FY23 Sustainability Report

1. As at 31 March 2023 on our balance sheet or under Macquarie management. Excludes lending and private credit funds. GW of green energy assets reflect 100% generating capacity of each asset, not the proportion owned or managed by Macquarie. Refer to the FY2023 Basis of Preparation for ESG Reporting for the definition of ‘green energy assets’. 
2. PwC has provided limited assurance over the total amount invested, committed or arranged by the Group in green energy assets in FY2023 ($A2.2 billion), as detailed in the PwC independent assurance report available within Macquarie’s FY2023 Basis of Preparation for ESG Reporting. MAM Private Markets' portion of the total amount invested, committed or arranged is $A1.67 billion. Refer to the FY2023 Basis of Preparation for ESG Reporting for the definition of ‘green energy assets’.
3. Scope 1 emissions: direct emissions from owned or controlled sources. Scope 2 emissions: indirect emissions from the generation of purchased energy.
4. The percentage of MAM’s infrastructure and agriculture portfolio companies with board-approved net zero plans is calculated based on the number of portfolio companies (a) that were in MAM’s portfolio at the time of its net zero commitment in December 2020 and (b) where MAM exercises control or significant influence. For the remaining assets, MAM is working towards establishing net zero plans over the next 12 months, or within 24 months of acquisition.
5. Across MAM Public Investments, with 482 different companies.
6. All portfolios that have stated alignment with the UN Sustainable Development Goals as a portfolio objective and are actively monitored by MAM Public Investments’ Investment Risk team to ensure compliance with their objectives.
7. For the year ended 31 March 2023. These represent bonds that have been issued to address specific environmental or social concerns and have been grouped into four categories: green or climate bonds, social bonds, sustainability bonds, and sustainability-linked bonds. These bonds have been labelled by the issuers in accordance with industry-recognised standards such as ICMA’s Green Bond Principles or the UNDP SDG Impact Standards for Bond Issuers and/or verified by an external ESG assurance provider.
8. As at 31 March 2023.
9. MAM generally only has influence over scope 1 and 2 emissions. However, to the extent possible, in line with the Net Zero Asset Managers initiative guidance, MAM intends to support assets where it has control or significant influence to reduce their scope 3 emissions.
10. The Paris Agreement's central aim is to strengthen the global response to the threat of climate change by maintaining a global temperature rise this century well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5°C. The Intergovernmental Panel on Climate Change concluded the need for net zero emissions by 2050 to remain consistent with 1.5°C.
11. The percentage of MAM’s infrastructure and agriculture portfolio companies with board-approved net zero plans is calculated based on the number of portfolio companies (a) that were in MAM’s portfolio at the time of its net zero commitment in December 2020 and (b) where MAM exercises control or significant influence. For the remaining assets, MAM is working towards establishing net zero plans over the next 12 months, or within 24 months of acquisition.
12. This includes (a) the remaining ~15% of MAM’s in-scope infrastructure and agriculture portfolio companies where MAM exercises control or significant influence, and (b) properties in our real estate Opportunistic business (where we partner with specialist operators) and those in our Core / Core-Plus business where we have control or influence with the aim to establish decarbonisation pathways.
13. Homes powered equivalent based on the average annual domestic consumption of each country (source: Enerdata) in which renewable electricity projects are generating, matched to the forecast average annual generation of assets in those respective countries.
