IFM sets ‘unprecedented’ emissions reduction targets for Australian assets

The fund manager has set targets for its seven Australian assets, covering airports, ports, a railway station and an electricity distribution business - including a 100% reduction by 2030.

IFM Investors has set public emissions reduction targets for all the assets held in its Australian Infrastructure Fund in what the firm has called an “unprecedented” initiative.

The seven assets are New South Wales electricity distributor Ausgrid, Melbourne Airport, Brisbane Airport, Port of Brisbane, NSW Ports, NT Airports and Melbourne’s Southern Cross Station.

Different targets have been set for each asset, with the level of reduction targeted varying depending on the asset’s sector and location. The targets range from a reduction of 8-25 percent by 2024 to 17-100 percent by 2030.

Ausgrid, for example, will aim to lower emissions by 8 percent by the end of fiscal year 2024 and by 17 percent by FY30 through increased use of solar, building efficiency upgrades, energy efficient lighting upgrades and increased use of low-emissions vehicles.

NT Airports, the company that operates Darwin International Airport, Alice Springs Airport and the Tennant Creek Airport, has the highest target, aiming to reduce emissions by 100 percent by FY30 through increased use of solar and other energy efficiency projects.

Speaking to Infrastructure Investor, IFM Investors executive director of responsible investment Chris Newton said that trying to reduce emissions was the next logical step after IFM published data on the carbon footprint of its infrastructure assets for the first time in its 2018 Infrastructure Carbon Footprint Report.

“[Investors] agreed that measuring the emissions profile of all our infrastructure assets globally was really important, to get an understanding of what our impact was on climate change. From there, it’s a natural extension to ask: what are you going to do next? So next for us is: how do we reduce our impact?”

The initiative has started with the firm’s Australian assets because they are located in “one market with one set of policy settings”, but the ambition is to extend it to the rest of IFM’s global assets by the end of 2020.

Improving investor returns was the primary reason for undertaking the reduction efforts, Newton said, emphasising that the targets had been founded on “investment principles, not ideological principles”.

“None of the targets we’ve set will [negatively] impact the investment profile of any of the businesses and that was a really critical principle that we weren’t going to waver from. That’s why some assets have bigger targets than others because they can make the business case work in their market,” Newton said.

“They are all board-endorsed targets and our co-shareholders in all of these investments agreed that they stack up and can be achieved.”

Newton confirmed that updates on progress would be made public every year.

“That’s exciting from my perspective because privately held infrastructure assets don’t often report like that so publicly. We’re up for it,” he said.

The move to publicly report progress on emissions reduction has been accelerated by investment from the Clean Energy Finance Corporation in IFM’s Australian Infrastructure Fund, Newton said.

CEFC’s A$150 million ($101 million; €91 million) commitment to the fund, made in 2018, made it a regular unitholder in the fund like all other investors, he said, but that part of the requirement for CEFC to invest was that IFM would set public targets and report on progress.

In a statement, CEFC chief executive Ian Learmonth said: “These infrastructure assets will operate for generations, with the targeted emissions reductions having the potential to make a material impact on cutting Australia’s carbon footprint. We congratulate IFM Investors and the asset managers for their leadership in lowering emissions and ensuring their businesses are making an important contribution to Australia’s carbon abatement task.”

IFM’s emissions reduction targets will see emissions reduced by more than 200,000 tonnes CO2 equivalent annually by 2030 – the same as removing almost 70,000 cars from the road, according to a statement.

The fund manager is reportedly looking to grow its Australian portfolio. Last week, Michael Hanna, head of IFM’s Australian infrastructure team, told the Australian Financial Review “there’s no shortage of appetite to at least do another A$12 billion” of investment in Australia. A spokesman confirmed to Infrastructure Investor that IFM had the potential to double its infrastructure investment in the country over the next 10 years but that no concrete targets had been set.