Fengate Sustainability Report

FENGATE ASSET MANAGEMENT

2023 Sustainability Report

Land Acknowledgement

Fengate acknowledges that we live and work on the land of traditional territories of Indigenous Peoples from across Turtle Island, which is also known as North America, and is home to many diverse peoples, cultures, languages and territories including First Nations, Inuit and Métis people.

Fengate acknowledges and pays respect to Indigenous Peoples who have been stewards of the land for generations and hold unique perspectives, knowledge and rights to ecosystem conservation and climate change.

Fengate strives to find opportunities to partner with, consult, and promote Indigenous People in our business and our investments. We also commit to educate our employees on Indigenous history, culture, rights and the ongoing process of reconciliation on a regular basis. See Fengate’s Indigenous Reconciliation Strategy.

Message from our CEO

I’m very proud of our achievements. However, success is about more than the bottom line, it’s about giving back in ways that make our community a better place to live. We have a social responsibility as a corporation and it is important to share our success with those who need help.”

Dear Stakeholders,

I am pleased to present Fengate’s first firmwide 2023 Sustainability Report. At Fengate, our focus goes far beyond simply delivering excellent investment results. We acknowledge that acting responsibly on behalf of our stakeholders, which include a global roster of institutional investors, is fundamental. Fengate was founded with a deep commitment and responsibility to its community, and Environmental, Social, and Governance (ESG) has been in our DNA ever since. We remain committed to upholding our responsibilities to our stakeholders, our environment, and the communities in which we serve as we celebrate 50 years as a firm.

We continue to operate with the strong belief that understanding and managing our material ESG responsibilities is a critical component of our fiduciary duties to deliver long-term sustainable value, and as responsible citizens, investing in and building real assets for a thriving economy. Thus, we integrate and champion ESG principles in each of our lines of business and into our long-term decision-making processes. Our investment process and commitment to ESG is what differentiates Fengate’s approach to investing. We recognize the approach to responsible investing must be thoughtfully aligned with our fiduciary obligation to generate risk-adjusted returns that meet our clients’ objectives.

Our responsible investment values are reflected in both what we invest in and how we partner in the delivery of our projects. Through our investments, which include

energy transition, essential infrastructure such as hospitals and schools, private equity investments, and real estate investments that provide student and seniors housing, we understand what a privilege it is to be part of the fabric of our communities. We strive for thoughtful delivery through partnerships with responsible labour groups, reputable designbuilders and operators, and meaningful engagement with local communities and Indigenous groups.

While we have made notable progress on this front, there is still much more that can be done. Looking ahead, we will continue to seek opportunities that make a positive impact through our work. I am proud of our team’s unwavering commitment to adapt and evolve our ESG strategy as we strive to become North America’s most trusted partner for private investments by putting our people, clients and communities first. We are thankful for the continued support and trust from our investors and our partners as we bring community and capital together to deliver purpose-driven projects and opportunities that address people’s needs and better our society.

Lou Serafini Jr. President and Chief Executive Officer

Message from our Head of ESG

With strong alignment between our ESG values and corporate mission and vision, purposeful consideration of ESG risks and opportunities in our investment strategy is every individual’s responsibility at Fengate to deliver on our objectives.”

In 2023, we made improvements in many aspects of our ESG program. The introduction of a more robust ESG data collection and engagement program, the establishment of a dedicated in-house ESG and Sustainability team, the integration of climate risk scenario analysis into due diligence processes, and the enhancement of our responsible labour practices, brought us a step closer to realizing our ESG strategy. I am also incredibly proud of the work we are doing to foster a diverse and inclusive workplace, with Fengate being recognized as one of Canada’s Best Managed Companies for the sixteenth consecutive year.

With a strong alignment between our ESG values and corporate mission and vision, purposeful consideration of ESG risks and opportunities in our investment strategy is every individual’s responsibility at Fengate to deliver on our objectives. This is why we have placed strong emphasis on the foundation of a robust ESG program, including a strong culture, continuous learning and development, and clear and consistent messaging from our leadership team.

Below are a few objectives from our ESG roadmap which we have implemented and will build upon in coming year:

▪ Energy transition is reshaping the global economy by opening up new markets while challenging the current state of others. Fengate is taking a holistic approach to energy transition by reducing our financed emissions where possible, delivering clean energy to the grid, and providing a reliable and equitable energy system for a strong economy. A thoughtful decarbonization approach requires a tactical balance of environmental, social and financial considerations. As a result, Fengate’s decarbonization journey is tailored to the opportunities and challenges at the asset-level, rather than a one-size-fits-all approach.

▪ Climate resilience has also been at the forefront of Fengate’s ESG strategy. Fengate has invested in a climate risk scenario assessment tool, Mitiga EarthScan, to help us better understand and prepare to mitigate the potential impact of evolving physical climate risk on every investment, during

and beyond the holding period. Climate scenario analysis ensures that the essential assets we manage continue to deliver sustainable and reliable value to our communities for decades to come.

▪ As previously mentioned, the labour community remains at the core of Fengate’s vision, mission and purpose. Fengate continuously looks for innovative ways to turn our commitment to responsible labour practices into meaningful action, including the rollout of a formal responsible labour engagement program. This program will improve how we engage with responsible labour partners and measure our collective impact on the labour communities in North America.

As we continue to grow our footprint, it is increasingly important to align our ESG strategy to value-creation, set pragmatic targets for ESG performance and actively engage in the industry for standard-setting and ongoing collaboration. Thank you for reading our 2023 Sustainability Report.

Della Wang Director, ESG

Business Overview

About Fengate

Fengate is a leading alternative investment manager focused on infrastructure, private equity and real estate investment strategies. With offices in Ontario, Canada, and Texas, United States (U.S.), and team members across North America, Fengate is one of the most active real asset and growth equity investors in North America. Fengate leverages 50 years of entrepreneurial experience to deliver excellent results on behalf of our clients, partners and the communities we work in. We believe that responsible corporate behavior and responsible investing is intrinsic to strong, long-term investor returns, and we strive to align these principles with our portfolio objectives.

About this Report

Sustainability Highlights

2,500

4.5M+

3.27M

The 2023 Sustainability Report discloses relevant information regarding material ESG topics for our business in 2023 and Q1 of 2024. This report highlights key initiatives we have undertaken over the past year, and contains forward-looking statements on our progress and direction. The report covers Fengate’s three verticals – infrastructure, private equity and real estate (business units) – and directly addresses the disclosure recommendations of the Task Force on Climate-Related Financial Disclosure (TCFD) for each business unit.

Best Work Place in 8 categories Canada’s Top 100 Small and Medium Employers

Firmwide ESG Objectives

To integrate ESG assessment into our investment process including origination, investment due diligence, approval, asset management, and disposition

To quantify the risk and return impact of ESG factors, where possible Quantify 02 Monitor

To monitor and improve our ESG performance in our asset management activities 03 Report

To report and be accountable on ESGrelated matters to our investors and stakeholders 04

To promote responsible investment principles to our employees, partners, service providers, and investors 05

ESG Policy

Fengate’s ESG Policy (the Policy) outlines our responsible investment beliefs, objectives and approach to integrating ESG risk assessments throughout the investment process across our business units to deliver long-term, sustainable returns for stakeholders. The purpose of the Policy is to define Fengate’s approach to responsible investing and stewardship activities. The Policy is updated on an annual basis, or more frequently as required. Our Firmwide ESG Policy is available on the Fengate website.

Exclusions

In principle and fundamental to our core investment strategy, Fengate conducts an ESG-related exclusionary screening that prohibits investment in assets or entities whose principal operations and revenue generation are in sectors deemed unethical, harmful to society, or in breach of laws or regulations including but not limited to tobacco, palm oil, civilian and nuclear weapons, or thermal coal power generation.

Material ESG Topics and Reference to Sustainable Development Goals (SDG)

At Fengate, ESG principles and considerations include a variety of material topics that align with Fengate’s firmwide corporate culture and vision that may have an impact — on its own or in combination — on the risk and return profile of investments.

We identified and prioritized a set of ESG topics material to Fengate. Materiality is defined based on an internal review and stakeholder consultation on a longer list of candidate material topics, and assessing them based on their potential impact on Fengate’s financial return, as well as the potential impact on the environment, people and economy.

Impact is defined by both likelihood and severity of occurrence. We also relied on the Sustainability Accounting Standard Board’s (SASB) definition of materiality to select the topics most relevant to Fengate, supported by alignment with other industry benchmarks such as the Global Real Estate Sustainability Benchmark (GRESB) and disclosure frameworks such as Task Force on Climate-Related Financial Disclosures (TCFD) and Sustainable Financial Disclosure Regulation (SFDR). We also considered the impacts commonly associated with the sectors and geographic locations of our investments to determine materiality. We embed these material ESG considerations, and evaluate risks and opportunities related to each of these topics, in every stage of our investment process:

Minimize our investments’ environmental impact and support the global energy transition

Alignment to SDG:

Amplify the health, safety and well-being of our employees and our communities

Alignment to SDG:

■ Water and Waste Management

■

■

■

and Biodiversity

■ Human Rights and Community Relations

■ Employee Engagement

■ Diversity and Social Inclusion

■ Employee Health & Safety

■ Responsible Labour Practices

Uphold strong governance principles and ethical conduct

Alignment to SDG:

We have aligned our material topics to the United Nations’ (UN) 17 SDGs. The SDGs, also known as Global Goals, were adopted by the UN in 2015 as a universal call to action to end poverty, protect the planet and ensure that by 2030 all people enjoy peace and prosperity. The 17 SDGs are integrated — they recognize that action in one area will affect outcomes in others, and that development must balance social, economic, and environmental sustainability. We support and recognize the importance of contributing to the advancement of sustainable development topics within our broader corporate ESG strategy.

■ Board Composition and Governance Rights

■ Critical Incident and Systematic Risk Management

■ Cybersecurity

■ Remuneration Policies

■ Accounting Integrity

Sustainability Timelines retrospective progress

Fengate became a signatory of PRI

2018 2022 2021 2023 2024

Fengate Equity, Belonging, Inclusion and Diversity (“EBID”) Think Tank was formed

Fengate established a firm-wide ESG Committee for formal oversight

Fengate Commercial Income Fund (“FCIF”) submitted to GRESB

Fengate became a signatory for the Institutional Limited Partners Association (“ILPA”) Diversity in Action initiative

Fengate became Legacy Spaces partner through The Gord Downie & Chanie Wenjack Fund

Fengate appointed first Director of ESG to lead Fengate’s firmwide ESG strategy

Fengate refreshed firm-wide ESG program with third-party advisor KPMG

Fengate Infrastructure Fund IV became an SFDR Article 8 fund

Fengate conducted inaugural physical climate risk analysis across majority of standing assets using Mitiga EarthScan’s climate risk assessment tool

Implementation of an updated Responsible Contractor Policy Inaugural firmwide Sustainability Report including TCFD-aligned disclosures

Onboarding of third-party ESG Data Management Tool

Developing decarbonization roadmap for select funds

ESG Integration into the Investment Lifecycle

In 2023, Fengate standardized the way ESG is embedded into each stage of the investment lifecycle through the introduction of a formal Lifecycle ESG Engagement Program (LEEP). While each business unit has adopted a custom approach to ESG integration, Fengate has standardized material aspects of the ESG integration process within the LEEP program to elevate and consistently apply ESG best practices across all phases of the investment lifecycle.

All new investments in infrastructure, private equity and real estate are subject to mandatory ESG screening and due diligence using Fengate’s due diligence framework, focusing on capturing a standard set of material ESG topics, along with additional topics identified through a sector-specific review, supported by SASB’s materiality map. This is to ensure that screened investment opportunities meet Fengate’s mandate and commitment to responsible investing.

