Sun Life Financial : InfraRed 2024 Sustainability Report

Creating Better Futures

Contents

A message from the CEO	1
InfraRed at a glance	2
Our contribution to the SDGs	4
Sustainability governance
and approach	6
Sustainability highlights	8
Climate	10
Environment	20
Communities	24
People	30

InfraRed Sustainability Report 2024

About usClimate Environment Communities People TCFD Appendix

1. message from the CEO

In my inaugural year as CEO, I am pleased to present the fourth edition of our annual Sustainability Report.

Looking forward	36
TCFD	37
Appendix: Framework alignment	41
Disclaimer	42

This document is issued by InfraRed Capital Partners Limited ("InfraRed"). InfraRed is authorised and regulated by the Financial Conduct Authority ("FCA") with firm reference number 195766. This document is for information and convenient reference, and does not constitute an offer or solicitation for, or advice that you should enter into, the purchase or sale of any security or other investment product or investment agreement, or any other contract agreement or structure whatsoever. Potential investors should read all offering documentation in full, when and to the extent that this becomes available. This will contain important information required to be disclosed by InfraRed under applicable law.

Inside cover image: Mid Hill

InfraRed has always adopted a sustainability- led mindset. We believe that a robust and pragmatic approach to sustainability supports effective governance and risk management practices and ultimately can generate positive financial results. This is essential as we strive to deliver resilient returns for our investors, as well as to create a positive impact in society - Creating Better Futures.

In our previous Sustainability Report, we outlined ambitious targets. Throughout 2023, we have been actively working towards meeting our commitments. Below are a few key highlights of the progress we have made.

Over the past year, we surpassed our climate solutions target - with 62% of our AUM invested in climate solutions. This success is largely due to our strategic investments in operational utility-scale renewables in Europe and the US. Our recent sale of Statera1, demonstrates that our investments in the energy transition stand to benefit from this macro-theme.

Beyond our active investment in climate solutions, we are also intensifying efforts to address the broader impact of climate change on our portfolio. We engaged with our portfolio companies to encourage the implementation of decarbonisation initiatives and the development of ambitious net zero plans. Concurrently, we also evaluated the impacts on our portfolio through climate change impact assessments. We believe these initiatives help implement and improve climate risk management related to our investments.

We continue to look at opportunities to maximise benefits for our public sector clients and the communities our portfolio companies serve. Following the establishment of our portfolio impact strategy last year, we have seen great success in scaling initiatives such as 'community fridges' and 'Recirculate'

to address fundamental challenges of social inequality.

Finally, we continue to refine our data collection methods to implement targeted initiatives and improve transparency to our investors and wider stakeholders. Integral to our progress are our annual Greenhouse Gas (GHG) and Environmental, Social and Governance (ESG) surveys. These are complemented by our Creating Better Futures (CBF) Awards that recognise and promote ESG initiatives each year.

We welcome any feedback and can be reached via [e-mail].

Jack Paris

CEO

May 2024

Wondrwall

See more on page

15

We embed sustainability in our strategy knowing that it drives not only positive environmental and social outcomes but also yields resilient financial returns. As we hone our focus on climate change and social challenges, we are enhancing data accuracy to inform more targeted initiatives and greater transparency for our stakeholders.

1 Statera is a portfolio company which develops	Front cover image: Wondrwall, a company that has produced an intelligent
and operates large-scale,grid-connected energy	home management system integrated with renewable energy sources.
storage and flexible generation assets to balance the	This early stage investment forms part of a broader low carbon heating
grid at best value for energy users and support the	investment thematic being explored across multiple opportunities.
transition to a low-carbon future.

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InfraRed Sustainability Report 2024

InfraRed at a glance

Our diverse infrastructure portfolio

InfraRed Sustainability Report 2024

About usClimate Environment Communities People TCFD Appendix

Our investment philosophy

InfraRed Capital Partners is an international infrastructure investment manager with more than 170 professionals operating worldwide from offices in London, New York, Sydney, Madrid and Seoul. InfraRed manages $13bn+ of equity capital for investors around the globe, in listed and private funds across both core and value-add and capital gain strategies.

