
to influence issuers. collaboration

Section 4: Navigating market-wide risks - Engaging with

government bodies and policymakers
PRINCIPLE 11: Section 3: Sustainable investing - Implementing our sustainable
investing approach
Signatories, where necessary, escalate
stewardship activities to influence
issuers.
PRINCIPLE 12: Section 3: Sustainable investing - Implementing our sustainable
investing approach – Listed equities
Signatories actively exercise their
rights and responsibilities.

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Appendix 2: IFM’s Sustainable Investing Guidelines

IFM Investors Sustainable

Investing Guidelines
May 2024
 2024 ANNUAL SUSTAINABILITY REPORT

Why Sustainability considerations are considerations

that relate to society and the environment, such as
Our purpose is to invest, protect and grow the climate change, worker safety and labour rights.
long-term retirement savings of working people. These considerations can give rise to investment
Maximising long-term risk-adjusted returns is risks, opportunities and impacts that can be
central to delivering on our purpose, and we believe financially relevant and ultimately affect investment
sustainable investing (SI) is integral to doing this. We performance.
aim to identify and act on sustainable investing risks
and opportunities across our portfolios. Sustainable investing is the approach we use
to integrate sustainability considerations into
IFM Investors (IFM) is owned by Australian pension investment analysis, decision-making, ongoing
funds. This ownership model and the fact that our management, and oversight of investments,
owners invest alongside our clients drives alignment recognising the impacts these can have on
between our purpose and our owners’ and clients’ investment performance, as well as on wider society
objectives, affirming our commitment to investing and the environment.
for the long-term and reinforcing our belief that a
healthy environment and strong societal foundations Our sustainable investing approach aims to manage
are important to achieving sustained economic financial risk and improve the performance. As part
growth. of this approach, we seek to identify, understand, and
manage a broad range of risks and opportunities that
can materially impact the value of our investments.

What Our sustainable investing approach varies across

asset classes and is tailored based on considerations
IFM’s Sustainable Investing Guidelines (Guidelines) such as the holding period and the degree of
seek to define our sustainable investing approach. influence we have.
These Guidelines generally apply to IFM’s funds
across the following investments: IFM has adopted our own definitions of sustainable
investing and sustainability considerations in these
• Infrastructure Equity Guidelines and such terminology is not intended to
refer to any regulatory definition.
• Debt Investments
Through our sustainable investing approach, IFM
• Private Equity aims to support a sustainable transformation of the
economy in a manner we believe helps deliver long-
• Listed Equities term value to our clients and considers the impacts
on people and the planet. To effectively implement
Client mandates and certain indirect investments IFM’s sustainable investing approach across our
(such as derivatives) are not subject to these portfolios, we have developed organisation-wide
Guidelines.1 principles covering our approach to environmental
action and social inclusion as set out in more detail
below. We aim to implement these principles across
asset classes where practicable and consistent with
our duties.

1
With respect to client mandates, certain Listed Equity mandates could be subject to the voting and engagement sections of these Guidelines based on the specific client agreements.

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How •  eeking to improve the performance of portfolio

S
companies across a range of sustainability
We assess sustainability considerations and their considerations through asset management and
impact on investments across the majority of asset stewardship, including exercising voting rights,
classes1 and strategies, noting that the approach where practicable
differs between asset classes.
• Monitoring and reporting
Our Sustainable Investment team leads on the
development and agreement of IFM’s overarching • Advocating to encourage the shift toward a more
approach to sustainable investing with each sustainable financial system
Investment team and other IFM business units, and
provides expert advice on sustainable investing- • Representing IFM in industry bodies and investor
related issues. The Investment teams lead on all practice development.
investing activities and integrating sustainability
considerations into those activities. These Guidelines are reviewed annually following an
established review process.
Our teams will refer to these Guidelines in their
relevant activities, which may include, one or more of
the following:
Who
• Analysis, mitigation, and management of
sustainability considerations for investments These Guidelines apply to all IFM Investors’ and its
subsidiaries’ people, including employees, directors,
• Due diligence temporary agency employees and contractors in all
jurisdictions.2
• Identification and compliance with applicable
laws and regulations

2
See Section ‘What’ for scope definition.

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IFM Sustainable Investing Principles

We have developed a set of sustainable investing principles to guide us
to make investment decisions which aim to maximise the returns and
manage risks for our clients. We aim to implement these principles across
asset classes where practicable. The implementation of these principles is
an ongoing process with some areas more advanced than others, and we
update these principles as new information emerges.

1 Biodiversity protection and nature restoration

We believe that there is a need and an opportunity to
contribute positively towards biodiversity protection
Environmental Action and nature restoration. We believe the current rate of
nature degradation is not sustainable, and there is a
Net Zero transition risks and opportunities need to reduce the adverse impacts where practicable
We believe the risks and opportunities arising as well as increase the positive interactions
from climate change and the transition to a net between investment and nature conservation
zero economy are unprecedented, making it and/or restoration. IFM’s teams take a tailored
important in our view that we seek to integrate these approach to the management of nature related risks,
considerations into our investment processes so we prioritising where we can have the greatest degree of
can continue to deliver strong risk-adjusted returns influence aligned with maximising long-term risk-
for our clients. adjusted returns. This approach may include where
practicable:
We believe the most efficient way to mitigate climate
change risk for long-term investors is to consider • Encouraging and supporting our portfolio
whether and how their assets can transition to a net companies to monitor, assess and disclose
zero economy by 2050 in a manner that achieves risks, dependencies and impacts on nature and
the goals of the Paris Agreement. Echoing the biodiversity in their operations and supply chains
agreement reached at COP28, we believe that long-
term investors benefit if this transition happens in a • Collecting data at asset and portfolio level
just, orderly and equitable manner to maximise long- on activities negatively affecting biodiversity
lasting benefits throughout the global economy. sensitive areas and assets located in proximity of
protected areas
IFM has set a target aligned with the International
Panel on Climate Change (IPCC) findings to reduce • Undertaking periodic assessments of nature
greenhouse gas emissions, targeting net zero across related risks across our portfolios both in terms of
our asset classes (scope 1 and scope 2 emissions) by materiality to our assets and the impacts of assets
2050. This target does not apply to client mandates. on biodiversity
The work to determine our approach to deliver on
this target is ongoing, tailored across asset classes • Assessing nature related risks at the due
and aligned with our priority to maximise risk diligence stage of acquiring new assets
adjusted returns for our clients.3 Our overarching
approach largely encompasses transition and • Deepening our awareness of the impact of
adaptation, and climate solutions investment rather deforestation across our assets, understanding
than divestment. Our ability to achieve our net zero any key risks, and taking steps to mitigate such
targets is dependent on advances in technology, risks
alternative energy sources being available at scale
and, policymakers and portfolio companies making • Collaborating and taking part in investor
and delivering on their own net zero commitments. coalitions targeting action on biodiversity, nature,
and deforestation.