Fengate continues to review the framework based on emerging ESG topics, and best practices on risk assessment methodologies. Where appropriate, Fengate performs deeper due diligence, working with third-party environmental and technical advisors. Climate scenario risk analysis is included in each diligence process supported by Mitiga EarthScan.

The investment team prepares a summary of the ESG due diligence findings, including material risks, mitigants, and opportunities to include in the proposed transaction’s Investment Committee Memo (ICM). Fengate’s Director of ESG provides an in-depth review and sign-off on the results of the ESG due diligence assessment before an investment is presented to the Investment Committee (IC) for final approvals. The Director of ESG attends all IC meetings to discuss material ESG risks and opportunities with the leadership team.

Post-closing, the investment team transitions the ESG diligence findings and mitigant plan to the asset management team. Assets are also onboarded to Fengate’s centralized ESG monitoring tool. Where Fengate can exercise influence through its contractual rights, we establish an onboarding meeting with the relevant parties to align on key ESG risks and opportunities, identify data collection requirements and establish ESG expectations for the management teams. Focus areas include, but are not limited to, providing local employment and engagement opportunities, exploring sustainable and low-carbon design in buildings, monitoring health and safety track records, and pursuing green building certifications where possible.

During the asset management phase, Fengate conducts regular check-ins with asset management teams and property managers on ESG performance and progress on key initiatives. We collect and monitor key ESG metrics such as energy consumption, greenhouse gas emissions (GHG), water and waste management, nature and biodiversity impact, green certifications, health and safety, union labour hours and various governance policies and procedures including cybersecurity, modern slavery and human rights.

All assets are also subject to an annual climate risk scenario analysis to monitor for changes in climate risk exposure. Following data collection and review, Fengate’s ESG team engages in data-driven conversations with the management teams on performance improvement opportunities and addresses any data gaps for the next reporting cycle. For assets where Fengate has limited operating control or financial interest, Fengate actively monitors the ESG performance of the assets it manages and engages in stewardship activities within commercial reasonability to encourage positive ESG outcomes.

Finally, the LEEP program aims to deliver transparent reporting and disclosures to our internal and external stakeholders. We understand the importance of transparency in building trust and demonstrating accountability. We align ourselves to robust reporting frameworks such as TCFD, SFDR and ESG Data Convergence Initiative (EDCI) to provide clear, detailed and timely information about our ESG activities and performance. Internally, our new ESG data management platform will provide a centralized platform to review and visualize ESG performance. Externally, Fengate will continue to advance its ESG reporting through alignment with best practices and reporting frameworks. Fengate will continue to share meaningful ESG data as we build up competencies around LEEP for all our staff and partners.

Firmwide ESG Governance

We acknowledge and underscore that robust ESG governance is a shared responsibility across all our business units. ESG roles and responsibilities are defined across our business functions and integrated in our broader governance framework.

Executive Oversight

The Fengate executive team is responsible for allocating sufficient attention and budget to the ESG Working Group and ESG Committee to operationalize Fengate’s ESG strategy. It is also responsible for overseeing strategic ESG decisions that impact all business units and corporate services. The ESG Working Group supports the executive team in monitoring and reporting progress against the ESG strategy. The executive team is also responsible for the final approval of any publicly disclosed ESG reports, including disclosure topics and performance outcomes before final publication.

ESG Committee

Fengate’s ESG Committee has oversight of the firm’s ESG strategy. The Committee is co-led by Kevin Reid, Executive Vice President and Head of Investor Relations, and Vernita Tsang, Chief Compliance Officer and General Counsel. The Committee is comprised of Della Wang, Director of ESG, senior representatives from each business unit, and other members of Fengate’s corporate services team. The ESG Committee is responsible for the ongoing development, monitoring and improvement of Fengate’s responsible investment activities. The Director of ESG is responsible for overseeing the firmwide implementation of Fengate’s ESG strategy and providing updates and decisions to the ESG Committee for review and approval.

We believe in the importance of diversity within the Executive Committee:

Investment Committee

The IC ensures the robust integration of ESG considerations into investment due diligence, risk assessment and investment decisions. The Investment Committee will review and provide strategic guidance on the potential ESG-related risks associated with an investment. In addition, the IC evaluates how ESG factors align with an investment’s potential risk-adjusted returns, long-term value and resilience before approvals.

EBID Committee

Fengate’s dedicated Equity, Belonging, Inclusion, and Diversity (EBID) Think Tank drives our ongoing strategy to foster a diverse, inclusive, and equitable workplace. We are committed to ensuring all backgrounds and perspectives — including race, ethnicity, culture, nationality, faith, spiritual beliefs, sex, gender identity, sexual orientation, age and abilities — are valued, sought after and celebrated at our firm.

ESG Working Groups

Business units have established dedicated ESG Working Groups comprised of ESG leads from specialized areas of the business to collectively advance Fengate’s ESG initiatives. The Working Groups are entrusted with the responsibility of defining, delineating, and communicating Fengate’s overarching strategy and initiatives to the business units. They are also responsible for overseeing and supporting the business units on their respective ESG strategy and execution and providing practical guidance on leading practices, industry trends, key risks and opportunities. These groups meet on a regulator cadence and reports on the progress of business unit initiatives to the ESG Committee on a quarterly basis.

Firmwide ESG Governance (cont.)

Signatories and Benchmarks

SDGs – We have aligned our material topics to the UNs’ 17 Sustainable Development Goals (SDGs). The SDGs, also known as the Global Goals, were adopted by the United Nations in 2015 as a universal call to action to end poverty, protect the planet and ensure that by 2030 all people enjoy peace and prosperity.

TCFD – Fengate supports the recommendations of the Task Force on ClimateRelated Financial Disclosure (TCFD) and is continuing to understand and address potential climate risks that Fengate may be exposed to through ongoing physical and transition risk assessments. Fengate is pleased to share its inaugural firmwide TCFD report enclosed in this 2023 Sustainability Report.

TNFD – Fengate is pleased to announce that we became a Taskforce on Naturerelated Financial Disclosures (TNFD) Forum Member in 2023. Our goal is to work alongside the TNFD to embed nature-related risks and opportunities into our firm’s strategic planning, operations, risk management processes and asset management activities to create long-term sustainable value.

ILPA – Fengate is a proud signatory of the Institutional Limited Partners Association (ILPA) Diversity in Action initiative. The ILPA Diversity in Action initiative brings together limited partners (LP) and general partners (GP) who share a commitment to advancing diversity, equity, and inclusion in the private equity industry.

GRESB – In 2022, Fengate became a member of the Global Real Estate Sustainability Benchmark (GRESB), an investor-driven organization that assesses the sustainability performance of real estate portfolios and assets. FCIF began its submissions to GRESB in 2022 for its grace period, while Development Fund III began its submission in 2023 for its grace period. In 2023, FCIF formally participated in GRESB with scores to be released in late 2024.

EU SFDR – Fengate Infrastructure Fund IV (“Fund IV”) is Sustainable Finance Disclosure Regulations (SFDR) Article 8 compliant. Fund IV promotes environmental and social characteristics but does not include the objective of sustainable investment.

UNPRI – As a signatory of the UNPRI, Fengate has committed to upholding its principles in our firm’s activities. Fengate professionals across the organization work together to integrate the principles throughout the full investment life cycle. Fengate is committed to applying the six principles of the UNPRI:

1. We will incorporate ESG factors into investment analysis and decision-making processes.

2. We will be active owners and incorporate ESG factors into our ownership policies and practices.

3. We will seek appropriate disclosure on ESG factors by the entities in which we invest.

4. We will promote acceptance and implementation of the Principles within the investment industry.

5. We will work together to enhance our effectiveness in implementing the Principles.

6. We will report on our activities and progress towards implementing the Principles.

Climate Change

TCFD - Task Force on Climate-Related

Financial Disclosure

Global mean temperatures have already risen by approximately 1.0oC above pre-industrial levels. According to the Intergovernmental Panel on Climate Change (IPCC), global surface temperature will continue to rise by 1.5oC cumulatively until at least mid-century under all emissions scenarios considered. Global warming will drive changes in the climate system such as the increase in the frequency and severity of heatwaves, marine and terrestrial temperatures, heavy rainfall, drought, intense tropical cyclones, sea level rise and more (hazards). While all regions of the world and all economic sectors are exposed, certain geographies and sectors are more vulnerable than others to the changes in these climate patterns.

The warming of our climate has brought to attention the issues and opportunities related to the adaptation and resilience of the built environment. Real assets often have a long life and are essential for social and economic activities. Therefore, asset adaptation and resilience are critical to ensuring they meet their objective in terms of serviceability, financial returns and social outcomes.

Fengate recognizes the urgency of addressing climate change in the coming decades. This section of the report, along with the business unit sections of the report on climate change, was prepared in alignment with TCFD recommendations.

Strategy

Fengate has established a robust process for assessing and managing climate-related risks at the asset and business unit level:

01

02

Integrate climate risk assessment into existing risk management process

Fengate has integrated physical and transition risk assessment into Fengate’s ESG due diligence tool for all new investments to identify potential exposure to climate hazards and identify necessary adaptation measures.

03

Firmwide climate risk assessment and reporting

Fengate partners with a third-party climate modeling software Mitiga EarthScan to conduct climate-risk exposure assessments and scenario analysis across the majority of Fengate’s investments.

Asset-level engagement and resiliency planning

Following our assessments, Fengate conducts asset-specific engagement to discuss any material risks and evaluate the asset’s current adaptation and resiliency measures. Reassessment is conducted periodically to reflect updated asset conditions, assessment methodologies and the latest available climate models.

Asset-level decarbonization roadmap

04

05

Fengate is currently undergoing a decarbonization study for select funds such as FCIF to identify the most efficient and optimal pathway to decarbonize the assets we manage and reduce the assets’ exposure to transition climate risk. Further, this exercise aims to uncover climate-related opportunities to enhance asset value.

Investment into renewable energy and low-carbon infrastructure

Fengate’s infrastructure funds continue to identify opportunities to contribute to global energy transition efforts by investing in renewable energy and low-carbon infrastructure.

Tailored business unit climate strategies are further discussed within the individual business unit sections of this report.

Climate Governance

Our climate governance model aims to ensure that climate-related risks and opportunities are integrated into all levels of leadership and management activities, and are addressed throughout the entire investment lifecycle. Our climate governance approach aligns with our firmwide ESG governance framework as described in the ESG Governance section of this report. The framework on this page highlights key functions within our broader ESG governance structure and their climate-specific roles and responsibilities.

Executive Oversight

Provides overall strategic direction and oversight on key climate topics and issues

Leads the development and implementation of our climate strategy including assessment of material risks and opportunities and their potential impact on our investment and broader firm objectives

Investment Committee

Reviews and provides strategic guidance on potential climate-related risks and opportunities associated with an investment, which are identified during due diligence, prior to approvals

ESG Working Group

Designs and coordinates the strategy and execution of climate-related initiatives

Business Units

The leads within each business unit oversees the implementation of climate-specific initiatives within their portfolios, aligned with their mandate. Leads will collaborate with specific functional teams within a business unit, such as the investment, development and asset management teams to execute on climate-specific priorities for the assets they manage or potential investments

ESG Committee

Risk Management

Through Fengate’s investments in climate-resilient infrastructure, low-carbon buildings, and clean energy assets, Fengate continues to support mitigation and adaptation actions against climate change. Fengate understands the importance of evaluating and preparing against the potential physical impact that climate risk may have on asset performance. As such we conducted a physical and transition climate risk assessment aligned to TCFD recommendations.

