Macquarie Infrastructure Group (MIG)

The Macquarie Group (Macquarie) manages a range of investment vehicles within Macquarie Capital. MIG is one of these vehicles. Macquarie has made a public statement on corporate citizenship which is available on its website. The commitment is based on Macquarie taking a long-term view of its business activities and acknowledging the importance of good custodianship to the communities in which it operates.

As set out on Macquarie’s website, this commitment is underpinned by:

• A clear expectation of ethical behaviour from all Macquarie staff, which has been adopted by MIG and which is set out in http://www.macquarie.com.au/mig_codeofconduct
• A robust framework of policies including those relevant to environmental, social and governance (ESG) responsibilities.

Responsibility

All Macquarie staff, including those working for MIG, have a collective responsibility to ensure that Macquarie continues to be a good corporate citizen. MIG management is supported in this by Macquarie’s integrity, equal employment and sustainability and environment officers, and the risk management group.

Macquarie staff may also contribute their time, expertise or finances to community organisations through the Macquarie Group Foundation.

MIG

MIG believes that many social, environmental and economic benefits arise from responsible private-sector development and operation of infrastructure. MIG is also aware that with these benefits lies the potential for risks, including ESG risks.

MIG’s approach to managing risk, including ESG risk, falls under the Macquarie Capital framework which is consistent with Macquarie’s framework. However, the Macquarie Capital framework also incorporates policies and practices that reflect the risks specifically associated with management of and investment in infrastructure funds. Key policies, procedures and accountabilities are set out in Macquarie Capital Funds’ corporate governance and risk management available on MIG’s website.

The framework is applied throughout MIG’s investment process as follows:

• Asset selection – environmental and social responsibilities are reviewed as part of the acquisition due diligence process
• Ongoing asset management – regular asset board reporting enables compliance with environmental requirements to be monitored and environmental and social responsibility issues to be identified
• Stakeholder reporting – policies, social and environmental initiatives and compliance performance are reported internally and, where appropriate, externally.

In addition to Macquarie’s own processes and policies, many new infrastructure projects undergo extensive social and environmental impact reviews before being given approval to proceed. The process is typically run by governments, which will have balanced the costs and benefits of the project. Accordingly, a government-run process will usually require new infrastructure to produce more efficient environmental outcomes than existing alternative infrastructure; or, where an investment is made in existing infrastructure, for that investment to produce improved environmental outcomes over those that existed prior to the investment being approved.

ESR-related regulatory requirements

MIG is not aware of any material breaches of relevant ESR-related regulatory standards by its assets during the year ended 30 June 2008.

ESR-related initiatives at MIG assets during FY2008

During FY2008 a change in the legislation covering reporting requirements removed MIG’s obligation to send hard copies of MIG’s annual and interim reports to security holders unless specifically requested.

A large number of MIG security holders chose to receive electronic copies of these reports. In conjunction with Planet Ark, MIG has assessed the reduction in the manufacture, printing and shipment of the reports as a result of elections made by MIG security holders as saving, in one year, more than 11 tonnes of paper, 327,000 litres of water, 2,100kg of waste from production to landfill and 24,000kg of greenhouse gas (GHG) emissions.

Examples of notable ESR-related initiatives undertaken during the past financial year at assets in which MIG invests include:

Carbon disclosure project

MIG is a participant in the carbon disclosure project (CDP), an annual international survey intended to guide the investment decisions of institutional investors, by providing them with information about how companies approach climate change. In 2008 MIG outlined its approach to assessing and managing environmental risks, which include climate change. From 2009 MIG will provide more information about its energy consumption and the greenhouse gas emissions arising from its activities.

Drive for Charity

Drive for Charity is an initiative where, each year on certain roads, a day’s toll proceeds are collected and distributed to charitable and not-for-profit organisations that provide assistance and services to the communities in which the roads operate. A strong sense of goodwill has developed around the initiative, with drivers often donating more money than the normal toll, and the motorways’ staff joining in to raise money for the worthy causes.

This year MIG was proud to support Drive for Charity on M6 Toll in the UK and on Dulles Greenway in the US.This year MIG was proud to support Drive for Charity on M6 Toll in the UK and on Dulles Greenway in the US.

