Green Investment Policy October 2020

This Green Investment Policy is designed to ensure that the activities of Green Investment Group (“GIG”) are in line with its Green Investment Principles1. Operation Evolution

This Green Investment Policy sets Many of the potential green benefits out GIG’s approach to application of any given loan or investment are of the Green Investment Principles, not susceptible to exact and certain each of which are detailed in the measurement. They can only be pages that follow. estimated using the best available scientific and technical approaches, The operation and implementation all of which continue to evolve and of this policy is supported by GIG’s necessarily require the application Green Impact Reporting Criteria1, of reasonable interpretation and which describe in more detail the professional judgment. We therefore methodology and approach we take expect to continue to develop for evaluating the quantitative and this policy to reflect changes in qualitative contributions to the Green market opportunities, evaluation Purposes2– the ‘green impact’ – of methodologies, scientific knowledge each project into which GIG invests. and technological approaches. Scope Review

Green Investment Principles 1 and 2 This Green Investment Policy will be (together, GIG’s “Green Objective”)3 reviewed at least annually. apply to all GIG’s business in making, supporting, facilitating, engaging in and encouraging investments, lending and related activities.

All of the Green Investment Principles apply to all forms of loans and investment by GIG.

As a part of Macquarie Group, GIG also applies Macquarie’s Environmental, Social and Governance policies and approaches4.

1 See www.greeninvestmentgroup.com/who-we-are/measuring-our-impact/ 2 See Section 1.1 of this document 3 See Sections 1 and 2 of this document 4 See www.macquarie.com/au/en/about/company/environmental-social-and-governance.html

Green Investment Policy 1 1. Principle 1: Positive • screen the potential for the globally; and activity to contribute positively to • decline to participate in that loan, contribution to a each individual Green Purpose; investment or activity if it would recognised Green • evaluate the risk of the activity result in our failing to meet this Purpose not contributing positively to one Principle. or more Green Purposes; We will only undertake activities • consider the extent to which that we are satisfied will result in (or loans or investment appear 3. Principle 3: Enduring are reasonably likely to result in) a likely to have each of the Green Impact positive contribution to one or more relevant attributes described of our recognised Green Purposes. under Principle 4 (Clear and firm We aim for our green loans and investment criteria); and investments to deliver safe and Every loan, investment or activity attractive returns, and so we will (as defined within the Scope) must • for loans or investment, apply the manage risk based on principles comply with this Principle. principles of evaluation set out under Principle 5 (Robust green of sound finance and responsible 1.1 Our Green Purposes impact evaluation). investment, in order to preserve our position as an institution that can We will only undertake activities We will decline to participate in deliver enduring green impact. that we consider will, or are any activity that we consider is not reasonably likely to, accelerate, aligned with this Principle. 3.1 How we apply this Principle advance, support or result in In considering whether any potential the completion, deployment, loan or investment will comply with development, emergence, 2. Principle 2: Reduction this Principle, we will: establishment or expansion of of global greenhouse any business, enterprise, market, gas emissions • consider its potential green industry, infrastructure, project or impact under Principle 1 (Positive contribution to a recognised technology which we consider will, We are committed to ensuring Green Purpose) and Principle 2 or is reasonably likely to, contribute that the effect of all our loans, to one or more of our five Green (Reduction of global greenhouse investments and activities, taken gas emissions) above; Purposes, namely: together, will (or is reasonably likely to) contribute to the reduction of • consider a risk analysis of 1. the reduction of greenhouse gas that transaction, including an 5 greenhouse gas emissions globally. emissions ; assessment of climate-related risks and other environmental 2. the advancement of efficiency in The effect of our activities for each and social risks in accordance the use of natural resources; financial year, taken together with all previous financial years, when with Macquarie’s group-wide Environmental and Social Risk 3. the protection or enhancement of aggregated, must comply with this Policy4; and the natural environment; Principle. • apply a judgement on a case- 4. the protection or enhancement of 2.1 How we apply this Principle by-case basis on whether each biodiversity; potential loan or investment In considering whether or not our would, if made, result in an loans, investments or activities to 5. the promotion of environmental investment portfolio which sustainability. date, in aggregate, comply with this demonstrates a reasonable and Principle, we will: prudent balance of risk and green In this Policy, ‘green impact’ refers • consider, when assessing the impact in light of the potentially to the quantitative and qualitative investible market opportunities contributions to the Green Purposes potential green impact of any potential loan, investment or available within our sectors. of each project into which GIG activity to be completed in any invests. financial year, the extent to which 1.2 How we apply this Principle the effect (when aggregated with the effects of our activities to In considering whether or not a GIG date) will, or is reasonably likely loan, investment or activity will align to, contribute to the reduction with this Principle, we will: of greenhouse gas emissions

5 In this policy, “greenhouse gas” has the meaning given by Article 1 of the 1992 United Nations Framework Convention on .