3
 s at the publication of these Guidelines, with respect to pooled products, for IFM’s infrastructure equity portfolio and IFM’s private equity portfolio we have also announced interim
A
2030 targets. IFM’s debt investments team and listed equities team continue to evaluate net zero targets across their portfolios.

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Efficient resource use Labour rights

With a growing global population and increasing We aim to conduct our business in a manner that
consumption rates, we believe the risk of breaching respects labour rights and we expect the relevant
planetary boundaries in key environmental systems companies in which our portfolios invest to do so as
is high and rising. We believe this necessitates well. Our purpose puts working people at the heart
better management of finite resources and a focus of our activities, and this includes demonstrating
on circular economic activity. We believe a key pillar workplace leadership with a focus on promoting fair
of this is the adoption of a circular approach, which and safe conduct.
seeks to reduce waste by keeping products and their
underlying resources in use for as long as possible. We support international efforts to promote and
Where appropriate and depending on our level of uphold these fundamental labour rights and
influence, we will use our position to encourage standards and seek to avoid being complicit in labour
portfolio companies to consider, disclose, and rights abuses and all forms of compulsory (forced) or
manage risks and opportunities regarding efficient child labour. Our approach is informed by:
resource use, reducing waste, and adopting a circular
approach to their products and operations. • Internationally recognised standards and
guidance5

2 • Upholding labour laws and maintaining fair

employment conditions

Social Inclusion • Continuous improvement of workplace health and

safety standards
Human rights
We seek to conduct our business in a manner that • Respect for the rights of workers to be
respects the human rights and dignity of all people. represented by and active in trade unions.
We expect the same from our portfolio companies.
We support international efforts to promote and Our focus on labour rights includes the promotion
protect human rights, including opposition to all of safe, fair, and inclusive workplaces and protecting
forms of slavery and human trafficking. workers’ rights during key transitions, such as those
relating to industry-focused automation and global
Internationally recognised standards and guidance4 energy transition.
inform how we consider human rights. Integrating
human rights within our overall risk assessment We believe that our commitment to social dialogue
approach and due diligence efforts, where practicable with civil society stakeholders supports our
and appropriate, allows us to be alert to higher success, so we seek to facilitate mutually beneficial
risk investments and factor this into our ongoing engagements between our portfolio companies,
monitoring and stewardship activities across our unions, and governments, where we have the
portfolios. ability to do so. Formalisation of dialogue supports
constructive engagement of stakeholders.
IFM’s ongoing approach to identifying and
addressing modern slavery risk in our investments, Inclusive workplace culture
operations and supply chain is outlined in our IFM believes that strong, diverse, equitable and
Modern Slavery statement published annually on our inclusive cultures are a value driver for companies
website. We also work together with industry peers in which our portfolios invest and that a lack of
through network collaborations to better understand diversity can lead to poor company performance.
and influence the way human rights risks are Respect and support of diversity and inclusion and
managed by the companies in which our portfolios avoiding discrimination in the workplace is therefore
invest. one of our focus areas. Diversity is a broad concept -
including diversity of thought, gender, culture, age,
ethnicity, skills, experience, and other characteristics.
We believe an inclusive culture that embraces diverse
qualities, backgrounds and perspectives leads to
more innovative thinking, better decision-making
and competitive business performance.

4
These include: International Bill of Human Rights - The International Bill of Human Rights comprising the Universal Declaration of Human Rights and the main instruments though which it has been
codified: International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights. https://www.ohchr.org/en/what-are-human-rights
• UN Guiding Principles on Business and Human Rights - https://www.ohchr.org/en/publications/reference-publications/guiding-principles-business-and-human-rights
• UN Global Compact - https://unglobalcompact.org/what-is-gc/mission/principles
• OECD Guidelines for Multinational Enterprises on Responsible Business Conduct - MNE Guidelines - Organisation for Economic Co-operation and Development (oecd.org)
• United Nations Declaration on the Rights of Indigenous Peoples - https://www.ohchr.org/en/indigenous-peoples/un-declaration-rights-indigenous-peoples
5
Including International Labour Organization’s (ILO) Core labour standards, UN Guiding Principles on Business and Human Rights, OECD Guidelines for Multinational Enterprises on Responsible
Business Conduct, UN Global Compact.
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Community engagement and Indigenous

