Responsible investment in infrastructure

IFM is committed to incorporating environmental, social and governance (ESG) factors into investment decision making and asset management. We aim to promote and employ ESG practices that meet a standard that is equal to or exceeds current market best practice.

IFM has been a signatory to the United Nations backed Principles of Responsible Investment (UNPRI) since 2008 and is a member of ESG Research Australia, the Investor Group on Climate Change (IGCC) and the Australian Council of Superannuation Investors (ACSI).

The UNPRI showcased IFM as a ‘best practice’ case study while Azhar Abidi, IFM’s Director of Sustainability and Responsible Investment, is also Chairman of the UNPRI Infrastructure Steering Committee.

Learn more about ESG at IFM »

In respect of infrastructure, our effort is twofold:

  1. Before entering into new investments, we assess ESG factors and their impact, and
  2. We aim to improve the performance of portfolio companies across a range of ESG factors, including by taking substantial, direct equity positions and appointing nominee directors on investee company boards.

By encouraging responsible corporate behaviour, and by incorporating our ESG investment principles into decision making, we seek to protect and enhance the value of our investments in a manner that is consistent with our long-term investment objectives and fiduciary duties. We have developed a proprietary ESG due diligence framework which is integrated into our investment process. In the due diligence phase, each ESG factor must be considered and analysed to determine its risks and exposure.

IFM’s approach to ESG due diligence in infrastructure

Environment
  • IFM reviews environmental risks in terms of potential costs (carbon taxes, costs related to reducing pollution), legal and compliance issues and reputational impacts.
  • The risk management protocols of companies are reviewed, including their historical performance.
  • Environmental considerations are also relevant to asset valuations. For example, climate change may not be apparent in the near future but it may impact an asset’s operational and financial performance in the long-term.
Social Risk
  • In order to avoid the risk of industrial action and litigation, we review labour relations, enterprise agreements and workplace safety to identify and mitigate areas of concern.
  • Human rights violations are unusual for infrastructure assets in OECD countries but we require compliance with international human rights accords which is over and above the usual requirement to meet local and national laws.
Governance
  • We acquire equity stakes in companies with significant influence and control to ensure that our interests as shareholder are represented at the board level.
  • Governance risks are reviewed in terms of shareholder rights and protections through legal documents as well as board representation.
  • We strive to ensure that shareholder agreements are negotiated with favourable indemnities and warranties as well as voting rights.