Sustainability is integrated into our investment philosophy. We invest in and create infrastructure projects that address pressing environmental and societal challenges.

Across our portfolio, wind and solar projects contribute to the decarbonisation of society, we connect communities through digital communication and road and rail projects, and increasingly we are seeing investment opportunities driven by the need to reduce natural resource consumption and create circular economies. Through the integration of ESG into investment processes, InfraRed aims to generate more resilient returns for our investors while contributing to positive sustainability outcomes.

240+	$13bn+	170+
Infrastructure	Equity under management1	Staff
projects

Our investments2

BY GEOGRAPHY %

BY SECTOR %

Energy	Connecting	Circular
transition	communities	economy
OBJECTIVE	OBJECTIVE	OBJECTIVE
Supporting the shift	Promoting digital inclusion and	Reducing waste and reliance
away from fossil fuels	improving quality of life	on finite resources
KEY FOCUS	KEY FOCUS	KEY FOCUS
Renewable energy, distributed	Electrification of transport	Bio-energy, recycling
energy and energy solutions	and digital infrastructure	and repurposing

	%		%
UK	56		Renewable energy	40
Rest of Europe	27	Social infrastructure	21
North America	12	Transportation	17
Australasia	3	Digital infrastructure	9
Other3	2	Flexible capacity	7
			Water utility transmission lines	6
			Power generation and other	<1

1. Calculated using five-year average exchange rate
2. Data as at 31 December 2023
3. 'Other' includes South America and the Middle East.

Recent investments

Jolt Energy		NexSpace
An e-mobility company		A new data centre company
implementing ultra-fast		utilising renewable energy
chargers to support electric		and energy efficiency
vehicle adoption in major		measures to minimise
urban areas.		environmental impacts.

Summit

A 362MW wind and solar farms supporting the decarbonisation of electricity.

Wondrwall

A company that has produced an intelligent home management system integrated with renewable energy sources

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InfraRed Sustainability Report 2024

InfraRed Sustainability Report 2024

About usClimate Environment Communities People TCFD Appendix

Contribution to the Sustainable

Development Goals (SDGs)

Through the evaluation of the essential services provided by each of the investments we manage, we have primary alignment with 7 of the 17 SDGs as outlined in the table.

Beyond the intrinsic environmental and social characteristics of our portfolio, InfraRed also places a strong emphasis on integrating sustainability considerations into our investment processes and corporate activities. This is aligned with

SDG

Ensure healthy lives and promote well-being for all at all ages

HOW OUR PORTFOLIO SUPPORTS1

41 companies that support good health and wellbeing including hospitals, community health facilities, and fire stations.

ANNUAL IMPACT1

8.7m

People with direct access to healthcare facilities as a result of our investments

our four sustainability priorities of Climate, Environment, Communities and People. By integrating ESG into our approach we support an additional four SDGs:

Contribution to the SDGs2

1

1312

4

3

12

Ensure inclusive and equitable quality	46 educational projects including schools, universities,	120,000
education and promote lifelong learning	colleges, libraries, and training facilities that facilitate
opportunities for all	the provision of essential learning outcomes.
			Student places across
			school, college and
			university facilities
		One of the largest water-only supply companies in the UK,
Ensure availability and sustainable	3.9m
management of water and sanitation	owning and managing water projects and networks across
for all	three supply regions in the south-east of England.
			People served with clean
			water by Affinity Water
		105 renewable energy and related infrastructure projects
Ensure access to affordable. Reliable,	5m
sustainable and modern energy for all	supporting the generation and provision of clean energy,
		including onshore and offshore windfarms, solar, battery
		storage, electricity transmission and electric vehicle
		(EV) charging.	Homes that can be
		powered using clean
			energy

	55
3: Good health and wellbeing	12%

Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation

12 housing accommodation and digital infrastructure projects which provide essential services required to support the functioning of modern economies.

