Environmental, Social and Governance (ESG) Principles and Policies
The Manager acknowledges the Trustee’s view that ESG issues have the potential to impact investment risks and returns and that considering these issues alongside traditional financial and business risk factors in investment decision-making can improve long-term risk-adjusted returns.
To the extent that it is consistent with their primary objective to maximise the value of the investments, the Manager will have regard to:
(i) The Trustee’s Responsible Investment Policy which outlines the Trustee’s principles and commitments in relation to responsible investment, including the integration of ESG risks and/or opportunities into investment processes and decision-making.
(ii) The Trustee’s Active Ownership Policy which outlines the Trustee’s principles and commitments to being an active owner of entities to which it provides capital and to exerting influence to improve the management and performance in relation to ESG issues.
(iii) The United Nations backed Principles for Responsible Investment (PRI) to which the Trustee is a signatory and is committed to implementing across all its investments.
The requirements of this clause shall not prohibit, restrict or otherwise negatively impact the Manager’s ability to execute its investment strategy or their obligation to carry out their fiduciary duty to act in the best interests of the Trustee and in accordance with the Agreement.
The Manager agrees to consider ESG risks, opportunities and/or performance in their:
(i) Investment processes including due diligence, ownership and exit processes.
(ii) Monitoring of Portfolio Assets including (without limitation) encouraging Portfolio Asset management to identify, manage and minimise material ESG risks, opportunities and/or improve performance in their ordinary business activities.
The Manager agrees to facilitate communication between the Trustee and certain portfolio companies regarding ESG issues.
The Manager acknowledges that the Trustee may reasonably request the Manager to provide information to assist the Trustee to assess the delivery of its Responsible Investment and Active Ownership Policies and its obligations under the PRI.
The Manager will report to the Trustee at least on an annual basis on:
(i) The development and/or implementation of any policies, process and fund terms regarding ESG.
(ii) How the Manager incorporated ESG risks, opportunities and/or performance when making investments for the Portfolio including any examples of where it impacted the investment, ownership or exit activities during the period.
(iii) A summary of key ESG performance indicators for each Portfolio Asset including electricity consumption (kwh), water consumption (ltrs), greenhouse gas emissions (tonnes CO2-e), waste generation (tonnes) and recycling (tonnes).
(iv) Actions to improve the ESG performance of Portfolio Assets during the period.
(v) Any material changes to ESG risks, opportunities or performance at the Portfolio Asset or portfolio level during the period.
The Manager agrees to use reasonable effort to provide (or procure that the Asset Management provides) any further information necessary to assist the Trustee to assess the delivery of its Responsible Investment and Active Ownership Policies and its obligations under the PRI.
The Manager agrees to participate in the survey for the Global Real Estate Sustainability Benchmark (GRESB) specific to the portfolio in which the Trustee is invested on an annual basis and to make the survey available to the Trustee.
The Manager agrees to report any material ESG-related incidents at the Manager or Portfolio Assets including actions taken in response to the incident, within 2 working days where the incident breaches legal or regulatory requirements or within 5 working days otherwise.
Right of veto (on ESG grounds)
The Manager acknowledges the Trustee will take ESG factors into consideration when assessing potential assets included in the investment pipeline and during the 5 day veto right period. The Trustee reserves the right to exercise its right of veto on ESG grounds.