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The investment approach for the University鈥檚 Endowment Fund is aligned with the principles of the Strategy, reflecting the University鈥檚 values.

There are circumstances in which the University believes it is appropriate to exclude certain exposures from the Endowment Fund鈥檚 portfolio on ethical grounds. 聽Such circumstances typically arise when activities undertaken by a given company or industry are deemed inconsistent with the Strategy.聽

Most investments expose the Fund to a mix of both positive and negative activities. 聽Certain companies may generate a small proportion of their revenue from negative activities but remain profitable investments from an ethical perspective. 聽The Endowment Fund鈥檚 stated exclusions therefore include allowances and tolerance levels to account for such nuances.聽

The Endowment Fund excludes public equities and corporate bonds issued by:

• Any listed company that derives 10% or more of total revenue from the ownership and exploitation of its fossil fuel reserves, including thermal coal, oil, and gas¹
• Any listed company which manufactures tobacco products
• Any listed company which manufactures controversial weapons (including components produced exclusively for use in controversial weapons) such as cluster munitions, biological/chemical weapons, and land mines

¹At the time of writing, the University has committed to the divestment of direct and co-mingled holdings encapsulated under this exclusion by the end of 2024.

In 2023 the Fund has undergone a number of changes to facilitate the transition to an investment portfolio that will be able to meet the objectives of the Strategy. 聽These changes include the following:

• Appointment of Frontier Advisory as a new independent asset advisor 鈥� March 2023
• Review of the Governance structure 鈥� approved by Council on 5 June 2023
• Review of the Endowment Fund Policy incorporating ESG principles and ethical investment exclusions 鈥� approved by Council on 5 June 2023
• Review of the Fund objectives and long-term targets and subsequent approval of new Strategic Asset Allocation (SAA) 鈥� approved by Council on 16 October 2023
• Development of a transition plan to the approved Strategic Asset Allocation and divestment from fossil fuels over the course of 2024

The Endowment Fund invests in four funds through three fund managers. 聽All three fund managers are signatories to the UN PRI (UN Principles for Responsible Investment). 聽A summary of the Fund Managers is provided below:

Funds SA

A core part of Funds SA鈥檚 Responsible Investment activities is the ongoing focus on environmental, social and governance (ESG) integration and stewardship activities through investment manager engagement and monitoring.

During 2022-23, as part of Funds SA鈥檚 Climate Risk Response Plan, Funds SA commenced phasing out thermal coal exposure, except where a credible transition plan exists.

Since 2012, Tobacco has been a formal exclusion applied to discrete mandates only. 聽Investments in
securities issued by companies classified as being in the tobacco industry according to the Global
Industry Classification Standard (GICS) or similar are not permitted.

Data provided by Funds SA is based on MSCI Metrics.

Fulcrum

Fulcrum uses Sustainalytics data for carbon reporting and firmwide exclusions. 聽All Fulcrum investment strategies are excluded from investing in controversial weapons (including cluster munitions), tobacco, and predatory lending.

In addition to temperature-based restrictions, Fulcrum screen out companies primarily involved in, and planning new projects for the extraction of, thermal coal mining and oil sands from existing strategies managed in line with net-zero. This exclusion applies to the strategic equity allocation within our Diversified Absolute Return strategy.

AQR

The GRP EL Offshore Fund uses both individual stock positions (cash and swap instruments) and equity index derivatives to achieve equity exposure. 聽

AQR uses MSCI data in calculating the metrics.

The WACI of the fund is 90.8 tCO2/$M sales. This compares to a benchmark WACI of 158 tCo2e/$m sales. The WACI of the fund will decline throughout 2024 as the Endowment Fund transitions from holding equities and bonds in companies whose primary business is the ownership and exploitation of fossil fuel reserves.

As at 30 June 2023 the consolidated Fund exposures are:

* Regarding Fossil Fuel reserves, revenue is not available. 聽Funds SA has used a metric that identifies any company that flags as holding reserves, most likely for energy applications

** Refer to definitions in Appendix 1

The approximate carbon intensity of the Fund, using the Weighted Average Carbon Intensity (WACI)*** metric by Fund Investment is highlighted below:聽

*** WACI - this figure represents the list equity portfolio's exposure to carbon-intensive companies calculated by each company's most recently reported, or estimated Scope 1 + Scope 2 greenhouse gas emissions normalised by sales in USD, which allows for comparison between companies of different sizes and weighted by the equity portfolio's exposure to those companies, expressed as tonnes of carbon dioxide equivalent per $ million of sales (tCO2e/$M Sls)

**** Funds SA have provided a 鈥渂enchmark鈥� WACI of 158 tCO2e/$M sales. 聽This is based on the proportion of the strategic asset allocation to International and Australian equities, using the International Equities benchmark of MSCI All Countries World Index Ex-Australia (unhedged) and the Australian Equities benchmark of the S&P/ASX300 Accumulation Index.