people
3
We believe in supporting collaborative engagement Governance, roles & responsibilities
with communities to create positive and mutually
beneficial outcomes. We recognise that engaging As we pursue our purpose and strive to support
local communities is an important part of companies the creation of long-term value and meet the
maintaining their standing and reputation locally. expectations of our stakeholders, we understand the
importance of robust governance.
We believe in building relationships with local
communities that are honest, open, inclusive, and Roles and responsibilities
based on a genuine commitment to understand their Our overarching sustainable investing approach
history, needs and expectations. This engagement is established and monitored at the IFM Board
should help our aim to ensure that the health and level. Management supports the execution of
wellbeing of communities in which we operate is this approach, aiming to ensure sustainability
protected, that cultural heritage, protocols and land opportunities and risks are reflected in our risk
rights are respected, and the community voice is management frameworks and plans at the corporate
considered in decision-making to avoid significant and investment levels.
adverse impacts.
Board oversight – Board Responsible
This approach is informed by the standards of the Investment and Sustainability Committee
UN Global Compact, and frameworks such as the UN (BRISC)
Guiding Principles on Business and Human Rights. The BRISC assists the IFM Board by providing an
objective, non-executive view of the efficacy of our
We believe in the notion of Free Prior and Informed sustainability strategy and reporting framework. The
Consent (as enshrined in UN Declaration of the Board approves (or delegates approval to the BRISC)
Rights of Indigenous Peoples) and expect relevant IFM’s sustainable investing strategy, Guidelines
companies in which our portfolios invest to adhere and organisational performance scorecard for
to this in their interactions with indigenous people sustainable investing and receives regular reporting
in their countries of operation. Where we have on sustainable investing-related developments
the ability to do so, we will challenge companies’ from asset classes and the central Sustainable
strategies relating to indigenous people if we believe Investment team. The BRISC monitors and oversees
their strategies are ineffective. progress against key sustainable investing and
sustainability objectives and provides guidance on

SI roles and responsibilities

The Board

Sustainable investment governance Investment oversight and review

BRISC BIC

GST IC

GSSG Sub-committees

PEC

Asset Management
Clients & Strategy Investment teams / sustainable investment specialists

Sustainable Investment team Infrastructure Debt Private Equity Listed Equity

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IFM’s sustainable investing approach as proposed by guidelines with each Investment team and other
management. IFM business units. These policies and guidelines
are implemented and developed further by the
Executive management responsibility - Global Investment Teams through applicable procedures or
Strategy Team (GST) operating manuals. The Sustainable Investment team
The GST supports IFM’s Chief Executive in executing is divided into four functional areas: sustainable
overall responsibility for the management of IFM. investing integration, stewardship, governance/
The GST is focused on ensuring high-quality support reporting/research, and corporate sustainability.
is provided to the IFM Board, including by seeking The team focusses on integrating the expectations
to maintain an efficient and collaborative workplace, of IFM’s clients and wider stakeholders into the
foster a strong, coherent, and inclusive culture, and organisation’s sustainable investing approach and
develop IFM’s capabilities, including those related to works closely with Investment teams to seek to
sustainable investing and stewardship. ensure client voices are appropriately reflected in
investment strategies and processes.
Investment oversight and review - Board The team also provides support and specialised
Investment Committee, Investment Committee advice, collaborating with Investment teams on their
and Sub-committees sustainable investing and stewardship approaches.
IFM’s Board Investment Committee, Investment Additionally, they coordinate knowledge sharing
Committee and Sub-committees have oversight between asset classes and across the broader
of our investment programmes and portfolios, business and also provide specialist peer review
with a view to ensuring our sustainable investing support to the Investment Committee.
approach and guidelines are appropriately factored
into investment decisions and ongoing portfolio Investment & Portfolio-level Sustainable
management. Investing responsibilities - Investment teams
The Global Heads of each asset class and the Global
The Investment Committee and Sub-committees Head of Asset Management (Infrastructure) are
are responsible for reviewing and approving new accountable for the execution and implementation
and follow-on investments for our infrastructure of these Guidelines in the investment and asset
equity, debt investment, and private equity portfolios, management process. They are supported in this
consistent with internal guidelines and procedures. process by their Investment teams and, where
The approval process includes an assessment, applicable, integrated asset class sustainable
where relevant, of material sustainability risks and investment specialists and the Sustainable
opportunities by the Investment teams which is Investment team.
also reviewed by integrated asset class sustainable
investment specialists and the Sustainable Each Investment team considers sustainability
Investment team. The review and, where appropriate, considerations and, to the extent practicable and
challenge on sustainability assessments helps with consistent with our duties, undertakes stewardship
the appropriate consideration of sustainability risks in their respective investment and asset management
in support of investment objectives (including the processes. Investment teams, and their integrated
delivery of long-term risk adjusted returns) as part sustainable investment specialists where in place,
of the approval process and in the context of our lead on the design and execution of asset class-
overall purpose. The Investment Committee is also specific strategies, frameworks, and reporting, in
responsible for monitoring the outcomes of past line with these Guidelines and in consultation with
investment decisions. the Sustainable Investment team. Asset class teams
manage asset and portfolio specific data, and the
Global Sustainability Steering Group (GSSG) Sustainable Investment team collates this data for
The GSSG, comprising senior executives from each external client and regulatory reporting.
IFM business unit and chaired by the Global Head
of Sustainable Investment, helps coordinate and Proxy voting and engagement – Proxy Voting
share information across IFM, supports multi- and Engagement Committee (PEC)
disciplinary projects, and monitors progress against The PEC provides oversight of proxy voting
sustainability initiatives. activity for the Australian listed equities’ portfolio
assets within our Listed Equities asset class and
Firm-wide Sustainable Investing is completely independent of proxy advisers.
responsibilities - Sustainable Investment team The committee determines our approach to our
IFM’s Sustainable Investment team leads on the Australian listed equities portfolio proxy voting and
development and agreement of our overarching approves significant votes relating to our largest
sustainability strategy and associated policies and holdings. The PEC also approves and monitors

