IFM Investors’ purpose is to protect and grow the long-term retirement savings of working people. To keep delivering on our purpose, we believe that it’s vital that we have a plan to mitigate the risks of climate change. This includes working closely with our investee companies to help ensure that they can continue operating in a net zero world and continue generating risk adjusted returns for our investors.

Using influence and capital to reduce emissions

As one of the largest infrastructure investors in the world, our approach centres on long-term ownership and the active management of essential community assets, such as water management services, tolls roads and airports.  For IFM, long-term ownership means holding an asset for 20, 30, or 40-years or more. With an investment-horizon that is measured in decades, we think it is vital that we use our influence, capabilities and capital to help our assets reduce emissions and remain viable and useful in a lower carbon operating environment – thus maintaining, and potentially increasing, value.  By way of example, as a shareholder in Melbourne Airport, we have supported the construction of a recently completed onsite solar farm, which is expected to generate up to 15 percent of the airport’s annual electricity consumption – enough to power all four passenger terminals. We are taking similar steps at our other portfolio assets.

Net zero 2050 target requires critical progress by 2030

Building on the work we are already doing with our assets, in October 2020, we announced our commitment to reduce greenhouse gas emissions across all of our asset classes, targeting net zero by 2050.  We established a multi-disciplinary taskforce to identify how each asset class would contribute to our net zero commitment. What became clear was that while the journey to net zero would require decades of effort, action in the years leading up to 2030 is critical.  So, in September 2021, we announced an interim 2030 emissions reduction target of more than one million metric tonnes of CO2e for our infrastructure asset class. This reflects an emissions reduction target of 40% of our infrastructure portfolio from 2019 levels.

Existing assets to seek most effective transition pathway for decarbonization

The task we, and other like-minded investors, are taking on is complex and challenging. Infrastructure assets provide essential services that underpin communities and economies around the globe. Starving these assets of capital or shutting them down risks health, wellbeing and livelihoods, and would make it harder to achieve net zero. Not taking appropriate steps to align assets with net zero also could mean transition risk is not being well managed for investors. So we must transition these assets at a pace and in a manner that is prudent and methodical. IFM already has a value creation thesis and a track record of active engagement at the asset level, and believe we are well placed to support these assets to transition. Conversely, divesting would just shift the problem to others. This undertaking calls for detailed and strategic long-term planning, because it is likely that decarbonisation pathways will vary between assets. In many cases, our existing assets are the best resource in finding the most effective transition pathway – they are the ones that often have the relationships, the construction skills, and the project management skills to develop and execute the move to renewable energy and help to drive the economy wide transition.

As responsible long-term owners, we are in the position to work closely with the management teams to identify and support these opportunities. At IFM, we recognise that the quality of the returns for long-term investors is a function of the quality and sustainability of the economy and financial system, now and in the future. That’s why we will keep working closely with our portfolio assets to generate positive returns for our investors over the long term, while supporting the environment, economies, and communities where we invest and operate.