Green Investment Policy 2 4. Principle 4: Clear and It is therefore our policy to identify We review potential green impacts firm investment criteria and evaluate the likely green impact across several time-horizons of any potential loan or investment. including: We may also consider any likely We will be clear and firm about the • the estimated total green impact green impacts resulting from their green standards we expect. We will over the life of the project; and identify the legal standards and other effect on the wider economy, • the estimated average annual relevant green attributes that we will including any positive effect that may result from our investment through green impact of the project over always consider when assessing its life. whether any particular investment financial market development, is likely to have a positive green reduced future technology costs or In considering whether any loan impact. wider effects such as behavioural or investment would make a change in society. contribution to achieving any 4.1 Mandatory legal of the Green Purposes, we will In considering and evaluating the requirements evaluate (and, so far as practicable, likely green impacts, together with quantify) the extent to which the As a pre-condition to investment the green risks (see definition of relevant project is likely to have we need to be satisfied that the green risk in Section 5.3 ‘Evaluation the corresponding positive green business, infrastructure or project of green risk’) associated with any impact. being supported by that investment proposed loan or investment, we will comply with all environmental will apply a professional judgement and planning laws, regulations and using the evaluation process set 5. Principle 5: Robust permits in all material respects. This out under Principle 5 (Robust green includes compliance with all the impact evaluation). green impact evaluation sustainability requirements imposed by the relevant regulations providing Following this evaluation, we will Before investing or otherwise economic incentives for the project carefully consider all performance participating in a transaction, we financial base case as presented to and risk attributes, including the will carefully consider the likely us, to the extent those regulations sound finances of the project and green impact of all prospective apply to the relevant project. its compliance with Macquarie investments, based on a robust and Group’s Environmental and Social transparent evaluation approach and In accordance with our obligations Risk Policy, before deciding whether process. as an Equator Principles Financial to invest. The decision will be based Institution, we shall adhere to the on a reasonable and considered As part of due diligence for every applicable requirements of the professional judgement of the loan or investment, a reasonable Equator Principles6. We will seek overall net effect of the relevant and considered professional to apply best practice aligned with loan or investment, in accordance judgement will be made about its the Equator Principles, which may with Principle 5 below (Robust likely contribution towards producing go beyond the requirements of green impact evaluation). The more a positive green impact. We will local legislation, for all investments significant, numerous and likely also ensure that all our loans or regardless of their type (debt or we consider the impact of any net investments, taken together, will (or equity) or location (Designated or positive effects of any potential loan are reasonably likely to) contribute non-Designated Countries7). or investment, the more we are likely to the reduction of greenhouse gas to give favourable consideration to emissions globally. 4.2 How we apply this Principle that loan or investment. We will do this by applying the We also need to be satisfied that relevant criteria set out under the relevant business, infrastructure 4.3 Quantification of green Principle 4 (Clear and firm or project will have, or is reasonably impact investment criteria) and by following likely to have, a positive (and, so far In each case, where reference the evaluation process set out in as practicable, quantifiable) effect is made to the quantification of Section 5.2 below. that will contribute to one or more of green impact, this is to be made our Green Purposes. in accordance with our latest applicable Green Impact Reporting Criteria.

6 See www.greeninvestmentgroup.com/who-we-are/measuring-our-impact/ for details of our implementation of the Equator Principles. 7 Designated Countries under the Equator Principles are those countries deemed to have robust environmental and social governance, legislation systems and institutional capacity designed to protect their people and the natural environment. The list of Designated Countries can be found on the Equator Principles Association website at: https://equator-principles.com/designated-countries/