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engagement activities that take place between IFM believes that effective stewardship,
IFM and our Australian listed equities’ portfolio incorporating company engagement and exercising
companies. The PEC delegates authority for day- voting rights (where applicable and appropriate),
to-day engagement and voting on listed securities can lead to better company performance, with a
to representative members in the Sustainable wide range of benefits for our investment portfolios
Investment team and our listed equities portfolio and beyond.
team.
The overarching approach to how we address
Remuneration sustainability-related matters with the companies
We include sustainable investing as a part of our our portfolios invest in is established at the IFM or
corporate performance scorecard to increase focus investment advisor level, and then we seek to tailor
on delivering positive performance on sustainable our stewardship practices to match the needs of
investing and wider sustainability goals. By specific asset classes and strategies, considering
linking the remuneration of IFM employees to our the nature and tenure of holdings and the degree of
sustainability focus areas, we aim to create the influence we have.
necessary alignment across the business.6 Overall
our reward approach is also designed to incorporate For our infrastructure equity portfolio investments,
and uphold IFM Risk Management frameworks, we work collaboratively with management teams
including consideration of sustainability risks. and other stakeholders to support sustainable
investing initiatives and business practices with the
Reporting view to preserving and enhancing the value of these
IFM supports a range of sustainability focussed businesses.
frameworks and standards and transparently
reports both publicly and to clients on a range of For our debt investment portfolio investments,
sustainability considerations across asset classes. we recognise that our greatest ability to influence
is during the initial investment phase and at
We are also subject to mandatory requirements refinancing. Post-deal engagement with issuers
under certain regulations. We monitor upcoming is limited, though it does form part of ongoing
regulations, assess their impact on our business and investment monitoring and our response to
work to ensure we comply with new and developing emerging or potential material sustainability risks.
regulatory requirements.
Our stewardship approach to Australian assets
Sustainability initiatives across IFM are reported to within our listed equities portfolio involves direct
the BRISC and the Board on a regular basis. and indirect company engagement and exercising
our proxy voting rights, while for global listed
equities portfolio investments we work with a proxy
adviser to support our stewardship activities.

4 In our private equity portfolio, our approach

considers how we can integrate sustainability
Stewardship, engagement and voting considerations into value creation. During
ownership, we seek to drive a range of
Stewardship is the use of various strategies, sustainability-related initiatives to support the
including the responsible allocation, management generation of long-term risk-adjusted returns.
and oversight of capital with the aim of creating
long-term value for clients, leading to sustainable Engagement
benefits for the economy, the environment and Where we believe it is appropriate, we look to engage
society. in direct dialogue with the entities where we invest
our clients’ funds. We conduct this engagement
We include systems-level matters in our either on our own or in collaboration with other
stewardship activities. This means, where investors.
appropriate, we pursue improvements to specific
companies or investments that also have the Through this engagement, IFM seeks to:
added benefit of positively influencing the broader • Build strong relationships that facilitate the
economic system and society in which we operate. transfer and flow of important sustainability data

6
Applies to all IFM employees excluding some risk and financial control employees.

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 2024 ANNUAL SUSTAINABILITY REPORT

• Deepen its understanding of how a company

/ issuer / asset manages sustainability
6
considerations Sustainable investing integration
• Influence positive change in sustainability The integration of sustainability considerations into
practices, processes and behaviours regarding IFM’s investment management processes enables us to:
company / issuer / asset specific issues and • Identify, understand and manage sustainable
broader industry, sector or thematic issues investing risks and opportunities that can affect
investment value and returns in the short,
• Escalate issues of concern where relevant. medium and long term (i.e. focusing on how
sustainability issues impact our investments).
Voting
IFM has developed proxy voting guidelines which • Understand the potential impacts and
we apply in relation to votes on Australian listed consequences of our investments on external
equities’ portfolio investments. For international environmental and social considerations (i.e.
listed equities’ portfolio investments, we seek to focusing on how our investments impact
apply voting guidelines from an internationally sustainability issues externally), given the
recognised provider that we consider to be closely potential of such impacts to dynamically turn into
aligned to our voting guidelines. direct risks and opportunities.

As discussed in these Guidelines, IFM’s investment

teams across asset classes (in line with the scope

5 set out at the start of the document) consider

sustainability considerations alongside traditional
financial and other investment data considerations
Advocacy & Collaboration in our investment analyses and decision-making,
and stewardship activities to support value creation.
Public policy and regulation are important IFM recognises that adverse impacts from
contributors to portfolio risk adjusted returns. investment decisions may be wide-ranging, and
We engage in policy advocacy as part of our for this reason, we seek to engage, promote, and
contribution to the management of systemic risks, improve the overall awareness of these impacts and
as well as where there is another appropriate link to operating performance of our portfolio companies.
our business or client interests. We aim to engage We do this by collaborating and consulting with a
the broader investment market and stakeholder diverse range of key stakeholders.
groups to share learnings on systemic sustainability
risks affecting long term returns for our clients.
We seek to achieve this by working closely with
our clients and owners to build collective solutions
that meet their needs in domestic and global
private markets, and by engaging proactively in
7
public affairs to support asset teams and the wider
business. Waivers and exceptions to these
Guidelines
Client mandates and certain indirect investments
(such as derivatives) are not covered by these
Guidelines. The voting and engagement sections
of these Guidelines may, however, be relevant to
certain mandates for our listed equities portfolio
team based on the specific client agreements.
In addition, passive index tracking equity strategies
within our listed equities portfolio do not integrate
sustainability considerations unless tracking a
specific index with sustainability characteristics
They do however use voting and engagements as
stewardship tools.

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Appendix 1 - Glossary

asset classes Refers to the sum of our infrastructure equity portfolio, our listed equities
portfolio, our debt investment portfolio and our private equity portfolio (see Our
capabilities | IFM Investors | IFM Investors for further details)

greenhouse gas (GHG) As defined by the Intergovernmental Panel on Climate Change (IPCC) in its
AR6 Synthesis Report, greenhouse gases are those gaseous constituents of the
atmosphere, both natural and anthropogenic, that absorb and emit radiation
at specific wavelengths within the spectrum of radiation emitted by the
Earth’s surface, the atmosphere itself, and by clouds. This property causes the
greenhouse effect. Carbon dioxide (CO2), nitrous oxide (N2O), methane (CH4) and
ozone (O3) are the primary greenhouse gases in the Earth’s atmosphere. Human-
made GHGs include sulphur hexafluoride (SF6), hydrofluorocarbons (HFCs),
chlorofluorocarbons (CFCs) and perfluorocarbons (PFCs); several of these are also
O3-depleting.

IFM “IFM”, “IFM Group”, “we” and “our” refer to IFM Investors Pty Ltd (see https://
www. ifminvestors.com/en-au/about-us/) and its subsidiary undertakings. IFM
Investors Pty Ltd acts in a capacity as a diversified portfolio adviser or manager
and any references to IFM acting as an “asset manager” or references to “our
investments”, “our portfolios”, “IFM’s portfolios” or equivalent should be read as
understood to be in this capacity.

