Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Minimized environmental impacts through resource efficiency and recovery in unlisted property and infrastructure businesses
• Participation in the CEO Panel on Climate Change to advocate for clear climate change policy

Social Achievements

• Improved community relations and employee safety records
• Developed a tailored ESG framework for the Global Resources team

Governance Achievements

• Implemented a more centralized, coordinated approach to engagement across investment teams
• Improved corporate governance risk assessment in credit and fixed interest investments

Climate Goals & Targets

Environmental Challenges

• Difficulty in meaningfully integrating ESG factors into credit and fixed interest products due to duration and credit risk
• Challenges in collaborative engagement between autonomous investment teams
• Lack of comparable ESG reporting by companies
• Traditional training for financial analysts not including ESG
• Difficulty in quantifying the dollar value of ESG risks
• Mixed messages from investors regarding ESG information needs

Mitigation Strategies

• Initiated discussions with corporate and supranational issuers on ESG issues
• Implemented a more centralized approach to engagement with a shared list of engaged companies and quarterly surveys
• Invested in staff training, including a globally recognized program for the direct infrastructure team and use of ASSET4
• Sourced a diverse range of ESG information from third-party providers
• Hosted the inaugural ESG Research Australia Awards to encourage better ESG research
• Collaborated with other investors and stakeholders on disclosure initiatives

Supply Chain Management

Responsible Procurement

• Engagement with companies on supply chain management issues

Climate-Related Risks & Opportunities

Physical Risks

• Physical impacts of climate change

Transition Risks

• Regulatory changes related to climate change

Opportunities

• Emerging markets for environmental services and environment-friendly products

Reporting Standards

Frameworks Used: UN Principles for Responsible Investment (PRI), Global Reporting Initiative (GRI)

Environmental Metrics

ESG Focus Areas

• Energy transition
• Climate risk
• Modern slavery
• Corporate governance

Environmental Achievements

• -13% reduction in absolute emissions over the last five years
• -31% decline in WACI (Weighted Average Carbon Intensity) when adjusted by revenue over 5 years
• -28% reduction in carbon intensity (for utilities) over the last 5 years

Social Achievements

• Signed a framework on worker’s rights with a union federation (Vinci)
• Improved modern slavery policy and procedures across multiple portfolio companies

Climate Goals & Targets

Environmental Challenges

• Transition risk for listed infrastructure companies as the world moves away from fossil fuels
• Physical impact risk from climate change
• Challenges in addressing Scope 3 emissions
• Complex supply chains making it challenging to obtain reliable information on modern slavery
• Lack of consistent global framework for assessing modern slavery risks
• Poor corporate governance in emerging markets
• Data reliability and availability for climate change impact assessment

Mitigation Strategies

• Regular meetings with senior management and stakeholders
• Engagement with companies to improve disclosures and accelerate change
• Prioritizing engagement with companies with higher exposure in countries ranked higher on the modern slavery vulnerability index
• Active ownership and voting on important governance matters
• Investing in resilience initiatives (Entergy)
• Implementing an escalation and voting strategy consistent with achieving net zero

Supply Chain Management

Responsible Procurement

• Encouraging companies to thoroughly map out both their direct and indirect suppliers
• Including specific clauses related to modern slavery in contracts in less developed markets (Rubis)

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events
• Droughts
• Wildfires
• Rising sea levels

Transition Risks

• Decline in demand for oil and gas
• Stranded asset risk for oil and gas pipelines

Opportunities

• Growth in renewable energy

Reporting Standards

Frameworks Used: TCFD

UN Sustainable Development Goals

• SDG 6
• SDG 7
• SDG 9
• SDG 11
• SDG 12
• SDG 13

Monitoring capital expenditure (capex) spent on activities corresponding to the sub-goals of these SDGs

Environmental Metrics

ESG Focus Areas

• Climate Change

Environmental Achievements

• 78% of AUM covered in decarbonisation process by 31 October 2023 (aiming for 100% by 2030)
• Significant reduction in portfolio carbon intensity compared to benchmark

Social Achievements

• Not disclosed

Governance Achievements

• Climate change risks overseen by multiple governance bodies within FSSA and FSI, including the Global Investment Committee (GIC) and Investment Product Research and Assurance (IPRA) team.

Climate Goals & Targets

Environmental Challenges

• Limited availability of reliable Scope 3 emissions data
• Lack of industry convergence on net-zero terminology and transition plan assessment
• Data limitations and inconsistencies in reporting and modelling methodologies across different data providers

Mitigation Strategies

• Active contribution to industry working groups to address data and terminology challenges
• Use of multiple metrics and continuous improvement of models to address data limitations
• Engagement with companies to improve data disclosure and encourage alignment with established frameworks (TCFD, SBTi)

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Weather disruptions impacting manufacturing facilities and land resources

Transition Risks

• Carbon taxes, disclosure penalties, green product requirements, stranded assets, stringent financing and lending terms

Opportunities

• Increased demand for lower-emission products and services

Reporting Standards

Frameworks Used: TCFD

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Sustainable Development
• Social and Environmental Outcomes

Climate Goals & Targets

Environmental Challenges

• Subjective judgment in investment selection
• Reliance on third-party sources
• Lack of global standardization for sustainable activities
• Concentration in sustainability-focused investments
• Increased risks in emerging markets (liquidity, currency, political, economic uncertainties, volatility, settlement, custody)
• Lower liquidity and higher volatility in small/mid-cap companies
• Potential sector concentration leading to higher volatility
• China market risks (repatriation, taxation policies, Stock Connects, QFI, ChiNext, STAR board, RMB currency conversion)
• Risks associated with using FDIs for hedging

Supply Chain Management

Climate-Related Risks & Opportunities