M6 Toll – 10 May 2008

Drive for Charity was held for the third time on M6 Toll. To date, more than £510,000 has been raised and distributed to worthy causes, including an annual £30,000 donation to the local County Air Ambulance. The organisations to benefit in 2008 were:

• Royal National Institute of Blind, the UK’s leading charity, offering information, support and advice to over two million people with sight loss
• Leonard Cheshire, the largest charity provider to disabled people in the UK
• M6 Toll Hospices, a joint venture involving the four hospices along the M6 Toll.

Dulles Greenway – 19 May 2008

This is the third year that Dulles Greenway has participated in the annual Drive for Charity event. In 2008 more than US$198,000 was donated to six local organisations through tolls and the assistance of Greenway sponsors within the local business community, bringing the total amount raised through the event to over US$570,000.

Drive for Charity is built around three-year funding relationships and in 2009 Greenway management will be selecting new recipients for Drive for Charity proceeds. The organisations which have benefited from the event to 2008 are:

• The March of Dimes, whose mission is to improve the health of babies by preventing birth defects
• Special Olympics, Loudoun Chapter, which provides local athletes with intellectual disabilities with opportunities to participate in weekly practices and tournaments
• Loudoun Abused Women’s Shelter, which provides emergency accommodation, food and emotional support to women and their children escaping domestic violence and abuse
• Fresh Air/Full Care, which provides funding for summer camps for at-risk youth
• Loudoun Wildlife Conservancy, which promotes the preservation and proliferation of healthy wildlife habitats.

New South Wales’ safest road

In December 2007 Westlink M7 was rated New South Wales’ best highway, with a four-star safety rating from the Australian Road Assessment Program (AusRAP). AusRAP is an initiative of the Australian Automobile Association.

The program has developed a star rating for all highways, based on their safety performance. The ratings system highlights the most dangerous and the safest sections on national highways and helps motorists understand the potential risks when driving on different roads.

AusRAP’s star ratings involve an inspection of a number of design elements such as lane and shoulder width and the presence of safety barriers, known to have an impact on the likelihood of a crash and its severity. Between one and five stars are awarded to road links depending on the level of safety ‘built-in’ to the road.

The AusRAP audit found that Westlink M7 motorists are better protected from head-on crashes by 100% of the motorway being divided. In addition the report states that 100% of the motorway features good horizontal alignment providing for safe driving at a uniform speed.

Supporting local students

n August 2007 407 ETR management announced the creation of a C$125,000 scholarship fund that will support students at York University in graduate studies for years to come.

The scholarship recognises that thousands of York students, staff and faculty use 407 ETR daily. The C$125,000 endowment fund will generate C$5,000 annually. That C$5,000 will then be matched two-to-one by the Ontario Graduate Scholarship Program, providing a total of C$15,000 to each year’s scholarship recipient.

In 2000 Dulles Greenway established their Citizenship Award and Scholarship, awarding its first funds in the spring of 2001. The program awards scholarships to public high school students in London’s County. Since inception more than 45 students have received scholarships for college. In 2008 the program awarded US$1,000 scholarships to 12 local students.

Understanding climate change impacts

During FY2008 M6 Toll’s management worked with scientists from the Institute for Environmental, Sustainability and Regeneration at Staffordshire University, to understand the road’s climate ‘footprint’. When completed, the work, which assesses the energy consumption and greenhouse gases emitted by various aspects relating to M6 Toll’s construction and operation, will be reviewed and verified by the UK Government-funded Carbon Trust.

Management will then be able to use the findings to drive energy efficiency to help M6 Toll reduce its climate impact.

Supporting the homeless

In April 2008 about 70 employees and guests of ITR held a charity bowling event to raise money for the Hope Ministries, which helps to meet the needs of people without resources to provide for their own physical, mental and emotional needs. The event raised US$3,500 for the cause and ITR employees additionally donated simple but much-needed items including medicine and food.

Bringing libraries online

The City of Chicago has put Chicago Public Library online, with US$10 million of the US$11 million cost of the project coming from the proceeds of the US$1.82 billion paid for the 99-year lease of Chicago Skyway. The ability to reserve and renew books from home means more Chicagoans can get help with their homework, download music and use the internet through the library’s services. Since the improvements were implemented in March 2008 the number of hits on the library website has grown to 105 million a month, up from 28 million at the same time in 2007.