Infrastructure/Debt/ Refers to our investments across asset classes. See: Debt Investments | IFM
Listed Equities/Private Investors | Infrastructure | IFM Investors | Listed Equities | IFM Investors |
Equity portfolios Private Equity | IFM Investors

portfolio company / Refers to a public or private company where IFM holds an equity investment.
companies This excludes debt investments.

purpose IFM’s purpose is to invest, protect and grow the long-term retirement savings of
working people.

stewardship Refers to IFM’s use of various strategies, including the responsible allocation,
management and oversight of capital with the aim of creating long-term value
for clients and beneficiaries, leading to sustainable benefits for the economy, the
environment and society.

sustainability Considerations that relate to society and the environment, such as climate
considerations change, worker safety and labour rights. These considerations, and how they
are integrated into investment processes, can give rise to investment risks,
opportunities and impacts that may be financially relevant and ultimately
affect investment performance. Our assessment of relevant sustainability
considerations and the approach we take varies across asset classes, tenure
of holding and degree of influence we have. References to “sustainability
opportunities”, “sustainability risks” and “sustainability impacts” shall be
construed as opportunities and risks associated with such sustainability
considerations (as applicable). Our definition and use of “sustainability
considerations” and “sustainability risks” differs from, and is not intended to
refer to, the technical definitions of “sustainability factors” and “sustainability
risks” in Article 2, points (24) and (22) respectively under the European
Union’s Sustainable Finance Disclosure Regulation (SFDR) or other applicable
regulations.

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 2024 ANNUAL SUSTAINABILITY REPORT

sustainable investing Refers to IFM’s approach to integrating sustainability considerations into

investment analysis, decision-making, ongoing management and oversight
of investments, recognising the impacts these can have on investment
performance, as well as wider society and the environment. Our sustainable
investing approach is tailored to asset classes, tenure of holding and degree of
influence we have as owners. Our definition of “sustainable investing” differs
from, and is not intended to refer to, the technical definition of “sustainable
investment” in Article 2, point (17) under the European Union’s Sustainable
Finance Disclosure Regulation (SFDR) or other applicable regulations.

social and Refers to the frameworks7 that identify 12 social foundations and 9
environmental environmental critical Earth system boundaries within which humanity can
boundaries / planetary continue to develop and thrive.
boundaries
The social foundations are internationally agreed minimum social standards and
established through the Sustainable Development Goals.

7
https://www.stockholmresilience.org/research/research-news/2023-09-13-all-planetary-boundaries-mapped-out-for-the-first-time-six-of-nine-crossed.html

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Important Disclosures
The following disclosure applies to this material and any information provided governmental rules; environmental claims arising in respect of infrastructure
regarding the information contained in this material. By accepting this material, acquired with undisclosed or unknown environmental problems or as to which
you agree to be bound by the following terms and conditions. The material does inadequate reserves have been established; changes in energy prices; changes
not constitute an offer, invitation, solicitation or recommendation in relation to the in fiscal and monetary policies; negative economic developments that depress
subscription, purchase or sale of securities in any jurisdiction and neither this travel; uninsured casualties; force majeure acts, terrorist events, under insured or
material nor anything in it will form the basis of any contract or commitment. IFM uninsurable losses; and other factors beyond reasonable control.
Investors (defined as IFM Investors Pty Ltd and its affiliates) will have no liability,
contingent or otherwise, to any user of this material or to third parties, or any Investments in fixed income securities are subject to the risks associated with
responsibility whatsoever, for the correctness, quality, accuracy, timeliness, debt securities generally, including credit, interest rate, call and extension risk.
pricing, reliability, performance or completeness of the information in this Private equity investments are speculative, highly illiquid, involve a high degree of
material. In no event will IFM Investors be liable for any special, indirect, incidental risk and have high fees and expenses that could reduce returns; they are,
or consequential damages which may be incurred or experienced on account of therefore, intended for experienced and sophisticated long-term investors who
a reader using or relying on the information in this material even if it has been can accept such risks. Furthermore, restrictions on transferring interests in private
advised of the possibility of such damages. equity funds may exist so prospective investors should be prepared to retain their
Certain statements in this material may constitute “forward looking statements” or investments in the fund until the fund liquidates. Private equity funds may borrow
“forecasts”. Words such as “expects,” “anticipates,” “plans,” “believes,” “scheduled,” money or use leverage for a variety of purposes, which involves a high degree of
“estimates” and variations of these words and similar expressions are intended to risk including the risk that losses may be substantial. Lastly, the possibility of
