ClearBridge applies screens which exclude certain investments across the Funds. The Fund will not invest in companies that directly generate any gross revenue from the production of tobacco, adult entertainment, cluster munitions, landmines, biological weapons, chemical weapons, or commercial gambling operations. It will not invest in companies that indirectly generate 5% or more of their gross revenue from the supply or retail of tobacco, the distribution or retailing of adult entertainment, or the licensing or supporting activities of gambling. The Fund will also not invest in companies that directly generate 10% or more of their gross revenue from the production of conventional weapons, the extraction and/or production of oil and gas, or the mining and/or sale to external parties of thermal coal.

Should an investment cease to be consistent with the screens imposed, such investment will be divested as soon as reasonably practicable and in the best interests of investors. Where negative screens are applied to exclude investments from a Fund (whether based on ESG factors or otherwise), all reasonable care is taken to ensure such screening is applied consistently and a portfolio's compliance with the screening criteria is regularly monitored. However there is a risk that different data will be available to the investment managers at different times, there may be limitations in the financial or other data made available to Franklin Templeton Australia upon which screening decisions are based, and some investments may from time to time be included in a Fund where they should, based on the applicable negative screen, be excluded and there is no guarantee that all investments in a Fund will meet all screening criteria at all times.

ClearBridge's compliance team monitors compliance with the ten UN Global Compact principles in each of the four areas (human rights, labour, environment and anti-corruption) on a daily basis for its investment strategies. If a violation is identified, the investment will be divested as soon as reasonably practicable and in the best interests of investors. Where a company is identified by a third-party data provider as breaching the principles of the UNGC will be categorised as a "fail", however, this assessment can be overridden if ClearBridge has identified clear evidence to support an assessment indicating that there was no breach of the principles.

As part of ClearBridge's bottom-up investment process, it also considers environmental, social, governance, and ethical factors and labour standards ("ESG factors") in determining whether to include, retain or exclude securities within the investment universe for each Fund. This information is utilised as part of the investment process by the portfolio managers when integrating ESG and fundamental research in stock selection. ClearBridge does not have a predetermined view as to what it regards to be a labour standard or an environmental, social, governance or ethical consideration.

ClearBridge applies a Research Management System, comprised of the proprietary ESG Ratings Manager ("ERM") and an ESG Engagement Management System which additionally features an Engagement for Impact ("EFI") component. The ERM system combines internal research and analysis, supplementary information and data obtained from a variety of third-party research providers, and engagement with certain company management and non-executive directors and other industry experts selected for review. ClearBridge acknowledges that there may be limitations to the degree of influence it may reasonably have in relation to the companies selected for engagement. ClearBridge does not have any predetermined metrics for measuring or reporting outcomes of the engagement activities. The Funds may hold investments where ESG factors are not considered, including cash, cash equivalents, exchange-traded funds and certain types of derivatives.

The ERM assesses and scores sustainability risks and opportunities across a range of factors, depending on the sector and subsector for each Fund. This system has four rating levels: AAA, AA, A & B, assigned to companies based on performance on key ESG issues (such as health & safety, gender diversity, climate risk, corporate governance risk, data security), including performance relative to the companies' industry peer set. Depending on the infrastructure subsector, these factors are weighted according to importance and broadly focus on environmental factors such as a company's environmental practices, GHG emissions and energy efficiency initiatives; social factors such as a company's approach to community relations; governance factors such as the governance structure of the company, our alignment (as a minority shareholder) with the management, board and other major shareholders of the company and management and board quality including operating excellence, diversity and remuneration practices, amongst others; ethical factors including management and board integrity and quality; and labour standards such as employee health and safety and management.

Engagements are an integral part of ClearBridge's investment process and its approach to stewardship. Engagements contribute to both our understanding of a company's ESG risks and opportunities — which ClearBridge research analysts express in an internal ESG rating for a company — and our ongoing assessment of a company's operational and financial strength. In fact, a company's ESG profile and valuation are often linked. Furthermore, a substantial portion of our company research is informed by direct, ongoing interaction with company management and boards of directors, both in our offices and through on-site company visits.

ClearBridge Investments is a signatory to the United Nations Principles for Responsible Investment ("UNPRI") and reports annually on the implementation of those principles. ClearBridge Investments also supports the principles of the UN Global Compact ("UNGC"). Its Compliance team monitors compliance with the ten principles in each of the four areas (human rights, labour, environment and anti-corruption) of the UNGC on a daily basis for our infrastructure investment strategies. If a violation is identified, any impacted portfolio/fund is required to sell out of the position as soon as reasonably practicable. Its investment process also considers the Sustainable Development Goals ("SDGs") by mapping issuers against each one of the SDGs as a proxy for determining a positive Environmental or Social contribution.