9m

Consumers to be provided with connectivity through fibre and communication towers

	4: Quality education	4%
	6: Clean water and sanitation	3%
	7: Affordable clean energy	55%
	9: Industry, innovation and infrastructure	12%
	11: Sustainable cities and communities	13%
	16: Peace, justice and strong institutions	1%

1. As at 31 December 2023
2. % by valuation as at 31 December 2023 for the portfolio with the exception of HICL (September 2023) and IRETF (December 2022)

Make cities and human settlements	23 projects including road, rail and ferry assets	5m
inclusive, safe, resilient and sustainable	which support sustainable and resilient cities.
			Individuals used our
			roads and railways
Promote peaceful and inclusive societies	8 public services projects including prisons, police	2.3m
for sustainable development, provide	stations, judicial courts, as well as defence and
access to justice for all and build	government buildings.
effective, accountable and inclusive
institutions at all levels		People served by InfraRed's
			courts, fire stations and
			police stations

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InfraRed Sustainability Report 2024

Sustainability governance and approach

InfraRed Sustainability Report 2024

About usClimate Environment Communities People TCFD Appendix

A long-termsustainability-led mindset is integral to how InfraRed operates. We employ a comprehensive sustainability investment and management framework, underpinned by robust governance structures.

This ensures that sustainability considerations are integrated into our investment and corporate activities.

Governance

InfraRed has a dedicated Sustainability Team, responsible for developing and implementing InfraRed's sustainability strategy and acting as a central knowledge point for ESG within the company.

All staff are required to integrate sustainability in their day-today roles. This includes conducting ESG due diligence on new investments, engaging with portfolio companies to implement decarbonisation initiatives, and operating our office in a sustainable way. To support this in practice, each of InfraRed's Senior Management Team has individual sustainability objectives which support their business area's contribution to our overall sustainability strategy.

The Head of Sustainability is responsible for providing regular updates to InfraRed's Management Committee on the sustainability strategy and key workstreams. The Management Committee provides oversight and guidance to ultimately ensure that InfraRed is fulfilling its sustainability commitments.

In addition, any investment or fund-specific sustainability considerations are communicated to fund Investment Committees for consideration and approval.

Sustainability Policy

The Sustainability Policy documents the process for embedding sustainability considerations into our investment and asset management processes as well as our own internal corporate operations. The policy can be found on our website here.

Our sustainability priorities

Our sustainability approach focuses on four priority areas where we can make a significant impact.

Climate		Environment		Communities		People
Read more on page 10		Read more on page 20		Read more on page 24		Read more on page 30

An integrated and holistic approach

InfraRed's governance structure

Whilst we have a number of dedicated sustainability resources within the business, it is the responsibility of all staff to deliver InfraRed's sustainability objectives within their day-to-day role.

These sustainability priorities are supported by our approach, with a particular focus on integrating ESG considerations into our investment processes, transparently reporting on progress and creating a culture where our team contributes to deliver our commitments.

plans

Management Committee

and action

Strategy

Investment Committee

Senior Management Team

Investment Management

Sustainability

Asset

Risk,

management

Portfolio

Fund

Capital

Central

Investments

Governance &

including

Management Management

Formation

Functions

Compliance

Portfolio Impact

Portfolio Company Board

reportingand

InfraRed Asset Managers

Portfolio companies

Feedback

Portfolio

Portfolio

Portfolio

Portfolio

Portfolio

Portfolio

company

company

company

company

company

company

Further details on our governance, including team structure and sustainability-linked performance objectives, can be found in our Sustainability Policy

Integrating sustainability into our investment process

Stewardship and engagement

Monitoring and disclosing ESG performance

Creating company-wide responsibility

Sustainability within our business

Our sustainability management framework ensures that ESG criteria are integrated into each stage of our investment process, irrespective of strategy or sector.

We adopt a proactive approach to asset management to ensure that our portfolio companies have effective governance structures and are managed responsibly with board oversight. We also seek to use our influence to promote the highest sustainability standards across our portfolio and supply chains.

We conduct annual ESG and GHG surveys to monitor portfolio companies' performance, helping us identify opportunities for change and ensure that we are transparent and accountable to investors and wider stakeholders.

InfraRed maintains internal governance structures and clear allocation of responsibilities to ensure sustainability requirements are incorporated in corporate and investment activities.