identify forward-looking statements, which include but are not limited to projections partial or total loss of a private equity fund’s capital exists, and prospective
of earnings, performance, and cash flows. These statements involve subjective investors should not subscribe unless they can readily bear the consequences of
judgement and analysis and reflect IFM Investors’ expectations and are subject to such loss. There can be no assurance that the private equity fund sponsor’s or the
significant uncertainties, risks and contingencies outside the control of IFM fund’s investment objectives will be achieved or that investors will receive a
Investors which may cause actual results to vary materially from those expressed or return of their capital.
implied by these forward looking statements. All forward-looking statements speak Australia Disclosure
only as of the date of this material or, in the case of any document incorporated by This material is provided to you on the basis that you warrant that you are a
reference, the date of that document. All subsequent written and oral forward- “wholesale client” or a “sophisticated investor” or a “professional investor” (each
looking statements attributable to IFM Investors or any person acting on its behalf as defined in the Corporations Act 2001 (Cth)) to whom a product disclosure
are qualified by the cautionary statements in this section. Readers are cautioned statement is not required to be given under Chapter 6D or Part 7.9 of the
not to rely on such forward looking statements. The achievement of any or all goals Corporations Act 2001 (Cth). IFM Investors Pty Ltd, ABN 67 107 247 727, AFS
of any investment that may be described in this material is not guaranteed. Licence No. 284404, CRD No. 162754, SEC File No. 801-78649.
Past performance does not guarantee future results. The value of investments Netherlands Disclosure
and the income derived from investments will fluctuate and can go down as This material is provided to you on the basis that you warrant that you are a
well as up. A loss of principal may occur. Professional Investor (professionele belegger) within the meaning of Section 1:1
This material may contain information provided by third parties for general of the Dutch Financial Supervision Act (Wet op het financieel toezicht). This
reference or interest. While such third party sources are believed to be reliable, material is not intended for and should not be relied on by any other person. IFM
IFM Investors does not assume any responsibility for the accuracy or Investors (Netherlands) B.V. shall have no liability, contingent or otherwise, to any
completeness of such information. user of this material or to third parties, or any responsibility whatsoever, for the
correctness, quality, accuracy, timeliness, pricing, reliability, performance or
This material does not constitute investment, legal, accounting, regulatory, taxation completeness of this material.
or other advice and it does not take into account your investment objectives or
legal, accounting, regulatory, taxation or financial situation or particular needs. You United Kingdom Disclosure
are solely responsible for forming your own opinions and conclusions on such This material is provided to you on the basis that you warrant that you fall within
matters and for making your own independent assessment of the information in one or more of the exemptions in the Financial Services and Markets Act 2000
this material. (“FSMA”) [(Financial Promotion) Order 2005] [(Promotion of Collective Investment
Schemes)(Exemptions) Order 2001, or are a Professional Client for the purposes
This material is confidential and should not be distributed or provided to any of FCA rules] and as a consequence the restrictions on communication of
other person without the written consent of IFM Investors. “financial promotions” under FSMA and FCA rules do not apply to a communication
made to you. IFM Investors (UK) Ltd shall have no liability, contingent or otherwise,
Environmental, Social, and Governance (“ESG”) strategies may take risks or to any user of this material or to third parties, or any responsibility whatsoever, for
eliminate exposures found in other strategies or broad market benchmarks that the correctness, quality, accuracy, timeliness, pricing, reliability, performance or
may cause performance to diverge from the performance of these other completeness of the information in this material.
strategies or market benchmarks. ESG strategies will be subject to the risks
associated with their underlying investments’ asset classes. Further, the demand Switzerland Disclosure
within certain markets or sectors that an ESG strategy targets may not develop as This Information is provided to you on the basis that you warrant you are (i) a
forecasted or may develop more slowly than anticipated. professional client or an institutional client pursuant to the Swiss Federal Financial
Services Act of 15 June 2018 (“FinSA”) and (ii) a qualified investor pursuant the
An infrastructure investment is subject to certain risks including but not limited to: Swiss Federal Act on Collective Investment Schemes of 23 June 2006 (“CISA”),
the burdens of ownership of infrastructure; local, national and international for each of (i) and (ii) excluding high-net-worth individuals or private investment
economic conditions; the supply and demand for services from and access to structures established for such high-net worth individuals (without professional
infrastructure; the financial condition of users and suppliers of infrastructure treasury operations) that have opted out of customer protection under the FinSA
assets; changes in interest rates and the availability of funds which may render and that have elected to be treated as professional clients and qualified investors
the purchase, sale or refinancing of infrastructure assets difficult or impractical; under the FinSA and the CISA, respectively.
changes in environmental and planning laws and regulations, and other
ART_IFM660