1. Define Scope

Time Horizon

Fengate conducts climate risk scenario analysis over three time periods, including short (2025-2030), medium (2030-2040), and longer-term periods (2040-2050). Real assets have long lifespans and are essential to economic and social welfare. An extended temporal scope ensures a thorough and forward-looking evaluation that considers the potential impacts of climate change across the entire lifecycle of these assets, thereby enhancing the resiliency and sustainability of the assets during both the holding period and the future operating assumptions at the point of exit and beyond.

Climate Scenarios

scope (time horizon and climate scenarios)

and

Climate scenarios are projections of future GHG emissions, used to explore the potential impacts of climate change under different socioeconomic conditions.

The EarthScan Climate Scenarios are based on climate scenarios developed by the Scenario Model Intercomparison Project (ScenarioMIP). ScenarioMIP climate scenarios are part of the Coupled Model Intercomparison Project Phase 6 (CMIP6) and inform the basis of the Paris Climate Agreement by the UN Framework Convention on Climate Change (UNFCCC), as well as the Sixth Assessment Report published in 2021 by the Intergovernmental Panel on Climate Change.

These scenarios combine Shared Socioeconomic Pathways (SSPs) and Representative Concentration Pathways (RCPs):

▪ SSPs are scenarios that describe possible social and economic development between now and 2100.

▪ RCPs describe, based on climate science and atmospheric physics and how GHG emissions interact with the climate system.

Fengate stress-tests the assets with all available scenarios to understand resiliency under the below climate scenarios.

2. Define Climate-Related Risks and Opportunities

Physical Risks

Physical risks refer to the physical impacts of climate change. Physical risks include acute risks, such as the increased severity and frequency of extreme weather events, and chronic risks, such as longer-term increases in average temperatures and changes to local ecosystems.

Acute – wind, flood, precipitation, heatwave, wildfires, storms

Chronic – long-term shifts in climate patterns, rising sea levels, increase mean temperatures

Transition Risks

Transition risks refer to the impact of various potential market changes during the global transition to a lowcarbon economy. Transition risks include policy, legal, technology, commercial and reputational changes. Fengate may be exposed to a variety of transition risks. Primarily, these involve government commitments (e.g., climate action, net zero, energy transition). We also seek to address the evolving preferences and expectations of our key stakeholders.

Transition Opportunities

The transition to a low-carbon economy presents many opportunities, including resource efficiency and clean energy sources, new products and services, and access to new markets. Fengate continues to invest in transition opportunities such as energy transition technology, low-carbon buildings and climate-resilient assets. We also recognize that Fengate can play a significant role in the transition by spurring innovation, improving resiliency and increasing the focus on the social impacts of climate change.

3. Climate Risk Scenario Analysis

Physical Risks Assessment

Fengate examined the potential exposure and vulnerability of our infrastructure and real estate portfolios to a range of climate hazards that represent the range of potential occurrences of climate-related physical events that may cause damage or loss. We assessed the assets’ potential impact from physical climate risks over a short, medium and long-term timeframe under different climate scenarios. This assessment was supported by our partnership with Mitiga’s EarthScan tool and its associated risk rating methodology, utilizing multiple futures models such as CMIP6 published by IPCC.

For each scenario and timeframe, Fengate screened potential exposure across the assets by considering two dimensions:

1. Exposure to six physical climate hazards through Mitiga EarthScan

2. vulnerability based on asset type and asset-specific resilience measures.

Exposure Assessment

Through Mitiga EarthScan, asset locations are first assigned an EarthScan Rating from A (very low climate-related exposure) to F (extremely high climate-related exposure) for each hazard category. Ratings are calculated based on a suite of climate hazard exposure metrics, which are generated by applying statistical modeling approaches to exposure metrics to describe how climate hazard probabilities change for a given location over time and across future emissions scenarios.

EarthScan Ratings, rooted in impact quantification based on physical buildings, are not directly applicable to non-built asset types such as wind and solar assets. As a result, the ratings are supplemented by underlying physical metrics such as flood inundation depth or heatwave length as the primary source of valuable data for risk assessment for non-built assets.

Vulnerability Assessment

Using Mitiga EarthScan, Fengate can extract a range of quantitative forecasts to assess the preparedness and resilience of an asset. Asset management teams are engaged and provided with the relevant projections to identify whether there are additional commercially and technically viable measures to enhance asset resilience if required. The underlying physical metrics are also shared with the investment team and technical advisors at the due diligence stage to confirm climate resilience within the design and technical specification of the asset.

Fengate understands that there are known and unknown limitations to conducting climate risk assessments, and is committed to evolving our approach and methodology as additional information, tools, climate data and best practices become available. We aim to highlight all key assumptions and known limitations throughout the report, where relevant and applicable.

Exposure: Is the source of risk or opportunity due to climate change (e.g., exposure to extreme heat, carbon prices or renewable energy

Vulnerability: refers to how the asset is impacted by the changing exposure

Examples of the climate hazard categories and related physical metrics are outlined below:

Transition Risk Assessment

The transition to a low-carbon economy is underway – driven by intensifying climate policy, changing investor sentiment, technological advances and fundamental shifts in market demand. Fengate understands the risks and opportunities of climate transition on asset performance, and considers them critical components of sound risk management practices. Across the business units, Fengate is actively monitoring jurisdiction-specific carbon policies, sector-specific regulations, market trends, and assets’ operations –including an annual assessment of asset-level GHG emissions and carbon intensity – to evaluate our potential exposure to transition risks in the short, medium and long-term.

Business unit physical and transition climate risk analysis can be found within the individual business unit sections of this report.

Heat stress Extreme wind

Extreme precipitation

Flooding (coastal and riverine)

Drought Wildfire

4. Asset-level Engagement

Following asset-level assessments, Fengate conducts asset-specific engagement with asset managers to discuss any material risks and evaluate the asset’s current adaptation and resiliency measures. Reassessment is conducted periodically to reflect updated asset conditions, assessment methodologies and climate models.

5. Inform and Educate

Fengate incorporates physical and transition climate risk analysis into every due diligence process to inform investment decisions or design considerations. Fengate has incorporated climate risk management into the ongoing ESG curriculum for our investment and asset management teams.

6. Ongoing Monitoring and Reporting

Fengate will continue to monitor assets in higher risk locations and regularly update the assessment based on changes in industry best practices, TCFD recommendations, climate data improvements, and internal capability-building measures. Fengate will continue to disclose the climate risk analysis findings in our TCFD reports.

Metrics and Targets

Portfolio Emissions

In 2023, Fengate prioritized enhancing the completeness and quality of the reported GHG emissions data across our business unit’s portfolios, aiming to improve the accuracy of our overall baseline for Fengate’s financed emissions. Fengate strongly believes that establishing an accurate GHG baseline for the assets we manage is a critical initial step in our journey toward setting informed targets and establishing decarbonization programs.

Scope 1 emissions represent direct emissions from sources owned or controlled by the asset. Scope 2 emissions represent indirect emissions from purchased electricity or steam consumed by the asset. We have calculated our emissions profile for the infrastructure and real estate business units for the 2023 period. Fengate will work closely with the private equity business unit to collect GHG data from portfolio companies in the near future.

GHG Emissions

We have calculated the scope 1 and 2 emissions profile for the infrastructure and real estate business units, along with corporate scope 1 and 2 emissions for the 2023 period. Our GHG emissions calculations are informed by the GHG Protocol and the Partnership for Carbon Accounting Financials (PCAF) methodology, utilizing a bottom-up, activity-based approach.

Data Management

We have assessed the quality of our data against the PCAF data quality scoring system. 48% of the assets where we collected GHG data has achieved a PCAF data quality score of 1, while 52% achieved a quality score of 2. Fengate looks to continuously improve the quality of our GHG data going forward.

Detailed calculated emissions, based on the Greenhouse Gas Protocol, that have been verified by a third-party auditor

Detailed calculated emissions, based on the Greenhouse Gas Protocol, not verified by a third-party auditor

Production-based data. For example, tonnes of steel produced

Economic data – such as revenue, company value and the amount lent/invested

Economic data – such as the amount lent/invested

Business Unit TCFD Report

Fengate recognizes the importance of implementing a strategic and tailored approach to GHG emissions management for each business unit. As such, Fengate has prepared detailed TCFD-aligned reporting for infrastructure and real estate. Fengate will continue to work to include private equity as part of its TCFD disclosures.

In addition to absolute GHG emissions, we also calculate financed emissions, emissions footprint and emissions intensity to inform our GHG emissions analysis for our investments.

Fengate Commercial Income Fund has received independent third-party verification with a limited level of assurance on its 2023 GHG emission inventory, in accordance with the ISO 14064-Part 3 verification standard, and the International Standard on Assurance Engagements (ISAE) 3000. Fengate has not independently verified the energy consumption data provided by our partners for assets within the Infrastructure business unit.

As the quality and quantity of our data increase, we expect the annual GHG emissions we report to improve over time. Fengate will commit to being transparent on any adjustments to methodology or retroactive adjustments to reported emissions as we refine our approach and maturity of GHG emissions reporting.

Please refer to the business-specific sections of this report for more details addressing each section of the TCFD report.

In the wake of the UN Biodiversity Conference (COP15) in 2022, 190 states committed to a set of ambitious goals and targets under the Global Biodiversity Framework. Biodiversity loss is also now recognized by the world’s central banks as a source of systemic risk alongside climate change. Fengate recognizes the significance of the protection and conservation of nature and biodiversity. We also acknowledge that nature loss poses a large risk to the economy as a whole and has a substantial impact on the built environment.

As such, Fengate officially became a Taskforce on Nature-related Financial Disclosures (TNFD) Forum Member in 2023. Fengate is also a Canadian TNFD Consultation Group member. The purpose of the consultation membership under the Institute for Sustainable Finance and CPA Canada as co-conveners is to bring together interested and knowledgeable parties including Taskforce members, government representatives, TNFD forum members, and TNFD early adopters. Our goal is to work alongside the TNFD to embed nature-related risks and opportunities into our firm’s strategic planning, operations, risk management processes and asset management activities to create long-term sustainable value.

Nature and Biodiversity

Fengate’s approach to biodiversity risk assessment

As part of our investment process, Fengate conducts location-specific nature and biodiversity risk assessment prior to an investment decision, following the framework recommendations put forth by TNFD.

During the due diligence process, the investment team overlays the investment’s operating locations with geospatial data, including data from existing market tools, which can assist in mapping terrestrial, freshwater and ocean biomes and ecosystems, as well as their integrity and resilience. For this exercise, we used the WWF Risk Filter Tool with underlying data from the Integrated Biodiversity Assessment Tool (IBAT) to identify where assets have potential overlap with areas of high biodiversity importance using two metrics: the World Database of Protected Areas (WDPA) and locations with potential overlap with Key Biodiversity Areas (KBA). TNFD disclosure framework recognizes these tools as part of the nature and biodiversity risk screening methodology. This is accompanied by an Environmental Site Assessment (ESA) at the site level to identify the existence and scope of soil or groundwater contamination.

In addition, Fengate considers the impact on local wildlife by the assets we manage. During the due

diligence and asset management phases of the investment, Fengate engages third-party experts in wildlife monitoring and environmental studies where relevant and invests in prevention and mitigation measures such as anti-bird strike films, rehabilitation of local vegetation and introduction of drought-resistant species, where possible.

Fengate conducts water risk assessment during due diligence to determine the investment’s potential exposure to areas with potential water scarcity risk. Fengate also evaluates the asset’s dependency and impact on local water sources. We rely on WWF’s Water Risk Filter Tool, which defines water scarcity by indicators including aridity index, water depletion, and projected change in drought occurrence. Risk level is determined based on a 5-point scale with scores under 2 ranking as very low to low risk. We will continue to monitor water risk across the assets we manage.