From focusing on our corporate carbon footprint to creating an equal and inclusive workplace, we are progressing sustainability initiatives within our own company.

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InfraRed Sustainability Report 2024

Sustainability highlights

Net Zero and climate resilience

• We continued to work with portfolio companies to improve accuracy of Scope 1, 2 & 3 emissions and initiated company-level decarbonisation plans
• We completed our second climate change risk assessment across the majority of the portfolio
• 62% of AUM is invested in climate solutions1

See page

11

ESG monitoring1

• 95% of portfolio companies responded to our annual ESG survey2
• 91% was the average score achieved in the annual ESG survey, updated in 2023 with new metrics (compared to 93% in 2022)
• Internal audit completed of our sustainability reporting processes

See page

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Our Impact

• We continued to implement portfolio impact initiatives, such as community fridges and Recirculate across more portfolio companies
• We hosted our inaugural Creating Better Futures Awards recognising 13 companies for 'gold standard' ESG initiatives
• We continued to hold bi-annual ESG summits with portfolio companies to share examples of best practice

See page

25

Industry recognition and contributions

• We maintained our PRI 5-star rating for the Policy, Governance & Strategy and Infrastructure modules and received a 4-star rating for the newly introduced module, Confidence Building Measures (CBM)
• A number of our portfolio companies were recognised externally for their ESG contributions
• We contributed to the development of industry guidance materials such as the IPA Guidance Document and provided direct responses to the SFDR and SDR consultations

See page

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InfraRed Sustainability Report 2024

About usClimate Environment Communities People TCFD Appendix

Our progress on sustainability commitments

SUB-PRIORITY	TARGETS1		2023 PROGRESS1
Climate Read more on page 10
Portfolio	70%		61%
coverage
of AUM to be aligning,		of AUM are aligning, aligned or net zero
	aligned or net zero by 2030
Engagement	90%		58%
threshold
of emissions to be subject to direct	of emissions have been subject to engagement
	or collective engagement and
	stewardship actions by 2030
Climate	50%		62%
solutions
of AUM to be invested in		of AUM invested in climate solutions
	climate solutions by 2025
Environment Read more on page 20
Minimising			74%
biodiversity loss
		of AUM are implementing initiatives
			with a positive impact on biodiversity
Reducing resource	100%	100%	62%	74%
consumption
of AUM with	of AUM with material	of AUM with material	of AUM with material
For portfolio companies	material water	waste generation	water consumption	waste generation
where we have	consumption to have	to have reduction	have reduction	have reduction
operational control	reduction initiatives	initiatives in place	initiatives in place2	initiatives in place2
	in place by 2025	by 2025
Communities Read more on page 24
Addressing	80		As a Client Insight Survey was completed
community		in 2022, we did not complete a subsequent
responses to the Client
and client needs		survey in 2023.
Insights Survey by 2025
Maximising	50		39
our impact
submissions to the Creating	responses to the Creating
	Better Futures Awards by 2025	Better Futures Awards
People Read more on page 30
Fostering diversity,	One-third of senior level roles at InfraRed	24%	21%
equity and inclusion	to be held by women in five years
of senior team	of staff are from
			are women3	ethnic minorities

Promoting responsible	82%
supply chains
of AUM have policies to monitor compliance
	with the UNGC Principles or OECD Guidelines
	for Multinational Enterprises
Maintaining	87%
health and safety
of AUM conducted independent health
	and safety inspections in the last year

1. As at 31 December 2023
2. The ESG survey is based on calendar year, the period running from 01 January 2023 to 31 December 2023
3. InfraRed received a 4-star rating for the newly introduced Confidence Building Measures (CBM) module

1. As at 31 December 2023
2. This target considers sectors with material water and waste consumption are outlined on page 25 of InfraRed's 2023 Sustainability Report. InfraRed is in the process of reviewing this target to reflect the level of operational control more accurately for the social accommodation projects which are predominately PPP/PFI projects
3. InfraRed defines senior level to include Managing Director and Partner

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InfraRed Sustainability Report 2024

Climate

InfraRed Sustainability Report 2024

About us ClimateEnvironment Communities People TCFD Appendix

Progress against net zero targets

Supporting climate action by decarbonising our assets, investing in the energy transition, and delivering climate resilient infrastructure

Since 2021, InfraRed has completed three portfolio-wide emissions assessments and two climate risk assessments. Data provides us with deeper insight into the double materiality of climate change and supports our objective to deliver targeted action.

