Environmental, Social and Governance

As Responsible Entity (RE) for the Rural Funds Group (RFF, the Fund), Rural Funds Management (RFM) takes the environmental, social and governance (ESG) responsibilities of the Fund seriously.

The statements outlined below have been endorsed by the RFM Board of Directors, with RFM senior management responsible for their implementation and monitoring.

Some areas relate more directly to RFM than RFF. For instance, RFF does not directly employ staff, so the human capital management section is in reference to staff employed by RFM which manages the Fund’s assets.

Environment

Management of natural resources, including water resources

RFF owns a portfolio of Australian agricultural assets and the stewardship of these assets is of critical importance to the performance and growth of RFF. RFF’s leases require operators to use appropriate agricultural production methods.

Wherever practical, the Fund will:

  • monitor industry developments and adopt farm management practices that incorporate the latest research findings and technologies to minimise environmental impact, protect biodiversity and better use the natural resources
  • maximise water-use efficiency through the use of modern, well managed irrigation systems
  • ensure water management practices consider and manage water quality and minimise run-off
  • use communication technologies to access water-use data remotely, assisting with optimal water use
  • adopt nutrient management practices that improve long term soil health, and ensure that pest and weed management requiring the use of chemicals occurs in a safe and environmentally responsible manner
  • ensure that lessees and personnel understand and are focused on sustainable farming principles and adhere to environmental legislation and regulations.

Climate change

RFM monitors the impact of climate change on RFF’s portfolio of assets and has implemented a climatic diversification strategy. The strategy promotes the acquisition of assets across different growing regions and asset classes. A Climate Diversification discussion paper was released to the ASX on 20 June 2016.

Energy use

RFM regularly reviews assets and infrastructure to identify more efficient technologies to reduce RFF’s energy consumption and carbon footprint. RFF’s assets in the cattle and poultry sectors have achieved savings from solar technologies. RFM Poultry, the lessee of the Fund’s poultry assets, recently installed 100 kilowatt solar systems on each of RFF’s four Victorian poultry farms. The energy produced is used to support chicken growing activities, with excess energy fed back into the grid. RFM is undertaking assessment of further solar energy options across the portfolio. Other examples of energy savings are the RFF almond and macadamia assets, which benefit from technology that measures tree sap flow ensuring the delivery of exact water requirements.

Social

Community engagement

Community engagement is an integral part of RFM’s corporate culture and is key to maintaining the support of the communities where RFF owns assets. RFM’s first preference when employing staff is to seek potential personnel with suitable skills and expertise from local communities for both employment and contracting opportunities in the areas where it operates.

In addition to being an employer in various areas of rural and regional Australia, RFM regularly provides support via donations, labour and other means to local community organisations. Organisations that RFM supported during the year include:

  • the McGrath Foundation, which helps to place breast care nurses into regional areas, including those where RFF has assets
  • the Rolleston State School and the Bundaberg Science and Engineering Challenge, a two day event attended by over 700 school students
  • ArtSound “Senior Memories”, a not-for-profit digital audio service tailored specifically to the needs and interests of seniors living in aged care facilities and retirement villages
  • Meg’s Children, a children’s home and community outreach program in outer Kathmandu, Nepal

RFM believes it is important to engage the communities in the areas where the Fund’s assets are located, as many of its developments are significant in size and scale. In May 2018, RFM and lessee Olam Orchards Australia hosted a community tour of its Kerarbury almond orchard in the NSW Riverina. The tour provided local organisations, business groups and landholders an insight into the progress and future plans of the substantial development. RFM also provides horticultural traineeships for local high school students, providing them with on-the-job training and potential ongoing employment opportunities with RFM.

Human capital

As RFF does not directly employ staff, RFM is responsible for human capital management associated with the management and operation of the Fund. RFM has implemented a range of human capital related policies, including: Code of Conduct, Environmental, Health, Safety and Environment (HSE), Incident Management, Diversity and Equal Employment Opportunity. The aim of these policies is to create a safe, diverse and equitable work place.