Looking forward, Fengate seeks to become a TNFD adopter and publish our nature-related disclosures using the TNFD Recommendations as we continue to refine and adapt our approach to nature and biodiversity risk management.

What is TNFD?

The TNFD is a market-led, science-based and government-supported global initiative. The recommendations and guidance provide organizations with a risk management and disclosure framework to act on evolving nature-related dependencies, impacts, risks and opportunities. The TNFD disclosure recommendations are structured around four pillars, consistent with TCFD and the International Sustainability Standards Board (ISSB).

Metrics & Targets

They accommodate the different approaches to materiality in use currently and are aligned with the goals and targets of the KunmingMontreal Global Biodiversity Framework.

Indigenous Reconciliation

Indigenous Reconciliation Strategy

Fengate recognizes the importance of Indigenous leadership, engagement, and participation in building North America’s critical infrastructure. We are committed to continually enhancing our Indigenous Peoples and Local Community Strategy through our investments and firmwide initiatives.

Early Indigenous engagement through our investments

▪ Consult: Engagement with Indigenous Advisors to liaise with Indigenous peoples of the region on sustainable land use, building design, and operating considerations

▪ Partner: Co-investment with Indigenous partners, and identify opportunities for Indigenous involvement and training opportunities in the design and build of greenfield investments

▪ Promote: Inclusion of Indigenous values within the design and operations of Canadian infrastructure projects

Case Studies

Corporate partnership with Gord Downie & Chani Wenjack Fund

▪ Fengate entered a partnership with Gord Downie & Chani Wenjack Fund (DWF) in March 2022

▪ DWF aims to build cultural understanding and create a path towards reconciliation between Indigenous and non-Indigenous peoples

▪ Fengate participates in DWF’s Legacy Space program as a reconciliACTION partner

▪ Through the partnership, Fengate delivers ongoing training on Indigenous Reconciliation to our employees

Emily Carr University of Art & Design

A LEED Gold Certified building with innovation in design, water use and construction waste management. The design is based on an Aboriginal Gathering Place - which hosts students, and contemporary artists.

Kapuskasing Hydro Projects

Extensive diligence on sustainable power generation along with rigorous environmental diligence with First Nations Partners. Three of four facilities in Kapuskasing are co-owned with Indigenous partners.

Surrey Memorial Hospital

A LEED Gold Certified building delivering 172 beds and largest emergency department in BC. Design incorporated group rooms for healing circles and smudging ceremonies based on Indigenous stakeholder engagement.

Trenton Lock 1 Hydro Project

The project was submitted alongside Dokis First Nation as a partner. Significant environmental assessment was conducted on ecological flow value and species at risk.

Gord Downie & Chanie Wenjack Fund Legacy Spaces Partner

In 2022, Fengate proudly unveiled a Legacy Space at its downtown Toronto office, in partnership with the Gord Downie & Chanie Wenjack Fund (DWF). Dedicated to heightening awareness and providing education about Indigenous history and the path towards reconciliation between Indigenous and non-Indigenous people in Canada, the safe and welcoming Legacy Space is one of many initiatives that Fengate’s EBID Think Tank has in place as part of its commitment to promote and advance diversity and inclusion, both within the firm and the industry more broadly.

A vibrant mural by Haudenosaunee artist, Kyle Joedicke, commissioned through the Art Gallery of Hamilton, adorns the legacy room with an illustration that represents two separate cultures and ways of life, flowing in harmony together, and respecting each other’s differences. With the intention to express a grander sense of community, Joedicke’s artwork incorporates artistic elements from The Seven Grandfathers Teachings: Love, Honesty, Truth, Respect, Wisdom, Bravery and Humility, considered guiding principles and core values of Indigenous people.

As part of Fengate’s commitment with DWF, the Legacy Space acts as a permanent physical space dedicated to promoting truth and reconciliation throughout the year.

DWF Initiatives also include:

National Day for Truth and Reconciliation

Employees engaged in A DAY TO LISTEN across Canada and participated in the orange shirt movement

Secret Path Week

DWF uses this week to promote reconciliACTION – meaningful actions that move reconciliation forward and answer Gord Downie’s call to Do Something

Walk for Wenjack Fengate registered a corporate team for DWF’s Walk for Wenjack, in order to raise both funds and awareness

Culture

Equity, Belonging, Inclusion, and Diversity (EBID) Think Tank

Diversity and Inclusion are important aspects of Fengate’s culture. Fengate is committed to supporting the advancement of equity, belonging, inclusion and diversity across our firm, and the industries in which we are involved. Fengate launched its EBID Think Tank to support the formal development of Fengate’s EBID mission and strategy. The EBID Think Tank consists of professionals from across the firm who lead and support various internal and external EBID-focused initiatives.

Mentorship Program

In 2023, Fengate launched a firmwide mentorship program through Ten Thousand Coffees, a platform for inclusive mentoring, employee connectivity and skills development. Participants are matched with a mentor/ mentee and prompts pairs to meet once per month. The program aims to enable employees to reach their career goals through effective mentormentee relationships, and advance the development and careers of diverse employees and allies in support of diversity, equity, and inclusion.

Employee Resource Groups (ERG)

To help foster an environment of inclusion and belonging, Fengate is happy to support work-related Employee Resource Groups (ERGs) that allow employees with similar interests to connect with each other.

The Women at Fengate ERG is dedicated to advancing the personal and professional development of women by building a network that supports, empowers and strengthens their ability to succeed in their roles. Through collaboration, open discussion, and innovation, the ERG will continually seek to raise awareness on the issues faced by women in the workplace and offer resources for growth, networking, and mentorship.

The Emerging Leaders: Investments Chapter brings together Analysts, Associates, and Senior Associates from infrastructure, private equity, real estate, and corporate services. The Emerging Leaders ERG seeks to provide a platform to foster connections, improve collaboration, and drive career development among emerging leaders at Fengate.

The Next in AEC ERG will be to meet to discuss new methods, technologies, innovations, and best practices in the construction and development fields.

ESG Training

Continuous ESG and Sustainability training is foundational to the successful operationalization of our ESG strategy and effective management of ongoing market trends and regulatory developments. Fengate has developed a firmwide ESG training program in 2023 for existing staff and an onboarding ESG package for new hires. Fengate’s ESG training program is tailored to the unique needs of individual business units and corporate services, onboarding new employees, and professional development needs of individual staff.

A Firmwide Corporate Culture Driving Exceptional Performance

Fengate Asset Management is the recipient of Waterstone Human Capital’s 2022 Canada’s Most Admired Corporate Cultures™ award for a three year period. This national program, now in its 19th year, annually recognizes best-in-class Canadian organizations for having cultures that have helped them enhance performance and sustain a competitive advantage. Only 50 organizations are awarded this prestigious corporate culture award. Fengate is a driven, high-performance environment, and the firm takes great care to promote employee health, well-being and belonging including:

A flexible work framework allowing employees to shift their life at work to accommodate their unique life at home

Recharge days through a combination of the office closing on Fridays before long weekends and at noon on Fridays during the summer months

Regularly conducted industry benchmarking followed by remedied solutions

Awards Won in 2023

▪ Canada’s Best Managed Companies – Platinum Member

Group RRSP program for all employees with an employer match component

Championing Equity, Belonging, Inclusion and Diversity through the firm’s EBID Think Tank. Recent initiatives, include: creating safe spaces for prayer/employees experiencing stress or anxiety; training for all people leaders to manage hiring and interviewing biases

Employee Education Assistance Program to encourage eligible employees to upgrade their education and/or skills via college/ university programs and courses

▪ Canada’s Top 100 Small and Medium Employers for 2023

▪ 2023 Best Workplaces™ with Most Trusted Executive Teams

▪ 2023 Best Workplaces™ in Ontario

▪ 2023 Best Workplaces™ in Financial Services & Insurance

▪ 2023 Best Workplaces™ in Canada – 100-999 employees

▪ 2023 Best Workplaces™ for Women

▪ 2023 Best Workplaces™ for Today’s Youth

▪ 2023 Best Workplaces™ for Mental Wellness

▪ 2023 Best Workplaces™ for Inclusion

Community Impact

Fengate’s work is not just about investments, buildings and land, but about the people we engage with and the communities we operate in. Our team is committed to supporting the advancement of equity, belonging, inclusion and diversity, as well as promoting the health, safety and well-being of our employees, partners and stakeholders.

Fengate Community Foundation (FCF)

At the heart of our community efforts is the Fengate Community Foundation (FCF), established in 2010 to enhance Fengate’s philanthropic efforts and establish a more structured way of giving, is a more than two million dollar grant by Fengate administered by the Hamilton Community Foundation (HCF). Through the FCF, Fengate donates to numerous charitable organizations within Canada and abroad each year with a focus on children and youth programs.

“I’m very proud of our achievements. However, success is about more than the bottom line, it’s about giving back in ways that make our community a better place to live,” said Lou Serafini Jr. “We have a social responsibility as a corporation and it is important to share our success with those who need help.”

Community Earth Day Clean-up

In an effort to help make a positive impact in our local community, Fengate organized and participated in community clean-up events during Earth Day.

Holiday Helpers

In partnership with the Fengate Community Foundation, more than 100 Fengate employees participated with Holiday Helpers in 2023, an organization that brings joy and assistance to families in need during the holiday season.

hours were volunteered by Fengate employees by actively organizing and participating in community initiatives in 2023.

Ride to Conquer Cancer

Fengate participates annually in the The Ride to Conquer Cancer, raising money for The Princess Margaret Cancer Centre.

Kids’ Meals Inc.

Fengate’s Houston team volunteered with Kids’ Meals Inc. and delivered meals to over 75 homes and families. Kids’ Meals’ mission is to end childhood hunger in Houston by delivering free healthy meals, year-round to the doorsteps of Houston’s hungriest preschoolaged children and through collaboration provide their families with resources to end the cycle of poverty.

Responsible Labour Practices

Labour Community

Fengate has a long-history of partnering with laboursponsored pension plans, which today represent approximately 75% of total capital commitments, including our largest and longest standing investor, LiUNA Pension Fund of Central and Eastern Canada (LPFCEC), as well as many other clients. Fengate’s success has been based on its ability to produce strong risk-adjusted returns with an investment strategy that includes labour considerations and the use of a skilled and unionized workforce when possible.

Fengate continuously looks for innovative ways to turn our commitment to social responsibility and responsible labour practices into meaningful action, including an updated Responsible Contractor Policy for its Infrastructure business focusing on an increased active project notification process, meaningful inclusion of responsible contractors into the project bidding process, and enhanced formalized efforts around labour hour tracking and reporting.

The Labour Community Remains at the Core of Fengate’s Vision, Mission, and Purpose.

REAL ESTATE

In line with Fengate’s ESG commitments, the real estate team works diligently to deliver senior housing; purpose-built, transit-oriented rentals; student housing; and commercial, industrial and retail communities. We recognize the critical importance of delivering progressive environmental and social impact through our investments.

Business Overview

Fengate real estate includes all investment, development, finance, legal, leasing and asset management activities. Fengate’s real estate business unit is diversified across investment strategies and asset classes, providing clients with access to investment solutions and expertise through the real estate continuum. The real estate team understands our work is not just about buildings and land but about people, neighborhoods, vibrant communities, and sustainability. In line with Fengate’s ESG commitments, we work hard to address and bring our vision to senior housing needs; purpose-built, transit-oriented rental housing needs; student housing needs; and the critical importance of progressive environmental and social impact with investments.

This report covers Fengate Commercial Income Fund (FCIF), Master Development Fund (MDF) including Development Fund I, II, III, and IV, and Multi-family Income Fund (MFIF), including highlights from Fengate’s Student Housing Fund. Fengate’s Real Estate’s portfolio is diversified across investment strategies and asset classes, providing clients with access to investment solutions and expertise through the real estate continuum:

Land Entitlement

▪ Acquire land, existing buildings or land assemblies to entitle or change entitlements.