IN THIS SECTION

Progress against net zero targets

Emissions disclosure

Climate resilience

Portfolio coverage

Target year

2030

70%

of AUM is aligning, aligned or net zero1

Baseline as of 31 Dec 2021

8%

of AUM aligned to net zero

Progress as of 31 Dec 2023

61%

of AUM is aligning, aligned or net zero1

Engagement threshold

Target year

2030

90%

of emissions to be subject to direct or collective engagement and stewardship actions1

Baseline as of 31 Dec 2021

0%

metric was not formally tracked

Progress as of 31 Dec 2023

58%

of emissions subject to direct or collective engagement and stewardship actions1,2

Climate solutions

Target year

2025

50%

of AUM to be allocated

to climate solutions which factor in substantial AUM growth plans during this period1

Baseline as of 31 Dec 2021

45%

of AUM allocated to climate solutions

Progress as of 31 Dec 2023

62%

of AUM allocated to climate solutions1

2023 PROGRESS	2024 OBJECTIVES
We developed guidance material to support	Increase net zero alignment percentage
portfolio companies to implement net zero	by supporting companies in setting targets
criteria over specific timeframes, based	and implementing decarbonisation plans
on sector and business maturity
We committed new capital to climate	Engage with portfolio companies on the findings
solutions including battery portfolios	of the climate impact assessment and assess
and an AI-powered home energy	the effectiveness of mitigation measures
management business

1. As at 31 December 2023
2. Based on metrics collected in annual ESG survey and direct engagement activity

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InfraRed Sustainability Report 2024

Progress against net zero targets continued

Portfolio coverage

InfraRed has increased its percentage of AUM that is aligning, aligned or net zero from a baseline of 8% as as 31 Dec 2021 to 61% as at 31 Dec 20231.

InfraRed Sustainability Report 2024

About us ClimateEnvironment Communities People TCFD Appendix

InfraRed manages infrastructure investments that encompass	no direct employees and operational control is often in the hands
a diverse array of sectors and stages of business maturity.	of the public sector client or third-party suppliers. This complex
The majority of our renewable energy and public-private	dynamic underscores the need for a tailored approach to
partnerships (PPP) / private finance initiative (PFI) companies have	engagement and net zero implementation, as outlined below.

61%

of AUM is aligning, aligned or net zero

0%20%40%60%80%100%

9%	52%	39%
Baseline (2023 data)	Aligning, aligned or net zero	Preparing to decarbonise2
- High Speed One	- Climate solutions such as	- A63 Road
- Affinity Water	renewable energy	- M17/M18 Road

PPP/PFI public services infrastructure

TYPICAL SECTORS

Education

Healthcare

Transport

Emergency services

29%

of AUM1

Operational control

FACTORS TO CONSIDER

Renewable energy and supporting infrastructure

TYPICAL SECTORS

Solar

Wind

Batteries

Transmission lines

51%

of AUM1

FACTORS TO CONSIDER

Operational businesses

TYPICAL SECTORS

Rail

Fibre

Water

Data infrastructure

20%

of AUM1

FACTORS TO CONSIDER

Aligning energy transition infrastructure

Since setting the portfolio coverage target in 2022, an additional 52% of InfraRed's portfolio now meets the Institutional Investors Group on Climate Change (IIGCC) Net Zero Investment Framework(NZIF) criteria for infrastructure projects.

This results in a total of 61% of InfraRed's in-scope AUM that is either aligning with, aligned to or achieving a net zero status.

Progress is largely attributable to The Renewable Infrastructure Group (TRIG), a £2.8bn UK-listed fund comprising renewable generation and infrastructure assets managed by InfraRed3.