14. Projects include approximately 2,340 hectares of land registered under the NSW Biodiversity Conservation Trust, 600 hectares under the Clean Energy Regulator Emissions Reduction Fund, and 60 hectares with the Department of Climate Change, Energy, the Environment and Water’s Carbon + Biodiversity (C+B) Pilot.
15. As at 31 March 2023. Metric calculated by taking the amount of waste treated at each of MAM's infrastructure portfolio companies operating in the waste sector over the past 12 months.
16. E-waste refers to all electrical and electronic equipment and its parts that have been discarded by its owner as waste without the intent of reuse.
17.  C.P. Baldé, E. D’Angelo, V. Luda, et al., ‘Global Transboundary E-waste Flows Monitor 2022’, United Nations Institute for Training and research, accessed July 2023, https://ewastemonitor.info/.
18. As of March 2023, the number of people reached is calculated by taking an estimate of the number of users for all MAM Real Assets portfolio companies. For example, for a specific toll road, the number of vehicles per day has been multiplied by the average number of passengers in a vehicle (two). Portfolio company data is collected from MAM’s asset management teams on a bi-annual basis.
19. MAM’s My Specialised Accommodations Solutions (MSAS) fund financed 300 specialist disability accommodation rooms between December 2020 and March 2023.
20. MAM established Goodstone Living – a specialist real estate development and investment management business – in the UK’s purpose-built rental housing sector in 2021. See https://www.goodstoneliving.com/.
21. Local defines ‘impact housing’ as social housing, key worker affordable housing, specialist disability accommodation, or age in place dwellings.
22. Over £1 billion invested through financing to UK housing associations and local authorities since 2015.
23. The blended financing platform is targeting $US1.5 billion of financing over its 10-year investment term and aims to achieve a lifetime reduction of ~9.5 megatonnes CO₂ equivalent of GHG emissions.
24. In the 12 months to 31 March 2023. Figure calculated using Taproot Foundation’s average hourly value of pro bono service ($US195 per hour converted to $A290.36 as per the exchange rate on 31 March 2023) multiplied by Macquarie employees’ skilled volunteering hours (22,874 hours).
25. In the 12 months to 31 March 2023. Calculated using transaction reports provided by Benevity, Inc. (provider of Macquarie’s giving platform), as a percentage of permanent MAM staff.
26. Revego African Energy Limited, https://revegoenergy.com/.
27. Water neutrality is the process whereby a company’s water footprint is reduced as far as practicably possible, with any remaining consumption offset. Water neutrality was independently assured by LRQA. See CleanMax Annual ESG Report 2022-23 for details: https://www.cleanmax.com/.
28. MAM currently defines an underrepresented group as anyone identifying as a woman, a person with disability, First Nation/Indigenous, Black/African American, Latinx, Asian, and/or a member of the LGBTQ+ community.
29. In 2021, Macquarie Group developed investee company human rights good practice principles and guidance to support Macquarie representatives who sit on the boards of investee companies (nominee directors) to oversee and manage human rights risks. They were developed with reference to international good practice guidance, with a focus on the UN Guiding Principles on Business and Human Rights.
30. MAM Public Investments’ Climate Solutions Strategy and Sustainable Equity Income funds disclose under the CFA Institute’s standards.
31. Public Investments recorded over 650 company ESG engagements with 480 different companies in more than 25 markets, covering more than 15 ESG-focused themes during FY23.
32. MAM Proxy Voting Dashboard
33. MAM has developed a methodology for reporting against the UN’s SDGs using a defined logic model and industry impact metrics to provide reporting of outputs and outcomes considered to benefit and/or contribute to these global goals. Each positive impact has been assessed on its own merit. SDG alignment has been based on information that is self-reported by MAM portfolio companies and is not independently verified.
34. As recorded on LinkedIn - 12,264 unique online viewers as of 17 August 2023.