▪ Focused on both industrial and residential.

Build-to-Core

▪ Develop high-quality assets to hold as longterm, income-producing properties.

▪ Our successful track record includes apartments, retirement, hospitality and industrial assets.

Core

▪ Invest and manage portfolio of stabilized incomeproducing properties with long-term, stable cashflows.

▪ Includes both commercial and residential asset classes, specifically industrial, office, retail and purpose-built.

Opportunistic

▪ Development or intensification of selfliquidating real estate assets (e.g., condominiums).

▪ Enhances returns and provides flexibility in large residential developments.

Real Estate ESG Integration into Investment Lifecycle

Fengate real estate integrates ESG considerations into all phases of its investment process, including at each phase of the investment lifecycle – from investment due diligence, through acquisition, development, ongoing management, to exit. This process follows Fengate’s Lifecycle ESG Engagement Program (LEEP) described earlier in this report. The investment, development and asset management teams are responsible for assessing, managing and monitoring ESG factors during each phase of the investment process.

Message from Vice President, Commercial Property Management & Sustainability

We have taken bold steps to expand our ESG roadmap beyond certifications, prioritizing meaningful progress in our employee, tenant, and stakeholder engagement efforts. We have also made tangible impact in our environmental footprint, such as reducing the office portfolio’s GHG emissions by 25%, diverting 100% of office landfill waste, saving +4,560,000 KWh of energy, and conserving 3.27M litres of water. By going beyond the standard requirements, we continue to strive to make positive environmental and social impact for all involved. Our commitment to continuously evolving and improving our ESG practices sets us apart and ensures a more inclusive and sustainable future for everyone.

Rachna Morgado Vice President, Commercial Property Management & Sustainability

ESG Progress and Roadmap

TOPICS

Decarbonization Initiatives

Waste Management

Fengate expanded tracking of our GHG footprint to 100% of standing real estate properties in FCIF and MFIF.

Fengate began to partner with U-PAK Emerald Waste to divert landfill waste of select office properties by converting any nonrecyclable and biodegradable waste into biofuels, including electricity and steam.

Fengate is in the process of establishing decarbonization pathways for a portion of the FCIF assets.

Fengate’s partnership with U-PAK is expanded to all of the office properties we manage, diverting 100% of landfill waste the properties generate in FCIF.

Fengate’s Proprietary Real Estate ESG Due Diligence Tool

Building Certification

Property Management ESG Program

Sustainable Design

Fengate continued to pursue building certifications such as LEED and BOMA BEST across the office properties we manage. Fengate won the Outstanding Building of the Year (TOBY) International Award for 2265-2275 Upper Middle Road East in the Suburban Office Park Mid-Rise Category.

Fengate began the collection of GHG inventory for the properties in the Multi-family Income Fund (MFIF), achieving 100% coverage rate in year 1.

Fengate pursued onsite-renewable energy and low-carbon heating and cooling technology where feasible. All industrial buildings are developed with net-zero-ready design.

Fengate is in the process of applying for BOMA BEST for the entire FCIF portfolio. In addition, Fengate is aiming for BOMA BEST certification across all MFIF properties in the coming years.

Community Impact

GRESB Reporting

Fengate organized and actively participated in community events, including blood drives, food drives, community cleanups, community meal programs and tree-planting events.

FCIF had submitted its first reporting to GRESB under the grace period assessment for the management and performance components.

Fengate is rolling out a property management ESG program across all properties in MFIF, in collaboration with our third-party property managers.

Fengate is in the process of reviewing and updating its sustainable design criteria for the development of both multi-family and commercial properties, with focus on reducing operating emissions.

Fengate continues to improve on the tracking and measurement of the impact we generate for communities. Fengate believes that quality data will allow us to set targets for year-over-year improvements on our community initiatives.

Fengate is expanding its submission to GRESB to Development Fund III in 2024 for its grace period assessment. FCIF will receive its first official GRESB rating in late 2024.

With the support of a third-party advisor, we have developed a real estate ESG due diligence tool utilized during deal sourcing, screening and investment underwriting. This tool addresses material ESG topics such as physical climate risk, GHG intensity, biodiversity impact, Indigenous people, and local community engagement, and responsible labour. A weighted scoring system assesses the level of potential ESG risks and opportunities. A summary of the due diligence findings is included in the Investment Committee Memo and presented to the Investment Committee for review and approval. Mitigation measures for material ESG issues are identified and quantified where possible. Key ESG factors are also included in the underwriting assumptions and postinvestment action plans.

Notable Achievements and Awards

Earth Hour Weekend Challenge | 1315 North Service Rd E

BOMA Toronto’s Earth Hour Weekend Challenge engages properties to reduce energy waste over a full weekend and recognizes the greatest reduction at BOMA Toronto’s annual Celebration of Excellence Gala. During the 2024 Earth Hour Weekend Challenge, a total of 168 buildings participated and Fengate’s 1315 North Service Road in Oakville achieved the largest reduction in energy consumption at over 43%.

Collectively, all the participants contributed to a total of 10% reduction in electricity and a total positive reduction of 305,970 kilowatt hours during the challenge weekend.

BOMA Certificate of Excellence | Concorde Corporate Centre

Concorde Corporate Centre received the BOMA Certificate of Excellence in 2024, based on 2023 data. This achievement is backed by a rigorous certification program that involves a written submission and an onsite visit. Information to be included and scored includes building management and operations, community impact, tenant relations/ communications, energy management and conservation, environmental, regulatory and sustainability initiatives, and the training of the building personnel.

Fengate’s 1111 & 1122 International Boulevard in Oakville were awarded The Outstanding Building of the Year (TOBY®) Award and the Certificate of Excellence in the Suburban Office Park – Mid Rise category at BOMA Toronto’s Celebration of Excellence Awards Gala in 2023 and is nominated for the International Toby in 2024.

ENVIRONMENT

Climate Action: TCFD Report

Climate Strategy: Decarbonization Roadmap

We are currently engaged in a thoughtful and strategic process to determine a viable transition pathway for the properties that we manage in FCIF and MFIF. The following represents the design of our climate strategy and may evolve as we progress.

1

Develop baseline GHG emissions

▪ Develop a baseline emissions forecast for the assets we manage under our current operating scenario

▪ Define our base year for target-setting purposes

▪ Review available sciencebased targets to understand plausible pathways for select assets in the portfolio

2

Identify potential abatement levers

▪ Identify an array of GHG abatement levers for scope 1 and 2 emissions within select assets

▪ Conduct a cost-benefit analysis based on the quantification of marginal abatement cost (MAC) for each opportunity

▪ Prioritize abatement opportunities based on MAC curve analysis under different climate scenarios

3

Develop a decarbonization pathway and set targets

▪ Based on the prioritized set of abatement opportunities, develop a feasible decarbonization pathway at the asset and portfolio levels

▪ Determine capital requirements and optimize capital allocation for investment opportunities

▪ Set absolute and intensitybased targets where applicable

4

Monitor and report on our progress

▪ Disclosure of Scope 1 and 2 emissions for assets in our decarbonization strategy

▪ Report on our progress on an annual basis against our targets

▪ Identify additional opportunities during our transition journey

In 2023, Fengate developed baseline GHG emissions for FCIF and identified a prioritized list of properties by benchmarking the assets’ current carbon emissions against the Carbon Risk Real Estate Monitor’s (CRREM) Global Decarbonization Pathways, aligned to a 1.5oC scenario. This exercise helped us identify assets with higher stranding risk and represent focus areas for near-term decarbonization efforts.

Subsequently in Q1 2024, Fengate engaged a thirdparty advisor to assist FCIF in identifying possible transition pathways for the fund. Fengate will continue to disclose its progress as we build out a robust transition plan for FCIF. We will also continue to expand our decarbonization assessment to additional properties under our management.

In addition to utilizing the CRREM tool for the properties we currently manage, Fengate also uses its benchmark emissions intensity figures to screen potential investments, ensuring that retrofit requirements for brownfield investments and design standards for greenfield investments are aligned with our ESG goals.

Climate Risk Assessment

The real estate business unit integrates climate considerations, including key risks and opportunities, into all phases of our investment process across all asset classes, aligned with our broader ESG integration approach.

Physical Climate Risk Assessment

Fengate conducted a physical climate risk assessment through Mitiga EarthScan’s Climate Risk Tool across FCIF, MFIF and MDF. The methodology for Fengate’s physical climate risk assessment can be found in the main section of the report here. Based on our physical climate risk assessment, assets have relatively low exposure to climaterelated hazards within the next 5-20 years. This is primarily a result of the geographic locations of the properties we manage, which are primarily in suburban and industrial areas of southern Ontario.

Fengate views the physical risk associated with climate change and the necessary steps for adaptation and resilience to have the same importance as other investment risk categories. On an ongoing basis, risks and opportunities presented by the physical impacts of climate change are integrated into Fengate’s existing risk assessment and management processes and will continue to evolve with industry standards, climate data improvements, and internal capability-building measures.

3.1:

fund-level exposure to physical risk across multiple climate scenarios and time horizons.

Using the tool, Fengate can obtain a range of quantitative climate forecasts under multiple climate scenarios and timeframes. For any highrisk locations, Fengate shares the risk ratings and projected hazard exposure metrics (i.e., max temperature in 0C and precipitation levels in millimetre) with the asset management team to understand asset resiliency and explore adaptation strategies. No high-risk locations are identified for FCIF or MFIF.

Looking forward to 2050, heat stress will experience a slight increase across the portfolio of assets under two of the more carbon-intensive climate scenarios as global temperatures rise. As we continue to respond through targeted asset-level assessments and engagements, our current assets’ geographic locations provide a significant risk mitigation measure against future climate hazards. Further, asset-level adaptation strategies that are currently in place help to temper certain extreme outcomes.

Table

Example of FCIF’s

Chart 3.1: Real Estate asset’s exposure to climate risk under Business as Usual Scenario in 2030 – Location-based distribution

Metrics and Targets

Fengate actively tracks and monitors energy consumption within all operating assets that we manage in FCIF, and since 2023 has expanded tracking to include properties within MFIF.

Fengate Commercial Income Fund

Within FCIF, Fengate’s Inventory Management Plan (IMP) sets out FCIF’s emissions scope, consolidation approach and operational boundaries, list of emission sources, process and controls, and associated emissions quantification methodology. Our methodology is aligned with the GHG protocol and GRESB standards. The Organizational boundary of FCIF’s inventory includes 9 offices (Commercial) and 22 industrial, retail, and flex (Industrial) properties within the fund.

Overall, FCIF was able to reduce the fund’s scope 1 and 2 emissions by 1% compared to 2022 levels. Most notably for Fengate’s commercial properties where we have operating control, Fengate reduced scope 1 and 2 GHG emissions by 30% and 12% respectively in 2023 compared to 2022 levels. This is attributable to our Building Insight Platform, which optimizes the HVAC system based on actual occupancy, allowing us to reduce energy consumption. Continuous education for the building operations team equips them with the ability to identify areas within the property where additional operational efficiencies can be achieved. Additionally, technology integrated into our operations has enabled us to pinpoint areas for improving efficiency in real time. We continue to track which buildings are high-emitters and focus our attention on uncovering potential GHG reduction strategies and energy cost reduction opportunities, with a budget allocated for such efforts.

While 70% of the office properties we manage have energy intensity below the national median1, we continuously look for opportunities to improve our emissions footprint through engagement with third-party consultants on energy consumption management.