www.ifminvestors.com | [email protected]
 2024 ANNUAL SUSTAINABILITY REPORT

Appendix 3: Important Disclosures and Disclaimers

The following disclosure applies to this report and any information provided this report may include information including, without limitation,
regarding the information contained in this report. By accepting or reading methodologies, modelling, scenarios, reports, benchmarks, tools and data,
this report, you agree to be bound by the following terms and conditions. derived from publicly available or government or industry sources that have
The material does not constitute an offer, invitation, solicitation, or not been independently verified. In addition, estimating climate change
recommendation in relation to the subscription, purchase, or sale of emissions requires the collection and analysis of large sets of new data and
securities in any jurisdiction and neither this report nor anything in it will form there are significant challenges and obstacles with both the availability and
the basis of any contract or commitment. IFM Investors (defined as IFM quality of such data. As such, no representation or warranty is made as to the
Investors Pty Ltd and its affiliates) will have no liability, contingent or accuracy, completeness or reliability of such information. In light of
otherwise, to any user of this report or to third-parties, or any responsibility uncertainty as to the nature of future policy and market response to climate
whatsoever, for the correctness, quality, accuracy, timeliness, pricing, change, including between regions, and the effectiveness of any such
reliability, performance, or completeness of the information in this report. In response, IFM Investors may have to re-evaluate its progress towards its
no event will IFM Investors be liable for any special, indirect, incidental, or sustainability ambitions, commitments and targets in the future, update the
consequential damages which may be incurred or experienced on account methodologies it uses or alter its approach to sustainability analysis and
of a reader using or relying on the information in this report even if it has may be required to amend, update and recalculate its sustainability
been advised of the possibility of such damages. disclosures and assessments in the future, as market practice and data
quality and availability develops rapidly. In particular, we may not achieve our
Forward-looking statements
targets and commitments, which may result in our failure to achieve any of
Certain statements in this report may constitute “forward looking
the expected benefits of our strategic priorities.
statements” or “forecasts”. Words such as “expect,” “anticipate,” “plan”,
“believe,” “scheduled,” “estimate”, “will”, “may”, “intend”, “seek”, “would”, The sustainability-related forward-looking statements made in this report
“should”, “could”, “effort”, “budget”, “continue”, “forecast”, “outlook”, are not guarantees or predictions of future performance and IFM Investors
“assumption”, “target”, “goal”, “commit”, “guidance”, “objective”, “potential”, gives no representation, warranty or assurance (including as to the quality,
“projection”, “probability”, “indicative”, “risk”, “aim”, “ambition” and variations accuracy or completeness of these statements), nor guarantee that the
of these words and similar expressions generally indicate forward-looking occurrence of the events expressed or implied in any forward-looking
statements, which include but are not limited to projections of earnings, statement will occur. There are usually differences between forecast and
performance, and cash flows. These statements involve subjective actual results because events and actual circumstances frequently do not
judgement and analysis and reflect IFM Investors’ intent, belief or current occur as forecast and these differences may be material. There are a
expectations and views and are subject to change, certain known and number of factors that could cause actual results and developments to
unknown risks, significant uncertainties, risks, assumptions and other differ materially from those expressed or implied by the forward-looking
factors, many of which are outside the control of IFM Investors. This may statements in this report, including factors that are outside IFM Investors’
cause actual results, performance, conditions, circumstances or the ability control. These include, but are not limited to, climate change project risk;
to meet commitments and targets to vary materially from those expressed data availability, accuracy, verifiability and data gaps; evolving
or implied by these forward-looking statements. While IFM Investors has methodologies; variations in reporting standards; changes in the
prepared the information in this report based on its current knowledge and sustainability regulatory landscape; and changes in risk management
understanding and in good faith, it reserves the right to change its views in capabilities. Sustainability-related strategies may take risks or eliminate
the future. All forward-looking statements speak only as of the date of this exposures found in other strategies or broad market benchmarks that may
report or, in the case of any document referenced or incorporated by cause performance to diverge from the performance of these other
reference in the material, the date of that document. All subsequent written strategies or market benchmarks. Sustainability-related strategies will be
and oral forward-looking statements attributable to IFM Investors or any subject to the risks associated with their underlying investments’ asset
person deemed to be or acting on its behalf are subject to the same classes. Further, the demand within certain markets or sectors that a
limitations, uncertainties, assumptions and disclaimers set out in this report. sustainability-related strategy targets may not develop as forecasted or may
Readers are cautioned not to rely on such forward-looking statements, the develop more slowly than anticipated. Sustainability-related practices differ
achievement of which is not guaranteed. Targets referred to in this report by region, industry, and issue and are evolving accordingly. As such, an
are aspirational in nature and there can be no assurance that targets will be investment's sustainability performance and practices, or IFM Investors’
met. In general, emissions targets apply to scope 1 and 2 emissions only and assessment of such performance or practices, may change over time.
not to scope 3 emissions unless otherwise stated. Similarly, new and evolving sustainability requirements imposed by
jurisdictions in which IFM Investors does business and/or in which its funds
Except as required by law, IFM Investors assumes no obligation to revise or
are marketed may result in additional compliance costs, disclosure
update any forward-looking statements in this report, whether from new
obligations, or other implications or restrictions on IFM Investors. Under
information, future events, conditions, or otherwise, after the date of this
such requirements, IFM Investors may be required to classify itself, its funds,
report.
or an individual investment therein against certain criteria, which may be
Past performance does not guarantee future results. The value of open to subjective interpretation. IFM Investors’ view on the appropriate
investments and the income derived from investments will fluctuate and classification may develop over time, including in response to statutory or
can go down as well as up. A loss of principal may occur. regulatory guidance or changes in industry practices or approaches to
classification. A change to the relevant classification may require further
Important information regarding sustainability including climate change
actions to be taken, such as requiring further disclosures by the relevant
related statements
fund or new process to be set up to capture data about the relevant fund or
This report contains forward-looking statements and other representations its investments, which may lead to additional costs. It should not be assumed
relating to sustainability topics, including but not limited to climate change, that any investment will be profitable or avoid losses.
net zero, climate resilience, emissions intensity, human rights and other
This report may include certain information on the sustainability practices
sustainability-related statements, commitments, targets, projections, risk
and track record of IFM Investors at an organisational and investment team
and opportunity assessments, pathways, forecasts, estimated projections
level, which may not necessarily be reflected in the portfolio or practises of
and other proxy data. These are subject to known and unknown risks, and
any fund managed by IFM Investors. Please refer to the offering documents
there are significant uncertainties, limitations, risks and assumptions in the
of any fund for details on how, and the extent to which, such fund takes
metrics and modelling on which these statements rely. In particular, the
sustainability considerations into account on a binding or non-binding basis.
metrics, methodologies and data relating to sustainability matters are often
relatively new, are rapidly evolving and maturing and are not of the same Investment on the basis of sustainability criteria involves qualitative and
standard as those available in the context of other financial information, nor subjective analysis. There is no guarantee that the determinations made by
are they subject to the same or equivalent disclosure standards, historical an adviser will align with the beliefs or values of a particular investor, and we
reference points, benchmarks or globally accepted accounting principles. cannot guarantee that our sustainability policies will result in the
There are inherent limits in the current scientific understanding of the performance or outcomes expected. For example, this document contains
impacts of climate change. It is not possible to rely on historical data as a sustainability-related statements based on hypothetical scenarios and
strong indicator of future trajectories, in the case of climate change and its assumptions as well as estimates that are subject to a high level of inherent
evolution. Outputs of models, processed data and methodologies are also uncertainty. Certain statements may also be based on standards and metrics
likely to be affected by underlying data quality, which can be hard to assess for measuring a company's sustainability profile, as well as standards for the
and we expect industry guidance, market practice, and regulations in this preparation of any underlying data for those metrics, that are still developing
field to continue to change. There are also challenges faced in relation to and internal controls and processes that continue to evolve. While these are
the ability to access data on a timely basis and the lack of consistency and based on expectations and assumptions believed to be reasonable at the
comparability between data that is available. Some material contained in time of preparation, they should not be considered guarantees. Relatedly,