The RE takes it’s obligations relating to Workplace Health and Safety seriously and has implemented an extensive HSE management system to educate personnel and protect them from harm. The RFM Board receives a monthly workplace health and safety report identifying any issues and incidents. RFM periodically reviews arrangements with independent contractors to determine their practices and standards meet legislative requirements and contractual obligations. RFM is committed to providing employees with ongoing opportunities for HSE training and development.

Animal welfare

RFF owns properties that are leased to chicken and cattle producers, including those involved in intensive production. RFM has policies and procedures with respect to animal treatment and welfare. The following information is provided about the cattle and chicken growing sectors.

Poultry: The birds produced at RFF’s poultry sheds are accredited under the RSPCA’s Approved Farming Scheme Standards – Meat Chickens. Ongoing compliance with the Standards is monitored through RSPCA audits, with each farm being audited twice each year, in addition to random audits. Chickens are raised in accordance with RSPCA standards for prescribed stocking densities and with the freedom to express normal behaviours.

Cattle: The lessees of RFF’s cattle properties are required to adopt best practice husbandry techniques including “low stress” stock handling methods which assists to maintain animal wellbeing. Fattened animals are generally sold domestically, to either a processor or feedlot. A small proportion of the cattle may not be suited to being finished and therefore may be sold to the live export market.

Governance

Corporate governance

RFM as RE is responsible for the management of RFF on behalf of its unitholders. The Board takes its corporate governance responsibilities seriously. The Board, which has a majority of independent directors, including an independent Chairman, is comprised of four directors with the experience and skills necessary to oversee the corporate governance requirements of the RE. The Board works together, and its collective ability facilitates effective decision making to lead a viable, profitable and efficient business. Board member performance is reviewed annually. RFM provides Directors with the opportunity for ongoing training as required to enable them to effectively meet their responsibilities.

In addition, RFM has established an internal compliance committee (ICC) that reports to the Board monthly. The ICC monitors and reports on compliance with RFM’s AFSL and compliance program to ensure that it is effective in meeting RFM’s compliance requirements. The ICC also provides a supporting role to the Compliance Officer. The ICC is structured to include representatives from different business units to ensure compliance monitoring and review are well embedded across RFM.

 

Please click the following link to view RFF’s corporate governance policies page.

Conflicts of interest and related party transactions

RFM manages a number of entities, including in its role as RE for six funds. Where related party transactions occur between RFF and another RFM managed entity, they are subject to the RFM Conflict of Interest Management Policy. RFM’s responsibilities and contractual obligations are set out in the Fund’s Constitution, the Corporations Act, the ASX Listing Rules and in the RE’s AFSL. As RE, RFM must always act in the best interests of the unitholders, and if there is a conflict between the unitholders’ interests and its own interests, it must give priority to the unitholders’ interests. RFM has also established protocols, including appointing separate personnel to act for each entity with separate external advisers. To monitor compliance with these obligations, the RFM Board receives a monthly report from the RFM Compliance Officer, who reports on RE compliance, conflicts of interests and related party transactions.

Ethical conduct

RFM seeks to act ethically while doing business and this underpins its approach with all transactions. RFM employees are obligated to conduct themselves in accordance with the standards set out in the RFM Code of Conduct, the Corporate Governance Charter and other related policy documents. Our employees conduct themselves with integrity, in compliance with legislative requirements and with internal policies and procedures. Employee performance is monitored by management through a combination of ongoing informal reviews and formal annual reviews. RFM’s recruitment process includes reference checking of all potential employees, as well as national police checks and bankruptcy checks for sensitive roles. RFM’s anti-money laundering and counter-terrorism financing program policy aims to identify, mitigate and manage the risk that the Company or its Officers may unwittingly facilitate money laundering or financing of terrorism. The RE manages the above risks in accordance with its Risk Management Policy available on the RE’s website.