Within Fengate’s industrial properties where tenants have operating control, scope 1 and 2 emissions increased by 12% and 10% respectively. This is mainly due to increases in tenant operating activities, along with increases in data availability as Fengate works closely with tenants on energy consumption data collection. Fengate will work collaboratively with tenants to identify energy reduction opportunities within our Industrial properties in 2024 and beyond.

Multi-Family Income Fund

The organizational boundary of MFIF’s inventory includes five multi-family properties. In 2023, Fengate began a formal tracking program for resource consumption across our multi-family properties. Fengate will continue to track the resource consumption across these properties and identify opportunities for performance improvements along with our third-party property managers. Year over year comparison will be available in future reporting periods.

Table 3.2: FCIF and MFIF Absolute Emissions

Fengate Commercial Income Fund

Fengate real estate continues to implement energy management initiatives across the properties we manage, enabling us to improve the environmental performance of our standing assets. It is also seeking to implement energy management initiatives across our development projects to improve the environmental performance of the properties in our pipeline. Where commercially feasible opportunities are identified to reduce energy consumption or greenhouse gas emissions, real estate will continue to implement energy efficiency upgrade projects at select properties.

Smart Buildings

Building Insight Platform tracks consumption and uses predictive analytics to generate performance optimization recommendations.

Energy Profiles

Energy Profiles combines comprehensive data management and vanalytics platforms to improve cost efficiency and advance sustainable operations.

Equipment upgrades

For all equipment which are due for replacement, FCIF seeks opportunities to upgrade to higher-efficiency replacements, or transition away from natural gas to electric-powered systems such as air-sourced heat pumps.

BAS upgrades

Building Automation Systems are installed across all office properties to optimize energy consumption and improve building efficiency.

Green Teams

Our Green Teams are groups of employees and tenants who have volunteered to meet regularly to identify specific solutions to operate in environmentally sustainable ways.

Green building certification

Fengate real estate continues to identify opportunities to obtain Green Building certifications — such as BOMA BEST, LEED, and ENERGY STAR — across both our development and operating assets.

Tenant building criteria

Fengate provides tenants, consultants, and contractors with a comprehensive guide, outlining the requirements for the sustainable products to be used in the planning and construction work within buildings.

Multi-Family Income Fund

Our MFIF properties are newly constructed within the past six years therefore all major mechanical and electrical equipment and systems are still within their operational lifespan. As such, we are always looking for innovative ways to further improve operational efficiencies and reduce resource consumption, including resident engagement to reduce energy use and the installation of high efficiency appliances. Our ESG strategy for MFIF continues to evolve and improve year over year.

Expanding our ESG capabilities

We now have a dedicated ESG and Sustainability team member for MFIF to actively engage management teams at the property level.

ENERGY STAR

To date, 100% of MFIF properties have ENERGY STAR accounts and are sub metered for hydro consumption. This helps reduce overall usage by promoting more responsible resource consumption and identify inefficiencies more effectively.

Lighting upgrades

We also implement LED lighting and occupancy sensors where not installed already across all properties.

EV charging

To encourage the use of sustainable modes of transportation, Fengate provides for electric vehicle and bicycle parking spots within our properties.

Looking ahead, Fengate will be completing energy audits at a number of properties to further identify energy saving opportunities. We will also be rolling out several ESG policies that will standardize best practices across all properties, including a preventative maintenance program and an energy management plan.

Environmental Initiative (cont.)

Master Development Fund

Fengate actively engages technical consultants at development sites to identify potential for on-site renewable energy including geothermal and Solar PV, along with energy-efficient initiatives such as heat pump technologies, and enhanced insulation to reduce operating GHG emissions. Fengate’s design practices continue to evolve as industry best practices advances. Examples of initiatives underway:

1. On-site Renewable Energy

Geothermal systems

Geothermal provides sustainable, low carbon energy to efficiently heat and cool buildings. Fengate investigates the feasibility of pursuing geothermal on our development projects with two multi-unit residential projects that have opted for a geothermal system with heat pumps.

Solar ready

The installation of solar panels supplies clean energy to tenants, therefore, reduces reliance on natural gas and can also provide significant financial benefits. We prioritize solar-ready design at our industrial development projects to help our future tenants meet their sustainability goals, reduce operational emissions and create independence from the grid.

2. Fuel-switching

Heat pumps

As Fengate seeks to transition towards a lower carbon future, heat pumps play an important role in working towards decarbonization. Heat pumps are significantly more efficient than alternative heating methods and helps us transition away from natural gas usage. Fengate’s preferred heating and cooling system are heat pumps because of their exceptional energy efficiency, GHG reductions and opportunity for cost savings for future tenants.

3. Sustainable Design Baseline

Net-zero ready guideline

Fengate currently follows a net-zero ready guideline for industrial projects, which was developed by our technical consultant that includes specific provisions for our assets to be prepared to transition to zero-carbon operations in the future. These provisions include all envelope upgrades, electrical infrastructure upgrades to be prepared for a future electrification of mechanical systems, and a structurally ready roof to support solar panels. Looking ahead we seek to evolve our design measures to transition away from natural gas, investigate embodied carbon emissions, and future-proof assets as we transition towards a low-carbon future.

Sustainable Design Case Studies

University of Toronto Scarborough, Ontario

At 24,620 square metres, Harmony Commons is the largest building in Canada to receive Passive House Classic certification. On behalf of our investor, the LPFCEC, Fengate partnered with University of Toronto (U of T) Scarborough to invest in and deliver a state-of-the-art purpose-built campus student residence with 746 beds within Fengate’s Student Housing Fund. A Passive House building is designed to use less energy for heating and cooling compared to conventional buildings. Passive House is regarded as the industry’s leading voluntary standard for energy-focused design and construction, and stands as the pinnacle of commitment to sustainable building practices. In U of T Scarborough’s Harmony Commons Student Residence, this standard is exhibited in the combination of highly efficient insulation, airtight construction, and carefully designed windows and ventilation systems. In addition to the reduced carbon emissions of building to the Passive House standard, savings in operational costs offset the additional expenses associated with construction.

A market-leading, industrial development located in a master planned industrial campus in the City of Cambridge featuring zero-carbon ready specifications. A zero-carbon ready industrial building includes specific provisions for the development to transition to zero-carbon operations in the future. These provisions include all envelope upgrades, electrical infrastructure upgrades to be prepared for a future electrification of mechanical systems, and a structurally ready roof to support solar panels. The HVAC equipment is intended to initially remain high efficiency gas fired makeup air units to maintain low tenant operating costs but be switched out at the end-oflife (~15 years) with high efficiency cold climate air source heat pumps and energy recovery ventilators. The provisions made with the zero-carbon ready design would facilitate a future transition to zero carbon operations, with the option to pursue the Canadian Green Building Council Zero Carbon Performance Certification based on 12 months of metered hydro and gas consumption.

315 Allendale Road, Cambridge, Ontario

Nature and Biodiversity

Fengate real estate recognizes the significance of the protection and conservation of nature and biodiversity. We also acknowledge that nature loss poses a large risk to the economy as a whole and has a substantial impact on the built environment. In addition to incorporating nature and biodiversity risk assessment during the due diligence stage, we have also implemented a variety of programs at the properties we manage to improve the way we interact with our environment:

at work

Honeybees program

Urban microhabitat program

In spring of 2021, the real estate business unit took thousands of bees under its wing by installing beehives on the rooftop of the office buildings we manage. These bees pollinate the urban flora and promotes biodiversity. At the end of the season, we harvest their honey and share it with our community. In 2023, we expanded the Bees and Pollinators program from its existing office sites to select industrial sites.

Select sites are also participating in microhabitats by growing produce on the roofs for donation to local food banks. In 2024, 1,500 pounds of food is expected to be harvested and donated to local food centres to promote a vibrant and healthy community.

Fengate recently partnered with One Tree Planted, where we make donations based on signed leases for MFIF. One Tree Planted is a forest restoration charity that raises funds to support local organizations with tree-based restoration initiatives across the globe, including the development of agroforestry systems, mangrove restoration, and the creation of wildlife corridors.

Community gardens

Migrating bird

Tree planting protection

Green cleaning

Many of our MFIF properties offer community gardens for residents. 1140 Wellington in Ottawa has a resident-run community garden program where they grow a variety of herbs and produce from May to October. Much of the harvested produce is donated to a local food centre with the remaining food divided up among the residents.

Each year in Canada, approximately 25 million migratory birds die as a direct result of collisions with buildings. To protect migrating birds from colliding with windows, we worked with FLAP (Fatal Light Awareness Program) Canada to install window film at Concorde Corporate Centre to provide birds with visual cues that a barrier is present.

All chemicals used in cleaning Fengate-managed properties shall bear the UL ECOLOGO certification seal. These chemicals are verified for reduced environmental impact and indicate that a product has undergone rigorous scientific testing and exhaustive auditing to prove its compliance with stringent thirdparty environmental standards.

Water Management

Irrigation management systems

The Irrigation Management System (IMS) tracks irrigation water and allows for remote schedule adjustment, leak detection, and water use reporting. In May 2022, Smart Water Systems (SWS) installed IMS at Fengate-managed office properties, resulting in significant reduction in consumption in a number of properties. The system promotes efficient water use, minimize waste from leaks, and allow for water use reporting by the litre.

Fengate real estate understands the importance of sustainable water use and responsible waste management in our operations. Our FCIF group is focused on providing tenants with high-quality experiences while managing the responsible consumption of natural resources. By providing guidance and implementing efficient practices, we are committed to contributing to the ongoing reduction of water and material waste in the buildings we manage. 1.

Flow alarm update

In addition to water use reductions from irrigation schedule optimization, Smart Water Systems recorded and fixed over 30 flow alarms. As these leaks may have previously gone undetected, the program has reduced damage to landscaped areas and reduced water waste by over 100,000 litres.

Water audits and targets

Fengate real estate has engaged third-party consultants to conduct water audits, with the goal of decreasing year-overyear water consumption by 1%. While the property management team cannot impose water consumption requirements on tenants, the team makes a concerted effort to discuss consumption patterns as necessary with tenants to encourage conservation.

Waste Management

Zero-waste Office Buildings

Fengate has proudly partnered with U-PAK Emerald Energy to divert 100% of landfill waste from the office buildings we manage. All materials have been directed to reuse, recycle, composting or energy production through U-PAK’s Energy from Waste program (Energy from Waste).

The coverage of this program has expanded from three properties in 2023 to 100% of the office assets within FCIF, and we continue to explore opportunities to expand this program to other properties we manage. The below is a summary of the total outcomes of the program to date1:

E-waste programs

The property management team bolsters recycling efforts by offering tenants complimentary e-waste pick-up (e.g., computers and related equipment, electronics, toners, batteries) in the office buildings we manage.

from

SOCIAL

Community Engagement

Fengate real estate implements a range of initiatives to elevate tenant satisfaction within the buildings we manage, while mobilizing our team and our partners to contribute to the positive wellbeing of our community. Below are some of our social initiatives in 2023:

Community Days: In an effort to help make a positive impact in the local community, the team sets up charitable initiatives such as toy and food drives. The team also sets up an annual Community Clean-Up event where corporate tenants come together to take meaningful action in protecting our planet for future generations. The events aims to raise awareness about the importance of environmental protection, and to encourage people to become more involved in conservation efforts.

BAND Offsite: Beginning during Black History Month on February 15, 2024, the Labourers’ International Union of North America (LiUNA) and Fengate partnered with Black Artists’ Networks in Dialogue (BAND) for a three-part public art exhibit dubbed BAND Offsite – 355 Adelaide, located in a future development site in downtown Toronto. The series runs from February to December 2024, launching with an installation by Frantz Brent-Harris and followed by works from Leone McComas and Natalie Asumeng.