AQR: The carbon metrics presented considers individual stock positions, which as of June 30, 2023, are emerging market stocks and Equity Index Derivatives. Emerging market companies tend to be more carbon-intensive and therefore the emerging-only exposure is elevated when comparing it to the MSCI World and MSCI ACWI metrics, which are either entirely or mostly developed market stocks. 聽Whilst there is not yet a universally accepted formal standard on the carbon reporting of derivative instruments and this is an area that the Partnership for Carbon Accounting Financials (PCAF) is working on. 聽Frontier believe it is a reasonable and prudent approach in this case to treat the equity index derivatives as equivalent to the look-through stock holdings. 聽With the inclusion of equity index derivatives in the carbon metrics, the portfolio emissions intensity (PEI) metric is significantly closer to that of the MSCI ACWI Index: GRPEL PEI has 161 level 1 emissions per $1 million in sales and 34 level 2 emissions per $1 million in sales, compared to 159 and 32 for MSCI Al Country World Index (ACWI), respectively for level 1 and level 2 intensities

Funds SA data uses the following MSCI metrics to calculate exposures noted within the report:

Generation Fossil Fuels - Maximum Percentage of Revenue

This factor identifies the maximum percentage of revenue (either reported or estimated) that a company derives from the fossil fuel (thermal coal, liquid fuel and natural gas) based power generation.

Funds SA has applied a filter of above 10% revenue from power generation.

Thermal Coal - Maximum Percentage of Revenue

This factor identifies the maximum percentage of revenue (either reported or estimated) greater than 0% that a company derives from the mining of thermal coal (including lignite, bituminous, anthracite and steam coal) and its sale to external parties. It excludes: revenue from metallurgical coal; coal mined for internal power generation (e.g. in the case of vertically integrated power producers); intra-company sales of mined thermal coal; and revenue from coal trading.

Funds SA has applied a filter of above 10% revenue from mining and selling mined product.

Metallurgical Coal - Maximum Percentage of Revenue

This factor identifies the maximum percentage of revenue (either reported or estimated) that a company derives from the mining of metallurgical coal (including coking coal) and its sale to external parties. 聽It excludes revenue from thermal coal, intra-company sales of mined metallurgical coal, and revenue from coal trading.

Funds SA has applied a filter of above 10% revenue from mining and selling mined product.

Unconventional Oil & Gas - Maximum Percentage of Revenue

This factor identifies the maximum percentage of revenue (either reported or estimated) greater than 0% that a company derives from unconventional oil and gas. 聽It includes revenues from oil sands, oil shale (kerogen-rich deposits), shale gas, shale oil, coal seam gas, and coal bed methane. 聽It excludes all types of conventional oil and gas production, including Arctic onshore/offshore, deepwater, shallow water and other onshore/offshore.

Funds SA has applied a filter of above 10% revenue from mining and sale of mined product.

Conventional Oil & Gas - Maximum Percentage of Revenue

This factor identifies the maximum percentage of revenue (either reported or estimated) greater than 0% that a company derives from conventional oil and gas. 聽It includes all types of conventional oil and gas production, including Arctic onshore/offshore, deepwater, shallow water and other onshore/offshore. 聽It excludes revenues from unconventional oil & gas (oil sands, shale oil, shale gas).

Funds SA has applied a filter of above 10% revenue from mining and sale of mined product.

Fossil Fuel Reserves - Energy Application

This factor identifies companies, regardless of their industries, with evidence of owning fossil fuel reserves used most likely for energy applications. 聽For high intensity industries (Energy, Utilities, Diversified Metals & Mining), this factor flags companies with evidence of fossil fuel reserves (excluding metallurgical coal). 聽For other industries, it flags companies with evidence of fossil fuel reserves (excluding metallurgical coal) and deriving revenue from business segments associated with energy application of fossil fuels such as thermal coal mining, oil & gas exploration and production and downstream activities e.g. refining; distribution & retail; pipeline & transportation; trading and fossil fuel based power generation. 聽Fossil fuel reserves are defined as proved and probable reserves (i.e. 2P) for coal and proved reserves (i.e. 1P) for oil and natural gas. 聽Evidence of owning reserves includes companies providing the exact volume of reserves, and companies making a statement about their ownership of reserves.

Funds SA has identified any company that flag as holding reserves that are most likely for energy applications, however the reserves may have not generated revenue.

Tobacco Producer

Companies that manufacture tobacco products, such as cigars, blunts, cigarettes, e-cigarettes, inhalers, beedis, kreteks, smokeless tobacco, snuff, snus, dissolvable and chewing tobacco. 聽This also includes companies that grow or process raw tobacco leaves.

Controversial Weapons - Any Tie

Companies that have any ties to cluster munitions, landmines, biological/chemical weapons, depleted uranium weapons, blinding laser weapons, incendiary weapons, and/or non-detectable fragments.

Fulcrum has provided data sourced from Sustainalytics using the following metrics:

Fossil Fuel exposures based on the following Global Industry Classification Standard (GICS) Sub Industries:

• 10102010 Integrated Oil & Gas
• 10102020 Oil & Gas Exploration & Production
• 10102030 Oil & Gas Refining & Marketing
• 10102040 Oil & Gas Storage & Transportation
• 10102050 Coal & Consumable Fuels
• 5510 Utilities (Only where company has fossil fuel powered generation facilities or operates extractive fossil fuel plants

A company is assigned GICS classification codes at the sub-industry levels by Standard & Poor's and MSCI according to their definition of the company's principal business. 聽A company's main source of revenue is the most important factor in determining its principal business activity.

AQR has provided data sourced from MSCI using the Global Industry Classification Standard (GICS) above.