Green Investment Policy 3 5.1 How we apply this Principle environmental measurements, green impact performance estimates or calculations, subject forecasts made in the initial To ensure the credible assessment to the principle of Proportionality, investment case; and of green impact, our evaluation and to use measurement and • the nature and extent of the process will be based on the estimation methods that avoid green risk of each investment following principles: bias, but acknowledging that in against other benchmark most cases precise measurement • Consistency: we will apply investments in the same sector. is not possible. consistent methods and 5.3 Application of future procedures for evaluation across • Prudence: we will use realistic investments and use consistent assumptions, values and standards to existing criteria and assumptions in appropriate procedures when investments evaluating significance and estimating the green impact of We recognise that the test of relevance through the application investments as part of the risk whether a loan or investment assessment process. To the of our Green Investment has or is likely to have a green Handbook. Any data collected extent that it is reasonable and impact depends significantly on and reported should also be prudent to do so, we will seek to the standards and performance of capable, so far as practicable, of rely on existing reports produced being meaningfully aggregated to meet the requirements of other the most likely alternative outcome and compared. parties and will seek to avoid without investment. As technology unnecessary duplication. progresses and legal and societal • Proportionality: we will take a standards for environmental proportionate approach, focusing 5.2 Evaluation of green risk performance develop, the standard our assessment on those components of green impact As an integral part of our due by which we assess green impact is that are material to the outcome diligence and overall risk analysis anticipated to rise, requiring updates and acknowledging that in most for every loan or investment, to our application of this Principle. cases precise measurement is as described under Principle 3 Although we will not seek to impose not possible. Accordingly, we (Enduring green impact), we also may decide that assessment of assess and evaluate the scope and new standards retrospectively on certain aspects of green impact nature of certain risks affecting the our investments (unless agreed with is not appropriate where this is success of that loan or investment companies in advance or required of little or no material value to in meeting the requirements of this by law), it is our general policy to the overall assessment or may Principle. encourage a culture of continuous be difficult or uneconomical to improvement in environmental achieve. We define ‘green risk’ as the risk of performance in the business, • Completeness: we will assess a loan or investment not contributing infrastructure or project being (subject to the above) all relevant to GIG’s Green Purposes (see supported. information reasonably available, Principle 1) as expected. In with the aim of ensuring that evaluating green risk, we will take 5.4 Delegated authority there are no material omissions into account quantitative and Where financing is granted indirectly from the data and information qualitative green impact data and by us through a fund manager, that would substantively influence we will consider and evaluate both a subsidiary or other authorised our assessment and decision positive and negative impacts of person such as a joint venture having regard to the asset a loan or investment and seek to partner, we may delegate the performance over time and other mitigate negative impacts where external factors. responsibility for ensuring the possible. This assessment may also application of this Principle, subject • Transparency: we will require consider the wider reputational risk to appropriate monitoring, evaluation clear and sufficient information associated with an investment. and reporting requirements. to be provided to us, so that a robust assessment can be made. In performing our monitoring and We expect specific exclusions continuing engagement process or inclusions of information to be described under Principle 6 clearly identified and assumptions (Effective covenants, monitoring and explained, and appropriate engagement) we will also consider references to be provided for and assess: both data and assumptions. • Accuracy: we will, so far as • the actual operational practicable, aim to reduce performance and related green uncertainties with respect to impact of the project against

Green Investment Policy 4 6. Principle 6: Effective management systems and The nature and extent of monitoring covenants, monitoring policies and ensure key project and engagement will be a function parties have similar arrangements of the specific characteristics of and engagement in place; the investment, its sector, size of • to give us prompt notice of any investment, the level of green risk We will seek to impose clearly materially adverse environmental and the nature of covenants agreed. documented requirements for issues arising in connection with securing the green impacts the investment and, so far as expected from each of our loans and possible, to implement an action 7. Principle 7: investments, and we will monitor plan to remedy the issue; and those impacts on a continuing Transparent reporting • to comply with other project basis over the life of that loan or or sector-specific covenants We will report at least annually on investment. designed to ensure delivery of the implementation of our Green anticipated green impacts and 6.1 How we apply this Principle Investment Principles to minimise specific adverse An important feature of any environmental impacts. 7.1 How we apply this Principle loan or investment by us will be Where a borrower or investee is not Our annual Progress Report will the incorporation of covenants in compliance with its covenants, we disclose appropriate green impact (or equivalent provisions for will work with it to bring it back into data. In order to do this, we will equity investments) in financing compliance to the extent feasible. include aggregated information documentation, requiring If the borrower or investee fails to on the quantified reduction in the compliance by the borrower or re-establish compliance within an emission of greenhouse gases investee and underlying project agreed grace period, we reserve the and such other metrics as are to ensure control, monitoring right to exercise remedies, as we appropriate to communicate the and reporting of green impact consider appropriate. green impact of our investments, (together with wider environmental as well as a qualitative description requirements) and management of 6.2 Monitoring and continuing of green impacts. Quantified data green risk. engagement process will be subject to independent While the specific requirements will Once a loan or investment has been assurance as appropriate. depend on the characteristics of the made, we will monitor associated To facilitate this reporting, we will investment, its sector and size of performance, including compliance collate appropriate anticipated and investment, our core requirements with agreed covenants and the actual green performance data for will normally include: management of green risks. This will be undertaken on a regular basis each of our loans or investments • to deliver, as a condition over the life of the investment. In as specified in our Green Impact 8 precedent, estimates of the key addition, this monitoring will also Reporting Criteria , as provided by operating parameters and green review continued compliance with the requirements of the relevant impact performance figures for Principle 1 (Positive contribution financing documentation and each year during the life of the supplemented by information project to a recognised green impact) and Principle 2 (Reduction of collated through monitoring and • to provide, at least annually, global greenhouse gas emissions). engagement during the relevant reports on such operating Monitoring will be based on reporting period (as described under parameters and green impact reporting from our borrowers and Principle 6: Effective covenants, performance and other material investees and incorporate follow- up monitoring and engagement). environmental matters in a format agreed with us; engagement as required. We will also report in accordance • to comply with all relevant Where required, we (or an with our obligations under environmental laws, regulations independent expert appointed the Principles for Responsible 9 and permits in all material on our behalf) may conduct site Investment and the Equator 10 respects; visits, and review other sources of Principles , as applicable. • to implement and maintain information, including that provided suitable environmental by other stakeholders.

8 See www.greeninvestmentgroup.com/who-we-are/measuring-our-impact/. 9 See more www.unpri.org/ 10 See more https://equator-principles.com/

Green Investment Policy 5 Contacts

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Green Investment Policy 6