Disclaimer

The name “Macquarie” in this document refers to the Macquarie Group which comprises Macquarie Group Limited ABN 94 122 169 279 and its worldwide affiliates. Macquarie Group comprises two separate subgroups, a banking group (including Macquarie Bank Limited ABN 46 008 583 542) and a non-banking group which includes Macquarie Asset Management (“MAM”), a full-service fund manager. MAM provides asset management services worldwide, specialising in equities, fixed income, multi-asset, infrastructure and renewables, real estate, agriculture, transportation finance and private credit via public and private funds, co-investments, partnerships and separately managed accounts.

This document provides general information in respect of Macquarie’s businesses and is not for distribution or to be made available to the public. This document does not constitute an offer to sell or a solicitation of an offer to subscribe or purchase or a recommendation of any securities and may not be distributed in any jurisdiction except in accordance with the legal requirements applicable in such jurisdiction. This document does not contain all the information necessary to fully evaluate the potential of an investment in any fund or other investment vehicle and does not take into account the investment objectives or financial circumstances of the recipient and, as such, no reliance should be placed on its contents. No person is authorised to give any information or to make any representation not contained in this document in connection with the matters described in this document, and, if given or made, such information or representation may not be relied upon as having been authorised.

This document and its contents are confidential to the person to whom it is delivered and must not be reproduced or distributed, either in whole or in part, nor may its contents be divulged by such persons to any other person without the prior written consent of MAM. Nothing in this document constitutes a commitment from Macquarie to provide or arrange any facility or is otherwise imposing any obligation on Macquarie. Past performance is not an indication of future performance and Macquarie does not guarantee the performance of or return of capital from any investment in any fund or other investment vehicle.

Other than Macquarie Bank Limited ABN 46 008 583 542 (“Macquarie Bank”), any Macquarie Group entity noted in this document is not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia).  The obligations of these other Macquarie Group entities do not represent deposits or other liabilities of Macquarie Bank.  Macquarie Bank does not guarantee or otherwise provide assurance in respect of the obligations of these other Macquarie Group entities.  In addition, if this document relates to an investment, (a) the investor is subject to investment risk including possible delays in repayment and loss of income and principal invested and (b) none of Macquarie Bank or any other Macquarie Group entity guarantees any particular rate of return on or the performance of the investment, nor do they guarantee repayment of capital in respect of the investment.

MAM has prepared this document on the basis of sources believed to be reliable. The accuracy of such information (including all assumptions) has been relied upon by MAM and has not been independently verified by MAM. Nothing in this document constitutes accounting, legal, regulatory, tax or other advice. Prospective investors should conduct their own independent investigation and assessment and should seek independent advice as to the validity of the information contained in this document, and the economic, financial, regulatory, legal, taxation, stamp duty and accounting implications of that information, including the merits of and any risks relating to any investment. Except as required by law, Macquarie and its respective directors, officers, employees, agents and consultants make no representation or warranty as to the accuracy or completeness of the information contained in this document and take no responsibility under any circumstances for any loss or damage suffered as a result of any omission, inadequacy, or inaccuracy in this document.

This document may contain certain forward-looking statements, forecasts, estimates, projections and opinions (“Forward Statements”). No representation is made or will be made that any Forward Statements will be achieved or will prove to be correct. A number of factors, in addition to any risk factors stated in this material, could cause actual future results and operations to vary materially from the Forward Statements. Similarly, no representation is given that the assumptions disclosed in this document upon which Forward Statements may be based are reasonable. There can be no assurance that the investment strategy or objective of any fund or other investment vehicle will be achieved or that investors will receive a return of the amount invested. Investment in any fund or other investment vehicle is subject to significant risks of loss of income and capital.

Advice warning

The information in this report is given in good faith and derived from sources believed to be accurate at this date but no warranty of accuracy or reliability is given and no responsibility arising in any other way, including by reason of negligence for errors or omission herein is accepted. This report is not an offer or invitation for subscription or purchase of, or a recommendation of, securities. It does not take into account the investment objectives, financial situation and particular needs of any person. The entities mentioned in this report, the Manager, Macquarie Group Limited and their worldwide affiliates and subsidiaries (the “Macquarie Group”) accept no liability whatsoever (whether based in contract, tort, strict liability or otherwise) for any direct, indirect, consequential or other loss arising from any use of or reliance on this report and/or further communication in relation it. Opinions expressed are subject to change without notice. Past performance of any product described in this report is not a reliable indication of future performance. There can be no assurance that any of the results or outcomes referred to in this document will be achieved or replicated.

Use of data

In preparing this document, MAM has used a variety of data sources, including data it has gathered itself directly from investee companies and/or publicly available sources, and data provided by third party data providers. Any data source used may not be comprehensive, may use estimations or may involve a qualitative assessment, for example by a third-party data provider. Further, there may be discrepancies between data sources, as well as data gaps, lags or limitations in the methodology for a particular data source. Divergent ESG-related views, approaches, methodologies and disclosure standards exist in the market, including among data providers, with respect to the identification, assessment, disclosure or determination of “ESG” factors, indicators or principal adverse impacts associated with an investment, product or asset, and different persons may consider or treat the same investment, product, asset, targets, actions or the like, differently from a sustainability perspective. Data provided by a third party may also be subject to change. MAM has taken reasonable steps to mitigate the risks associated with any data limitations but does not make any representation or warranty as to the completeness or accuracy of any third-party data (whether actual or estimated), or of any other data that is disclosed in this document.