Company: IFM Investors
Category: Active Ownership Project of the Year (shortlisted)
In the spirit of showcasing leadership and raising standards of responsible investment among all our signatories, we are pleased to publish case studies of all the winning and shortlisted entries for the PRI Awards 2019.
Project overview and objectives
IFM Investors launched its Australian Infrastructure Sustainability Project in June 2018. The project’s aim was to work with the owners and operators of its infrastructure holdings to create business strategies that marry the integration of ESG factors, and reporting, with a drive for long-term commercial value.
IFM’s assets include airports, seaports, railways and energy transmission and distribution infrastructure – serving millions of Australians every day.
IFM’s mission was to encourage the operators to integrate ESG practices into the day-to-day running of the assets, and to breed a culture of openness about their progress towards implementing such policies. In the past the operators of these privately owned assets tended to limit their reporting to a discrete set of shareholders and key stakeholders. The key project objectives were to:
• Secure a commitment from the boards of the infrastructure assets for public transparency, and to allocate resources to begin or progress their sustainability strategy and reporting.
• Convene a two-day educational and knowledge-sharing forum with portfolio assets to support them in developing and executing their respective sustainability strategies.
• Launch IFM Investors’ Community Partnerships Proposal.
• Communicate the project and outcomes to IFM’s portfolio investors.
The project in practice and challenges overcome
In June 2018 IFM asked the managements of its infrastructure assets to produce a sustainability report for public disclosure. It called for a commitment from the operators that they would allocate resources towards a coherent sustainability strategy, and openly report all ESG performance.
As part of its campaign, IFM convened a two-day educational and knowledge-sharing forum. The focus of the forum was to share knowledge with the operators of its infrastructure assets on how best to reduce emissions and report on the sustainability of their operations.
In addition to the logistical challenges of hosting the two-day forum with delegates from across Australia, key project challenges primarily related to the varying maturity levels of sustainability strategy and reporting across the portfolio, such as:
• The varying levels of education needed to bring different operators to a common level of understanding. The Sustainability Forum and pre-and post-forum engagement addressed this challenge. For example, IFM introduced delegates to its customised modelling tool to develop their own emissions reduction trajectory and set targets.
• The varied levels of investment needed to get businesses to a common level of performance measurement, strategy and reporting. Getting this right was important because stakeholders increasingly expect ESG disclosure, and questions relating to ESG performance are becoming increasingly frequent and complex.
IFM Investors had strong expectations of where each asset should be at with respect to reporting on their sustainability performance to consistently high standards. In order to make this easier for operators, the firm developed a template based on GRI-aligned annual sustainability targets. The template included metrics relating to the following categories:
• Energy & GHG emissions management
• Water management
• Stakeholder engagement
• Labour relations
• Customer data privacy
Success against objectives
In terms of tangible progress in encouraging the operators to embrace ESG factors in the way they conducted business, IFM succeeded on a number of levels:
• The assets have established individual emissions reduction targets ranging from 8%-25% by 2024, up to 100% by 2030. IFM Investors has worked closely with the assets and their other co-owners to commit to meaningful emissions reductions, while maintaining returns for its investors.
• The firm secured board commitment from each infrastructure asset for public transparency, and to allocate resources towards putting in place a sustainability strategy and open ESG reporting.
• Despite the logistical challenges of bringing people together, the two-day Sustainability Forum attracted 14 representatives from eight major.