Direct Investments

Pre-Investment Analysis:We incorporate Sustainability Accounting Standards Board (SASB) framework into our due diligence process to research, identify and assess material ESG issues in our direct investments. Through this process, we:

• Identify material ESG topics and metrics
• Collect and assess relevant ESG data and information
• Determine the investment’s inherent ESG risk exposure
• Identify ESG risk management practices

Investment Decisions: We integrate the evaluation of ESG risks and opportunities into our investment decision-making process. This process includes the creation of a formal and comprehensive analysis document called an investment memo. Every investment memo includes a section on ESG considerations and the findings from our pre-investment analysis. Investment memos are reviewed and approved by our Management Investment Committee.

Post-Investment Analysis: During the post-investment phase, we actively monitor relevant ESG risks over the life of the investment to determine if any additional mitigation actions are required. We also encourage company’s management to enhance its ESG management approach.

Externally Managed Investments

ESG practices and performance are embedded in evaluation, selection and ongoing monitoring of external investment managers. We use an extensive ESG due diligence questionnaire to assess and identify managers with the personnel, knowledge, and structure to incorporate ESG in the investment decision-making process.

The PRI defines stewardship as: “the use of influence by institutional investors to maximise overall long-term value including the value of common economic, social and environmental assets, on which returns, and clients’ and beneficiaries’ interests depend.”. We believe that being an engaged investor reduces investment risk and contributes to enhanced returns over time.

Engagement

We monitor and engage on material ESG issues with entities in which we invest, by using internal expertise and collaborating with peers.
. We do this by:

• Working collaboratively with company management to identify, review and address ESG issues
• Influencing ESG practices through board-level interaction
• Holding board seats to exercise effective stewardship into the investment and asset management process
• Voting on all matters requiring shareholder or board approval

The nature and scope of our engagement is determined by asset class. For example, in our infrastructure portfolio, we identify portfolio companies that we feel could benefit from our stewardship, and we secure board representation to enhance our influence in the investment. Within our real estate team, we work with property managers to implement sustainable practices such as achieving building certifications like LEED or BOMA BEST and to set greenhouse gas reduction targets.

External Managers

Proxy Voting

Proxy Voting is an important component of stewardship and we take ESG considerations into account in our proxy voting activities. Through our proxy voting activities, we seek to support sustainable business practices, including environmental stewardship, fair labor practices and the protection of human rights. We ensure that our votes are cast in a manner that is consistent with our investment strategy and in the best long-term interest of our clients.

Advocacy

We actively look for opportunities to collaborate with other institutional investors, government, industry sectors and leading organizations to advance ESG practices and disclosures across the market. Participating in the following initiatives enhances our ability to create positive, real world impact through our investments. We often participate as signatories to investor letters.

We invest in long-term sustainable investing opportunities and incorporate the UN Sustainable Development Goals (SDGs) framework into investment process.

IMCO targets to commit at least $3.5 billion in new sustainable investing opportunities over the next 3 years.

We believe that tracking longer-term sustainability trends and investing in securities and those companies addressing environmental and social challenges provides both financial return and social and environmental impact.

We have a role to play in the transition to a low-carbon economy. As this transition brings both risks and potential opportunities, we take a disciplined approach that considers asset allocation, portfolio construction and risk-return objectives.

We look to invest in companies that are seeking to have a positive impact on society, particularly those delivering solutions to environmental and social challenges. This includes investing in companies involved in the clean energy transition, while reducing our exposure to energy- and carbon-intensive industries.

We are implementing a robust screening framework that strives for research-based, repeatable, and defensible results to screen and monitor companies for misalignment with IMCO’s and our clients’ core missions, values, and risk and return criteria.

We conduct an analysis to review ESG sensitive and controversial issues.