106
 2024 ANNUAL SUSTAINABILITY REPORT

there is no guarantee that any investment or its operations will achieve its Australia Disclosure
sustainability-related targets or, whether or not such targets are met, have a This report is provided to you on the basis that you warrant that you are a
positive sustainability impact, either on particular sustainability-related “wholesale client” or a “sophisticated investor” or a “professional investor”
topics or as a whole. There are significant differences in interpretation of (each as defined in the Corporations Act 2001 (Cth)) to whom a product
what constitutes positive sustainability impact, and those interpretations disclosure statement is not required to be given under Chapter 6D or Part 7.9
are rapidly changing. We may be required to expend substantial effort or of the Corporations Act 2001 (Cth). IFM Investors Pty Ltd, ABN 67 107 247
incur additional costs to address such matters, including but not limited to 727, AFS Licence No. 284404, CRD No. 162754, SEC File No. 801-78649.
evolving legal obligations or due diligence. Additionally, adhering to a
Netherlands Disclosure
sustainability policy may result in missed opportunities, which may be
This report is provided to you on the basis that you warrant that you are a
difficult to predict due to the subjective and longer-term nature of some of
Professional Investor (professionele belegger) within the meaning of
these issues.
Section 1:1 of the Dutch Financial Supervision Act (Wet op het financieel
Other important disclosures and disclaimers toezicht). This report is not intended for and should not be relied on by any
This report does not constitute investment, legal, accounting, regulatory, other person. IFM Investors (Netherlands) B.V. shall have no liability,
taxation or other advice and it does not consider your investment objectives contingent or otherwise, to any user of this report or to third parties, or any
or legal, accounting, regulatory, taxation or financial situation or particular responsibility whatsoever, for the correctness, quality, accuracy, timeliness,
needs. You are solely responsible for forming your own opinions and pricing, reliability, performance, or completeness of this report.
conclusions on such matters and for making your own independent
United Kingdom Disclosure
assessment of the information in this report. Tax treatment depends on your
This report is provided to you on the basis that you warrant that you fall
individual circumstances and may be subject to change in the future.
within one or more of the exemptions in the Financial Services and Markets
This report is confidential and should not be distributed or provided to any Act 2000 (“FSMA”), (Financial Promotion) Order 2005, (Promotion of
other person without the written consent of IFM Investors. References to Collective Investment Schemes)(Exemptions) Order 2001, or are a
external sources or websites do not incorporate these sources or websites Professional Client for the purposes of FCA rules] and as a consequence the
by reference. The content behind any links to external sources or websites restrictions on communication of “financial promotions” under FSMA and
may change after the date of this report and IFM Investors takes no FCA rules do not apply to a communication made to you. IFM Investors (UK)
responsibility regarding the same. Ltd shall have no liability, contingent or otherwise, to any user of this report
or to third parties, or any responsibility whatsoever, for the correctness,
This report may contain information provided by third parties or derived
quality, accuracy, timeliness, pricing, reliability, performance, or
from publicly available or government or industry sources which has not
completeness of the information in this report.
been independently verified. While such third-party sources are believed to
be reliable, IFM Investors does not assume any responsibility for nor makes Switzerland Disclosure
any representation or warranty as to the accuracy or completeness of such This report is provided to you on the basis that you warrant you are (i) a
information. In particular, this report contains information obtained from professional client or an institutional client pursuant to the Swiss Federal
portfolio companies. IFM Investors believes the information obtained from Financial Services Act of 15 June 2018 ("FinSA") and (ii) a qualified investor
portfolio companies to be correct but cannot guarantee its accuracy. Case pursuant the Swiss Federal Act on Collective Investment Schemes of 23
studies selected and described within this report reflect certain examples June 2006 ("CISA"), for each of (i) and (ii) excluding high-net-worth
across all asset classes and are not necessarily representative of the individuals or private investment structures established for such high-net
stewardship activities, sustainable investment or sustainable business worth individuals (without professional treasury operations) that have opted
practices of IFM Investors across all assets classes or all existing investments out of customer protection under the FinSA and that have elected to be
managed and advised by IFM Investors. treated as professional clients and qualified investors under the FinSA and
the CISA, respectively.
An infrastructure investment is subject to certain risks including but not
limited to: the burdens of ownership of infrastructure; local, national and United States of America (“US”)
international economic conditions; the supply and demand for services This report is provided to you on the basis that you warrant you are (i) an
from and access to infrastructure; the financial condition of users and accredited investors within the meaning of the US Securities Act of 1933
suppliers of infrastructure assets; changes in interest rates and the and (ii) a qualified purchasers within the meaning of the US Investment
availability of funds which may render the purchase, sale or refinancing of Company Act of 1940.
infrastructure assets difficult or impractical; changes in environmental and
IFM Investors does not intend to solicit or make its services available to the
planning laws and regulations, and other governmental rules; environmental
general public in the US and many of IFM Investors’ products and services
claims arising in respect of infrastructure acquired with undisclosed or
are not available in the US. Under no circumstances should the Information
unknown environmental problems or as to which inadequate reserves have
be considered as an offer to sell, a recommendation regarding or a
been established; changes in energy prices; changes in fiscal and monetary
solicitation of an offer to buy any securities or interests in products or
policies; negative economic developments that depress travel; uninsured
services sponsored by IFM Investors. Such offers or solicitations will be
casualties; force majeure acts, terrorist events, under insured or uninsurable
made in the US only to privately solicited investors that have been pre-
losses; and other factors beyond reasonable control.
qualified as an Accredited Investor or Qualified Purchaser (as applicable)
Investments in fixed income securities are subject to the risks associated and in accordance with relevant US securities laws. Accredited Investors
with debt securities generally, including credit, interest rate, call and and Qualified Purchasers are generally deemed sophisticated in financial
extension risk. matters such that they are capable of evaluating the merits and risks of
prospective investment.
Private equity investments are speculative, highly illiquid, involve a high
degree of risk and have high fees and expenses that could reduce returns; IFM-18OCT2024-3940322
they are, therefore, intended for experienced and sophisticated long-term
investors who can accept such risks. Furthermore, restrictions on
transferring interests in private equity funds may exist so prospective
investors should be prepared to retain their investments in the fund until the
fund liquidates. Private equity funds may borrow money or use leverage for
a variety of purposes, which involves a high degree of risk including the risk
that losses may be substantial. Lastly, the possibility of partial or total loss of
a private equity fund's capital exists, and prospective investors should not
subscribe unless they can readily bear the consequences of such loss.
There can be no assurance that the private equity fund sponsor’s or the
fund’s investment objectives will be achieved or that investors will receive a
return of their capital.
ART_IFM698

www.ifminvestors.com | [email protected]