InfraRed recognises that guidance on the application of NZIF to infrastructure assets continues to evolve, particularly around decarbonisation requirements for assets categorised as climate solutions. We are committed to engaging with the relevant industry stakeholders to support the development

Preparing to decarbonise

The 'preparing to decarbonise' category, as introduced in the Private Markets Decarbonisation Roadmap2, accounts for another significant portion of AUM (39%).

These companies monitor their GHG emissions. Many have dedicated teams prioritising net zero efforts, and some are in the advanced stages of formalising decarbonisation plans. InfraRed's three-pronged net zero approach outlined on the next page is designed to facilitate a further transition, from preparation to alignment with net zero, in the coming year.

Preparing to decarbonise

GHG measurement, high-level decarbonisation plans4

Aligning

Short- and medium-termscience-based net zero targets in place5

Services are performed for clients (e.g. the NHS) in accordance with rigid contracts that pre-date net zero, offering limited flexibility for financing, optimising and changing energy systems.

OUR RESPONSE

We are adopting the Infrastructure and Project's Authority's (IPA) guidance,

Decarbonisation of Operational PFI Projects- a PFI-specific,stepped approach to support net zero interventions, with recommended activities and checklists at each stage.

These projects are operationally net zero as emissions intensity (tCO2e/MWh) from electricity generation/distribution outperforms net zero aligned trajectories.2 Virtually all emissions are generated in the supply chain.

OUR RESPONSE

We track net zero alignment of suppliers across categories such as replacement parts and maintenance. Suppliers are encouraged, based on materiality, to set science based targets for their companies. Net zero commitments of new suppliers will also

be considered in procurement.

There is a greater ability to use governance rights and collaborate directly with staff and decision-makers in these companies to support net zero implementation.

OUR RESPONSE

We encourage these companies to adopt a net zero framework developed by InfraRed's Net Zero Working Group. It recommends a phase-in approach to meeting the NZIF alignment criteria over the short to medium term, based on business maturity and sector.

of best practices for the application of this framework to the infrastructure sector.

Aligned

Net zero aligned decarbonisation plan underpinning targets and detailing mechanisms required to meet these

Net zero

Emissions are aligned with or out-performing required pathway, and will maintain this performance

Transition planning taking into account separate strategies required for portfolio companies

NEXT STEPS	NEXT STEPS	NEXT STEPS
Initiate a 'pilot programme' to work	Improve granularity of supplier data.	Track company progress on aligning
directly with a selection of PFI projects	Scale supplier engagement programme	to framework in accordance with
to practically apply IPA guidance.	business maturity.
beyond TRIG to other renewable energy
Establish a system enabling progress	and supporting infrastructure.	Host workshops with Management
in each step to be regularly reported		Teams to provide support to
to portfolio company board directors.		overcome challenges faced.

1. 87% of AUM is included in InfraRed's net zero commitment. While all portfolio companies are subject to net zero engagement, two funds that are currently being divested are excluded from the target as InfraRed cannot impose binding obligations on future owners of companies
2. Category in line with supplementary guidanceto NZIF by Initiative Climat International (iCI) and Sustainable Markets Initiative: www.bain.com/content assets/6df8cbe0d2a34117bf9751b150a6372e/private-markets-decarbonisation-roadmap.pdf
3. As at 31 December 2023
4. Decarbonisation plans in place but level of ambition not explicitly aligned to a net zero pathway
5. Short term: 3-5 years; medium term: 10-15 years

1. AUM in-scope of net zero commitment as at 31 December 2023
2. Science Based Targets initiative (SBTi) Power Sector; Transition Pathway Initiative for electric utilities. Note these pathways include Scope 1 and 2 emissions i.e. the carbon intensity from energy generation

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InfraRed Sustainability Report 2024

Progress against net zero targets continued

InfraRed Sustainability Report 2024

About us ClimateEnvironment Communities People TCFD Appendix

Engagement threshold

At the core of our net zero strategy is engagement with our public sector clients, portfolio company Management Teams and other key stakeholders. It is only through active engagement that we can effectively address a broad range of challenges, including improved data collection, GHG measurement

and implementation of decarbonisation initiatives.