“An artist’s ability to transcend languages and culture through their work is integral in building and connecting communities, and we are honoured to provide BAND the opportunity to showcase their art to the public,” said Joseph Mancinelli, International Vice President and Regional Manager for Central and Eastern Canada, LiUNA. “Creating platforms to highlight, promote and celebrate diverse perspectives is at the core of building stronger communities and we are proud to present BAND Offsite at 355 Adelaide Street West.”

HelloArt: In 2023, we continued to partner with HelloArt to make art even more accessible. The Toronto-based company partners with businesses to exhibit original artwork across the Greater Toronto Area, with a vision to be every community’s inspiration for showcasing its artists and their stories. The main lobbies and common area by the elevators feature several wall-mounted pieces complete with interpretive plaques about the artist’s background, their preferred media and works, and a QR code to scan and learn more about the artist. Pieces are available for purchase and any unpurchased pieces are rotated quarterly, making it effortless for anyone to enjoy and buy art. This initiative has been rolled out throughout the entire office portfolio.

Tenant Green Teams: The property management team has organized Green Teams at Fengate’s properties, comprised of volunteers from the corporate tenants. Green teams are a self-organized, grassroots and cross-functional groups who come together to identify and implement specific solutions to help their organization operate in environmentally sustainable ways.

Applebee Farm: Fengate supports local farmers by leasing 77 acres of underutilized land at well below market rate to generate positive economic benefits for the local community. Applebee Farm will grow crop to feed their own livestock and sell a portion of the crop for livestock feed.

GOVERNANCE

Governance Protocols and GRESB

Governance Protocol

We acknowledge and underscore that robust ESG governance is a shared responsibility across all our business units. ESG roles and responsibilities are defined across our business functions and are integrated into our broader governance framework here at Fengate.

Leverage relationships to identify and source investment opportunities

Evaluate investment risks and implement risk mitigation strategies

Deploy capital return reflecting investment risk

Determine the most optimal team of consultants for entitlement process

Engage general contractors to submit bids for construction and begin tendering process

Investment Screening Meeting

Investment Committee approval required to proceed with detailed due diligence

GRESB

Global Real Estate Sustainability Benchmark (GRESB) is the recognized global standard for rating organization-level sustainability performance, compared to LEED which is assetlevel. GRESB is a mission-driven and industry-led organization providing standardized and validated ESG data to financial markets.

Participating in GRESB gives us credibility as we embed ESG across our business strategy. GRESB gives us an opportunity to benchmark our strategy and program, to enhance our value proposition to co-investors, lenders, tenants, and communities.

Actively manage investments

Hold investments for duration or realize value through exit

Investment Committee Memorandum

Investment Committee approval required prior to commitment on investment

Investment Working Memorandum

Annual review meeting to assess historic performance of all assets

Investment Screening Memorandum

Investment committee approval required to proceed with rezoning submissions

Investment Committee Meeting

Investment committee approval required to proceed with vertical development

Fund and Portfolio Review

Investment, Development, and Asset Management teams

provide quarterly reports on project status and fund performance

We are looking forward to sharing FCIF’s 2023 GRESB score in late 2024. The GRESB roadmap we have developed for each of our funds reflects our continued efforts in integrating sustainability into our operations and decision-making processes. We remain committed to transparency and accountability, and we look forward to sharing our progress and GRESB results in the coming years. As Fengate continues to evolve in our ESG journey, we seek to submit additional funds to GRESB.

Industry Participation

INFRASTRUCTURE

Fengate leverages its long-standing relationships with designbuilders, operators and developers to source, develop and manage infrastructure investments across North America on behalf of its clients that

Business Overview

The firm has been investing in infrastructure since 2006, with a focus on mid-market greenfield and brownfield assets in the transportation, social, energy transition and digital sectors. Fengate leverages its long-standing relationships with design-builders, operators and developers to source, develop and manage infrastructure investments across North America on behalf of its clients that deliver value to our communities through responsible labour practices and our community engagement initiatives.

The firm has a proven track record and trusted reputation as an investment and development partner across the sectors it operates in, and an infrastructure project portfolio of more than 45 assets valued at over $20 billion. Fengate is committed to responsible investment and to bringing transparency and accountability to monitoring asset-level environmental, social and governance factors while delivering essential infrastructure and driving economic growth for our communities.

Key Highlights

1.6M

MWh

of renewable energy generated in 2023, equivalent to 160,000+ homes powered

5.1M+ cumulative construction union work hours created across 5 projects1 22 of 25 Social and transportation assets are certified or targeting LEED silver or gold2

Deliver essential infrastructure

Engage local workforce and communities

Generate return on investment

This section covers Fengate Core Infrastructure Fund III (CIF III), Fengate Infrastructure Fund IV (Fund IV) and Fengate Infrastructure Yield Fund (Yield Fund). Fengate infrastructure focuses on the following sectors:

▪ Renewable energy

▪ Battery storage

▪ Cogeneration

PRI score for Infrastructure in 2023 4 out of 5

$1.1B+ Investment Commitment to energy transition assets

2,500+ hospital beds delivered in Yield Fund

2023 Principles on Responsible Investment

During the 2022-2023 period, Fengate improved its Infrastructurespecific Principles on Responsible Investment (PRI) score from 76 to 90, 26 points above the industry average. This marked improvement demonstrates Fengate’s continuous progress on our ESG efforts. Key areas of improvement included:

▪ Enhanced annual ESG data collection and monitoring

▪ Updated ESG policy statement outlining ESG integration into the investment process

▪ Integration of ESG factors including climate risk analysis into due diligence activities and value- creation opportunities

▪ Committed Fund IV as SFDR Article 8 compliant

has

Notable Achievements

Delivering new

Prince George’s County Public Schools

The Fengate-led consortium, Prince George’s County Education and Community Partners, delivered five state-of-the-art middle schools and one kindergarten through eighth-grade (K-8) in just two-and-a-half years – largely during the global pandemic – for Prince George’s County Public Schools (PGCPS) in Maryland. PGCPS is one of the largest school districts in the United States, and was faced with rapidly aging school facilities and overcrowded classrooms. Fengate’s public-private partnership approach accelerated the project’s delivery and created 3,000 jobs for local businesses in the process. The six new schools opened their doors to more than 8,000 students in the Summer and Fall of 2023.

Reducing Carbon footprint and creating social value

Los Angeles International Airport’s Consolidated

Rent-A-Car facility

In December 2023, Los Angeles International Airport’s (LAX) Consolidated Rent-A-Car (ConRAC) facility was recognized with an Energy and Operational Carbon Design Merit award from the U.S. Green Building Council’s Los Angeles chapter. The award recognized the project’s sustainability excellence and positive impact on the community and environment. The project was under a Project Labour Agreement (PLA) and created more than 5,000 jobs and $200 million in wages for the local workforce during construction. It will also eliminate approximately 3,200 daily shuttle bus trips, reduce congestion on local streets, and achieve a carbon reduction of 1,220,000 pounds per year.

Meeting the justice needs of a growing population

Clackamas County Replacement Courthouse

The Clackamas County Replacement Courthouse project in Oregon, U.S. was shortlisted in two 2023 P3 Awards categories; Social Infrastructure Project and Best Financial Structure Project. The social project addresses the essential need to replace the existing courthouse which no longer meets the needs of the growing Clackamas population and is designed to be environmentally sustainable to achieve Leadership in Energy and Environmental Design (LEED) Gold certification. The project targets a 53.4% electricity reduction and 88.1% natural gas reduction from the baseline, resulting in a total greenhouse gas (GHG) reduction of 62.2%.

Putting Our People First

Fengate’s vision is to be North America’s most trusted partner for private investments by putting our people, clients, and communities first. We empower and celebrate our people, and were proud to see Andrea McLean, Senior Vice President, of Infrastructure Asset Management, named the 2024 Emerging Leader at the Women’s Infrastructure Network Awards. The award acknowledged Andrea’s commitment to mentoring women in the industry and her contributions to the infrastructure sector as a whole, up to and including 2023.

ENVIRONMENT

Climate Action: TCFD Report

Strategy

Our Energy Transition Strategy

As a leader in the energy transition, we recognize the urgent need to support the transition to a low-emissions and climate-resilient economy. Our commitment is to deliver sustainable, equitable, and secure energy solutions across North America while achieving exceptional returns for our investors. Our balanced energy transition strategy is built upon three foundational pillars:

1. Sustainable

We are dedicated to increasing the supply of clean and sustainable energy sources, which is crucial for reducing the emissions intensity of the overall energy supply. By investing in renewable energy projects and innovative technologies, we aim to significantly lower greenhouse gas emissions in our grid systems. This includes growing our investments in wind, solar, hydro and other renewable energy assets. Fengate’s investments in wind and solar assets contribute 750MW of clean energy generation capacity across North America. An example of a recently completed wind project is Prairie Switch Wind located near the city of El Campo in Wharton County, Texas, with the capacity to generate more than 550,000 MWh of renewable energy per year.

2. Equitable

Our strategy ensures that the transition to a low-carbon economy does not compromise economic activity or job security. Our investments promote green jobs and foster economic opportunities in communities impacted by the energy transition through responsible labour practices and support to landowners. Fengate’s investments in co-generation (CHP) assets further support the equitable decarbonization of industrial sectors by optimizing the efficiency of energy generation compared to traditional systems. CHP is an efficient approach to generating on-site electric power and useful thermal energy, such as steam and hot water from a single fuel source, by capturing and using heat energy that would otherwise be wasted. CHP represents one of the most commercially and technically viable decarbonization levers for hard-to-abate industrial sectors. Our industrial off-takers have also set net-zero targets for scope 1 and 2 GHG emissions which encompasses CHP operations. Fengate will work with our energy off-takers to explore further decarbonization options, such as adding solar/battery storage or using hydrogen fuel/carbon capture technologies, where commercially and technically feasible.

3. Secure

Ensuring the resilience and reliability of grid systems is paramount in meeting increasing energy demand and planning for potential disruption. Battery Energy Storage System (BESS) is an important part of the global energy system, and will play an increasingly important role in the transition to renewable energy through grid stabilization and peak demand management. Fengate Infrastructure’s development partnership with Alpha Omega Power (AOP) continues to identify and invest in BESS development opportunities within North America.

By focusing on these pillars, we strive to lead the energy transition in a way that aligns environmental responsibility with economic growth and energy security, and is consistent with our responsible labour principles. Our balanced approach ensures that we can meet the needs of today while paving the way for a sustainable and resilient future.

750+ MW wind, solar and hydro assets

400,000+ tCO2e of avoided carbon emissions in 2023

1.6M MWh of renewable energy generated in 2023, equivalent to 160,000+ homes powered

Fengate’s infrastructure investments support both mitigation and adaptation actions against climate change, including investments in clean technology, and climate-resilient and sustainable infrastructure.

LEED Buildings

Of the 25 operational and underconstruction projects in Fengate’s social and transportation portfolio, 22 were either certified or targeting Leadership in Energy and Environmental Design (LEED) silver or gold in 2023. LEED is an international benchmark for sustainability excellence and green building leadership. By obtaining LEED certification, Fengate demonstrates its commitment to investing in infrastructure assets that meet and exceed industry standards of green building design and construction, including sustainable site selection, water efficiency, energy performance, material and resources, indoor environmental quality, and location and transportation.

Our Decarbonization Journey

Fengate recognizes the importance of decarbonizing our infrastructure funds and is taking a thoughtful and pragmatic approach to transition planning at the asset level. Fengate’s transition strategy is informed by current leading target-setting frameworks in private markets, including the Institutional Investors Group on Climate Change’s (IIGCC) Net Zero Investor Framework (NZIF). In addition, we are also referencing Bain’s Private Markets Decarbonization Roadmap (PMDR) developed by the Initiative Climat International (iCI) and the Sustainable Markets Initiative’s Private Equity Task Force for guidance where applicable.

