IFM

IFM has a formal Corporate Governance & ESG Policy as part of its Group Risk Management Plan. The Policy applies to all investment groups. ESG processes for each investment group are provided below.

Infrastructure

For new investments, the group uses a proprietary ESG due diligence checklist. For existing investments, the group influences ESG outcomes by taking substantial, direct equity positions and appointing nominee directors on investee company boards. ESG initiatives are logged in a database and implemented as part of the group's asset management business plan.

The PRI has showcased IFM as a 'best practice' case study in its 2010 Report on Progress.

Private Equity

The group focuses on governance aspects, particularly for domestic funds where IFM holds advisory board positions. Side letter exclusions on ESG issues are taken up where available. The group is currently undertaking an ESG survey of its managers. Through its participation on AVCAL, IFM is advocating ESG reporting standards for general partners.

Listed Equities

For actively managed funds and mandates, IFM uses ESG data from Regnan for consideration in investment decisions. The active portfolio aims to have an ESG score higher than the benchmark. For passively managed funds and mandates, IFM's primary aim is to at least achieve the benchmark return. Given this, incorporation of ESG issues into the index funds has developed into a direct engagement process, rather than an active stock weighting approach.

IFM subscribes to proxy advice by the Australian Council of Super Investors (ACSI) and actively votes on all company resolutions. Contentious voting decisions are referred to IFM's in-house proxy and engagement committee that primarily votes in accordance with ACSI Governance Guidelines. The committee will usually vote against company resolutions that breach these Guidelines.

For mandated listed equity portfolios, IFM votes according to client direction.

IFM regularly enters into dialogue with the listed companies it invests in about financial results and strategy. Each year, IFM also identifies one or more ESG themes to use as a basis for engagement. These themes are aimed at improving the environmental, social and governance performance of companies as well as ensuring that they broadly comply with IFM's Corporate Governance & ESG Policy.

Debt Investments

The group undertakes credit assessment for non-recourse lending to infrastructure projects following a similar ESG due diligence process as the infrastructure group. For corporate borrowers, the group integrates ESG data (where available) in its credit assessment.

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