We track progress against our engagement threshold target via the annual ESG survey, seeking evidence of:

• InfraRed Asset Manager engagement with the portfolio company
• Discussion of net zero at the portfolio company board management level
• Portfolio company engagement with subcontractors on net zero and emissions reporting

In line with the NZIF requirements, the companies with positive results across all three metrics or those who have been directly engaged by the Sustainability Team have been allocated against their 2023 total GHG emissions. This shows what proportion of the portfolio's emissions have meet our direct engagement requirements.

TARGET:
90%	58%
of emissions to be subject	of portfolio emissions
to direct or collective	achieved InfraRed's direct
engagement and stewardship	engagement requirements1
actions by 20301

Portfolio engagement

We engage with portfolio companies and other stakeholders via various forums, including:

• ESG Summit: A webinar hosted by InfraRed for portfolio company Management Teams, discussing case studies, emerging net zero guidance and improving data collection.
• Management Services Provider (MSP) Forum: a regular touchpoint between subcontractors and InfraRed's Asset Management Team.
• One-to-onemeetings between InfraRed's Sustainability Team and a number of portfolio company management teams on net zero action plan and progress.

Industry engagement

Contributing to industry standards

Recognising the diverse challenges faced by businesses in transitioning to net zero, we actively collaborate with industry groups. Together we are developing comprehensive sets of guidance tailored to address unique dynamics associated with a breadth of infrastructure businesses and sectors.

UK Government guidance on decarbonising PFIs

In 2023, InfraRed contributed to the development of the Infrastructure and Projects Authority (IPA) guidance document, Decarbonisation of Operational PFI Projects. This handbook provides tools to implement net zero initiatives within the bounds of strict contractual requirements. InfraRed is initiating a pilot programme to work closely with PFIs to adopt this framework which is discussed on page 13.

This guidance is publicly available here

Five principles of good practice for developing a decarbonisation plan are set out in the guidance document:

1	Data first
	2	Know your contract
3	Engage with stakeholders
4	Prioritise
	5	Make a plan

Climate solutions

Investments in climate solutions support system-wide decarbonisation and sustainable practices across industries. Financing transmission line and battery projects are key examples of this, facilitating the transition to cleaner electricity at a national level. Similarly, electric rail projects across the UK and Europe connect communities while avoiding GHG emissions from alternative fossil fuel-based transport.

InfraRed has surpassed its target with 62% of AUM now dedicated to climate solutions, exceeding the initial objective of 50% by 2025. This corresponds to a $2+ billion increase in InfraRed's allocation to investments which support the energy transition since the beginning of 2022. We remain committed to outperform this target by continuing to increase our allocation to climate solutions within the broader growth of InfraRed's assets under management.

CLIMATE SOLUTIONS INVESTMENT	%
	% invested in climate	45
	solutions, 2021
	Allocation to climate solutions,	17
2022 & 2023
	Social infrastructure, digital	38
	infrastructure, transportation

$2bn+

While climate solutions remains a focus, we actively support other infrastructure projects essential to modern society such as hospitals, fibre networks and roads. This is central to one of our sustainability themed investment strategy of protecting and connecting communities.

1 2022 UK Greenhouse Gas Emissions (latest data):

Decarbonising the residential sector with intelligent technology

Project: Wondrwall

Strategy: InfraRed Value-add

The majority of UK households rely on fossil fuels for electricity and home heating and cooling, making the housing sector a major contributor to national emissions1. While ensuring energy security and affordability remains a priority, it is considered essential to reduce residential emissions with improved energy systems.

Advances in technology are paving the way for more efficient domestic energy management. Additionally, transitioning home heating systems to electric power sourced from renewables can reduce energy consumption, emissions, and household energy bills.

A fund managed by InfraRed has made an early-stage investment in Wondrwall, an innovative company specialising in AI-driven optimisation for homes in the UK. This early- stage investment forms part of a broader low carbon heating investment thematic being explored by our InfraRed. Wondrwall integrates Internet of Things (IoT), sensor technology and low carbon heating with renewable solutions into one integrated Home Energy Management System (HEMS).

