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First Sentier Investors (including First State Investments)

PRI reporting framework 2020

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INF 11. ESG issues in post-investment activities

11.1. Indicate whether your organisation and/or operators consider ESG issues in post-investment activities relating to your infrastructure assets.

11.2. Indicate how your organisation, and/or operators, considers ESG issues in the following post-investment activities relating to your infrastructure assets.

          We consider ESG issues in our buy/sell/hold decision-making

11.3. Describe how your organisation, and/or operators, considers ESG issues in post-investment activities related to your infrastructure investments. [Optional]

The Boards of our infrastructure investments provide governance and oversight of management in setting meaningful and appropriate ESG targets for their annual performance scorecards.

Please refer to the ESG statement and the Minimum Standards mentioned in INF 01.1. These targets are monitored on an ongoing basis and form part of Board and other reporting such as monthly, quarterly and annual reports. KPIs are part of scorecards and management compensation may be impacted by the achievement of the ESG targets. In addition to this we also monitor ESG issues at our investee companies through a ‘ESG Questionnaire’ which is sent to each business, for us to collect and monitor relevant data on a range of ESG issues including staff diversity, workplace safety in operations, emissions, resource use, etc.

We aim for all of our investee companies to have an articulated sustainability strategy or framework. This can take a variety of forms, as relevant for each particular business. These frameworks will need to reflect our minimum standards and may use SDGs to define long term targets and other relevant best practice approaches. The company’s sustainability strategy then defines the business approach to operations and maintenance and ensures ESG issues are embedded across the organisation. In most instances, the way our investee companies act in relation to ongoing operations and maintenance etc. is governed by legal and regulatory national or international framework which are reflected on the company’s internal set of comprehensive policies. However, depending on jurisdiction, policy settings will need to be complemented and reflect various ESG issues that are material to the respective company. This might include processes around ensuring safety in high-risk areas, or considerations around low-carbon maintenance options. These policy settings at the company-level will be subject to the oversight and direction of the Board of directors, on which our investment professionals sit. Stakeholder engagement is vital to an infrastructure business’ social licence to operate and our portfolio companies all include this as part of their business and strategic planning.

Our regular quarterly asset management reviews provide a valuable platform for ESG considerations. We use these not only to monitor a range of ESG metrics, benchmarks and performance around discrete initiatives, but also to consider the buy/sell/hold decision. We maintain this discipline around our investment horizon for each asset. As an example, in respect of one of our regulated utilities, our forward-looking view of its governance and regulatory environment, amongst other things, informed our recent decision to divest our interests in that asset.