IFM

IFM recognises that a sustainable approach to investing is vital to the long-term stewardship of the planet and will have a positive impact on the value of our investments. We are committed to incorporating consideration of environmental, social and governance issues into our investment decision making, and to ensuring that our own business and the entities that we control are responsible users of finite resources.  

We will consider environmental, social and governance factors and their impact on new investments that we enter into across the various asset classes in which we invest. We will actively manage our existing assets and seek to continuously improve upon the performance of assets across a range of environmental, social and governance factors.

IFM has a dedicated Director, Sustainability and Responsible Investment. Each asset management area of the business has an implementation plan that formalises the incorporation of ESG into investment decision making processes.

United Nations Principles of Responsible Investment

IFM became a signatory to the United Nations Principles of Responsible Investment (PRI) in early 2008. The PRI is a set of six aspirational principles that provide a global framework for integrating ESG into the investment decision making process. Over 400 organisations globally, representing 15 trillion US dollars under management, have signed the PRI.  The principles IFM adopted are:

    1. We will incorporate ESG issues into investment analysis and decision-making processes. 

    2. We will be active owners and incorporate ESG issues into our ownership policies and practices. 

    3. We will seek appropriate disclosure on ESG issues by the entities in which we invest. 

    4. We will promote acceptance and implementation of the PRI within the investment industry. 

    5. We will work together to enhance our effectiveness in implementing the PRI. 

    6. We will each report on our activities and progress towards implementing the PRI.

Climate Change

IFM believes that on the balance of probabilities it is most likely that climate change is occurring as a result of human activity. As a long-term investor, IFM has an interest in working to reduce the magnitude of climate change and supporting the adoption of mitigation and adaptation strategies.

IFM is an active member of the Investor Group on Climate Change (IGCC). Through IGCC, IFM seeks to further its corporate understanding of climate change issues as they affect investors, and to work collaboratively with other investors to influence policy debate on climate change related issues.

Corporate Governance and Engagement

Proxy Voting

As a major institutional investor, IFM takes its corporate governance responsibilities seriously. IFM’s policy is to vote proxies it is entitled to, within IFM’s pooled listed equity vehicles, and to vote according to client direction on mandated listed equity portfolios.

IFM is of the view that the corporate governance standards outlined in the Corporate Governance Guidelines (June 2007), developed by the Australian Council of Superannuation Investors (ACSI), will result in the more effective governance of a company, and these Guidelines constitute the issues IFM takes into account when determining its proxy voting.

IFM will generally follow the approach outlined below on these specific issues:

• Board composition. It is preferable for boards to be comprised of a majority of independent directors, and to have a chairperson who is independent.
• Appointment of directors. Boards should undergo a transparent process to appoint new directors, and have regard to the existing workload of a potential appointee and to the diversity of the board. 
• Appointment of chairperson. The chairperson should be an independent director and should not be the chairperson of another listed company. 
• Director and executive remuneration. The remuneration of directors and executives should be designed so as to ensure long-term alignment with shareholder interests and performance hurdles should be reasonable and transparent. Boards should ensure there is full disclosure of total remuneration packages, including all components and any termination provisions. 
• Audit and remuneration committees. Boards should have both an audit and a remuneration committee. The audit committee should be chaired by an independent director and be comprised of independent directors. The remuneration committee should be chaired by an independent director and have a majority of independent directors. 
• Director attendance. Directors are expected to attend at least 75% of board and committee meetings and should not be re-elected if they fail to do so without showing cause. 
• Auditor. The board must appoint an independent auditor.

Company Engagement

IFM regularly enters into dialogue with the listed companies in which it invests. In addition, IFM has policies which specify that IFM will engage with companies about corporate governance standards.

Each year, IFM will also identify one or more themes to use as a basis for engagement with listed companies. These themes will generally be aimed at improving corporate reporting and participation in initiatives that improve the level of environmental, social and governance performance of companies in the ASX200 Index. For 2008/09 these themes are: 

• Sustainability reporting. IFM will seek to increase the quantum and quality of sustainability reporting by companies listed in the ASX200 Index. 
• Participation in the Carbon Disclosure Project. IFM will encourage companies to participate in the Carbon Disclosure Project.

Corporate Sustainability

IFM measures and sets reduction targets for its own corporate ecological and carbon footprint.  We measure our use of water, paper, electricity, as well as our contribution of waste going to landfill and greenhouse gas emissions through travel.