The adoption of Wondrwall can reduce household energy costs while contributing to the UK's net zero targets.

1 As at 31 December 2023

assets.publishing.service.gov.uk/media/65c0d15863a23d0013c821e9/2022-final-greenhouse-gas-emissions-statistical-release.pdf

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InfraRed Sustainability Report 2024

Emissions disclosure

InfraRed Sustainability Report 2024

About us ClimateEnvironment Communities People TCFD Appendix

The following table outlines InfraRed's financed emissions	All data collected is provided to a specialist GHG consultant
for all portfolio companies. These include total (absolute)	and, following a period during which checks and clarifications are
emissions as well as those attributable to InfraRed1.	made, country and activity-specific emissions factors are applied.
Emissions associated with portfolio companies that were sold
Emissions are disclosed in line with the Partnership for
or acquired during the period have been prorated to reflect the
Carbon Accounting Financials (PCAF) methodology.	ownership period.
Data collection approach	Where there are data gaps, for example, energy data is controlled
InfraRed's GHG emissions survey is updated each year, with input	by a third party and is inaccessible, proxy estimations are utilised.
These are drawn from several sources, including industry-specific
from the IPA Net Zero Working Group and third-party consultants.
databases or companies of a similar nature within the portfolio.
The survey is issued to the majority of portfolio companies. However,
an increasing number of these companies complete their own	Engagement efforts have led to a greater consistency in portfolio
detailed emissions inventory annually. This is a practice InfraRed	company data entries over time. However we recognise that
encourages as it builds greater awareness within their business.	completing an accurate emissions inventory, including Scope 3,
	requires continued engagement efforts across the wider industry
	and supply chains.

	2022		2023
	Absolute	Attributable	Absolute	Attributable
InfraRed's Scope 3, Category 15	emissions	emissions	emissions	emissions
(Financed Emissions)	(tCO2e)	(tCO2e)	(tCO2e)	(tCO2e)
Scope 1	2,773,730	292,853	2,787,583	212,896
Scope 2	292,722	45,468	243,784	41,977
Scope 3	2,040,511	281,765	1,241,101	182,352
Total portfolio emissions	5,106,963	620,086	4,272,469	437,225

Portfolio-wide emissions analysis

The following analysis is based on the emissions that are attributable to InfraRed in line with the PCAF methodology2.

SECTORAL BREAKDOWN	EMISSIONS BY PROJECT STATUS	OPERATIONAL ENERGY
		USE BREAKDOWN

	%		%		%
Power generation	35		Operations	83	Non-renewable energy	98
Social infrastructure	20		Operational and Construction	11	Energy covered by green	2
Flexible capacity	15		Construction	6	contracts/self-generation
Digital infrastructure	11
Renewable energy	11
Transport	6
Utility and transmission line	2

1. This takes into account other equity shareholdings and debt proportions at each portfolio company
2. As at 31 December 2023

Factors driving changes in emissions

InfraRed's financed Scope 1 and 2 emissions increased over the period by 1% in absolute terms. While electricity based emissions decreased, gas related emissions rose in the period. Fluctuations in emissions year on year are also reflective of improved accuracy of energy data provided by portfolio companies.

In 2023, InfraRed adopted EXIOBASE as its data source to estimate Scope 3 emissions. Recommended by the GHG Protocol, it uses more recent data, with greater granularity across sectors and countries than the methodology previously adopted. The use of this newer database has contributed to a material reduction in the Scope 3 emissions reported this year.

While the revised methodology provides a more accurate reflection of impact, we anticipate further movements in emissions as data quality and methodologies improve.

Data quality

While emissions associated with water and waste are based on actual consumption, the remaining Scope 3 emissions have been estimated using financial spend on, for example, purchased goods and services.

InfraRed has conducted a review of emissions data quality as per the PCAF standards. Scope 1 and 2 emissions average score was 2 for the portfolio (1 representing the highest quality, 5 the lowest).

1	2	3	4	5
High				Low

92%

of portfolio companies provided emissions- related data

2

Scope 1 & 2 emissions PCAF data quality score (highest is 1)

Frameworks used in GHG accounting and reporting

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