Depending on the asset type, Fengate’s level of operational control, and commercial structure, among other factors, our ability to pursue decarbonization options at the asset level varies significantly. As such, Fengate has not yet made a net-zero commitment across its infrastructure funds. Fengate understands that net-zero commitment requires the design and implementation of tailored, asset-level decarbonization approaches in order to set a decarbonization ambition and net-zero target at the fund level. We continue to make progress towards realizing our decarbonization strategy and identify where we can make a material impact on our financed carbon footprint. Some achievements to date include:

Emissions Performance Baselining

In 2023, Fengate conducted a comprehensive review of the scope 1 and 2 GHG emissions profile across assets in CIF III, Fund IV, and Yield Fund and established a baseline profile of Fengate Infrastructure’s Scope 3 financed emissions following the GHG protocol and PCAF methodology.

Active Engagement

Based on the data collected in 2023, we are actively engaging in dialogue with our asset managers in setting out the measures towards a decarbonization strategy for asset-level scope 1 and 2 emissions. This includes engaging third-party technical advisors on site-level energy audits to provide Energy Conservation Measures (ECM) recommendations and transition pathways. Where possible, Fengate collaborates on climate stewardship activities with co-investors to drive consistent strategies for the assets we manage.

TCFD Recommendations and Reporting

Fengate continues to align our climate program to TCFD recommendations and we are committed to continue sharing our progress through our TCFD report enclosed in our Sustainability Report.

Net Zero Maturity Scale

Fengate has adapted IIGCC’s net-zero alignment maturity scale for our own transition framework. Fengate has added an additional step to categories assets that are either preparing to align or have a decarbonization strategy in place that is not yet ready to be net-zero aligned due to operational, technical or commercial considerations.

Analyze and Prepare

Preparing to align or Decarbonization strategy in place

Committed to Aligning

Based on our initial assessments, most operating assets are not yet aligned, while some assets are preparing to align through the exploration of a transition plan, and several have commitments to align. The majority of our renewable assets are well-positioned to be net-zero with minimal transition efforts given the nature of their operations. The majority of the social assets we manage such as hospitals, courthouses and schools have been built to standards such as LEED silver and gold certified, where energy efficiency has been optimized based on technically and commercially feasible energy solutions. Beyond building to LEED standards, further decarbonization of social assets such as hospitals pose unique challenges and opportunities due to the operational demands for critical healthcare services, and therefore must be evaluated on a case-by-case basis. Many assets are currently exploring additional energy efficiency and electrification opportunities that are within commercial, operational and technical feasibility.

18%

AUM with decarbonization and/or net-zero targets in place

AUM of renewable energy assets with minimal scope 1+2 GHG emissions

28%

AUM with energy efficiency targets through LEED Silver or Gold certification

63%

AUM with decarbonization considerations

Fengate continues to act on its decarbonization strategy and make progress in line with the IIGCC maturity scale through direct and collaborative engagement and establishing climate governance at the asset level where Fengate has ability to exercise influence through its contractual rights. Fengate recognizes the importance of global decarbonization while remaining committed to transparency in disclosing the opportunities and challenges that are posed throughout this journey.

Aligning towards a net zero pathway

Aligned to a net zero pathway

Not aligned

Risk Management

Physical Climate Risk Assessment

Fengate conducted a physical climate risk assessment through Mitiga EarthScan’s Climate Risk Tool across its standing assets, including Fund III, Fund IV, and Yield Fund. The methodology for Fengate’s physical climate risk assessment can be found here.

Across Fengate’s infrastructure funds, assets have relatively low to moderate exposure to climate-related hazards within the next five to 20 years. Looking forward to 2030-2050, heat stress will experience a slight increase across the portfolio of assets under two of the more carbon-intensive climate scenarios as global temperatures rise. Assets located in certain southern U.S. locations are expected to be more exposed to temperature increases over the next decade, while assets in Western Canada are expected to experience higher precipitation risk.

Chart 4.1: Infrastructure asset’s exposure to climate risk under Business as Usual Scenario in 2030 – Location-based distribution

asset locations evaluated

overall risk exposure

assets have low to medium exposure

Fengate views the physical risk associated with climate change and the necessary steps for adaptation and resilience to have the same importance as other investment risk categories. On an ongoing basis, risks and opportunities presented by the physical impacts of climate change are integrated into Fengate’s existing risk assessment and management processes and will continue to evolve with industry standards, climate data improvements, and internal capability-building measures.

Table 4.1: Example of Fund III’s portfolio-level exposure to physical risk across multiple climate scenarios and time horizons.

Based on Fengate’s review, assets situated in higher-risk locations all currently have adequate structural adaptation or commercial arrangements in place for resilience. Fengate will continue to monitor the assets and its resilience plans periodically to identify opportunities for additional adaptation measures.

As mentioned, EarthScan Ratings, rooted in impact quantification based on physical buildings, are not directly applicable to non-built asset types such as wind and solar assets. As a result, ratings are supplemented by underlying physical metrics such as flood inundation depth or heatwave length as the primary source of valuable data for risk assessment for non-built assets. Using the tool, Fengate can obtain a range of quantitative climate forecasts under multiple climate scenarios and timeframes. For any high-risk locations, Fengate shares the risk ratings and projected hazard exposure metrics (i.e. max temperature in oC and precipitation levels in millimetres) with the asset management team to understand current asset resiliency measures and explore adaptation strategies, if applicable.

Chart 4.2: Example of max temperature trend for a sample asset location in Fund III

Max temperature trends (2-year return period) at a high heat-risk location

Examples of Existing Adaptation Measures

Envelope Design Considerations

Buildings are designed with features that reduce cooling loads, such as improved insulation, reflective roofing materials and strategic shading. These design choices help maintain comfortable indoor temperatures and reduce energy consumption, especially in hotter climates.

Temperature-Tolerant Mechanical Systems

Mechanical systems for solar assets are engineered to operate efficiently at temperatures well above projected levels. This includes the use of robust materials and advanced cooling technologies that can handle extreme heat without compromising performance or longevity. In addition, ERCOT has implemented cold weather preparedness requirements for generators. Therefore equipment is also insulated, heat traced and enclosed in a building to prepare against extreme cold events.

Elevation of Electrical Components

Electrical infrastructure is elevated above ground level to protect against stormwater and flooding. This includes raising electrical panels, transformers and other critical components to prevent water damage and ensure continuous operation during adverse weather conditions.

Looking ahead, Fengate will continue to monitor assets in highly exposed assets and regularly update the assessment, engage our asset management teams and operating partners to strengthen governance and management, evolve our practices to quantify and report on potential financial impacts, utilize the findings to inform future investment decisions and educate Fengate’s investment team members on climate risk identification and management.

Fengate will continue to monitor these assets and their resilience plans periodically. This ongoing assessment will help identify opportunities for additional adaptation measures, ensuring that the assets we manage remain robust and capable of withstanding evolving environmental challenges.

Metrics and Targets

Fengate collected energy consumption data across CIF III, Fund IV, and Yield Fund in 2023. The data is reviewed by Fengate’s ESG team and used to calculate financed GHG emissions at the fund levels. Fengate continues to engage at the asset level to improve the quality and completeness of the data we collect. Our GHG quantification methodology is aligned with the GHG protocol and PCAF Methodology for Scope 3 Category 15 Financed Emissions.

Infrastructure Funds1

2023 Financed Emissions (tCO2e)

Many factors may influence the financed emissions figures on a year over year basis, including changes in ownership levels, company leverage ratios, fair market value fluctuations and other operating variables. To have a more accurate view of true changes in operating emissions intensity through other KPI’s that Fengate tracks, including absolute emissions, carbon intensity and carbon footprint figures. Definitions for each of the KPI’s can be found in PCAF’s Global GHG Accounting and Reporting Standard.

As part of the Infrastructure Lifecycle ESG Engagement Program (LEEP), Fengate will continue to track the scope 1 and 2 emissions from its funds to provide meaningful year over year comparisons. Fengate will also continue to improve on the coverage of its GHG inventory. Future improvements include the tracking of material scope 3 emissions, and the identification of commercially and technically feasible decarbonization opportunities where Fengate has operating control.

What are Scope 3 Category 15 Financed Emissions?

According to the PCAF guidance, financed emissions are calculated by multiplying the attribution factor by the emissions of the investee company and then taking the sum of these emissions. The attribution factor represents the proportional share of a given company, represented by the ratio of the outstanding amount of equity to total equity and debt.

1. Fengate has not independently verified the energy consumption data provided by our partners. GHG emissions are quantified for assets that have been in operations and under Fund ownership for at least one reporting year.

SOCIAL

Social Impact

Social Infrastructure

From schools and universities to healthcare facilities and civic services, Fengate has invested in and delivered more than 20 social infrastructure projects across North America. These assets are essential for societal well-being and economic growth; fostering community engagement, improving health outcomes, and contributing to the development of human capital. Fengate partners with the public and private sectors to finance, develop and maintain social infrastructure to ensure the long-term sustainability and prosperity of its communities.

Community Engagement Highlights

Clackamas County Courthouse

Kids’ Meals Inc.

Prairie Switch Wind Project

Hesed House

hospital beds

2,500+ classroom seats

10,000+

Social Initiatives

Community engagement and charitable giving are integral components of all Fengate infrastructure projects. We believe in creating meaningful connections within our project communities and contributing to their growth and development. With every infrastructure development, Fengate aims to have a positive impact on its project neighbours through a variety of initiatives, from charitable giving to supporting local businesses.

Throughout 2023, the Clackamas County Replacement Courthouse project team contributed to several local charities, including hosting a toy drive, collecting canned food, and other neccessities for the Clackamas Service Center, organized a school materials drive for underprivileged children. Through initiatives such as these, we strive to make a positive impact in our community. In addition, the project engaged local artists to create murals for the construction hoarding and presented project updates to local Neighbourhood Associations for transparency and community building.

LAX ConRAC

The Fengate-led consortium which delivered the LAX ConRAC facility positively impacted the local community by operating sustainably and balancing economic, social and environmental responsibilities throughout construction. The project created more than 5,000 jobs and $200 million in wages for the local workforce.

Fengate’s Energy Transition office, located in Houston, Texas, volunteered with Kids’ Meals Inc. to deliver nutritious meals to more than 75 families in the Houston area. Every day in Houston there are more than 50,000 preschoolaged children have limited or unreliable access to a sufficient quantity of affordable, nutritious food. Fengate’s contribution enabled Kids Meals Inc. to deliver free, healthy meals to the doorsteps of some of Houston’s most disadvantaged preschool-aged children and contributed to the charity’s mission to end the cycle of poverty.

Oakville Hospital Foundation

During Christmas 2023, our Asset Management team, using corporate and personal donations, participated in the shopping and delivery of toys to Oakville Trafalgar Memorial Hospital as part of the Oakville Hospital Foundation’s ‘Child Life Wish List’ program. The program assembled a wish list of items that can help make the hospital experience less stressful for children and their families during the holiday season.

Fengate’s Prairie Switch Wind project in Texas created more than 200 jobs during construction and will continue to support the community for generations to come with more than $50 million in tax revenues going directly back into Wharton County. Throughout construction, the project invested approximately $12 million in the local economy through spending in the community.

Fengate team members volunteered at and provided donations to Hesed House in Wharton County, Texas. Located in the township where Fengate built the Prairie Switch Wind project, Hesed House was founded by local resident, Stephanie Konvicka, to create a community centre that promotes belonging, inclusiveness, mental health support and local events within Wharton County— a community that is regularly devastated by flooding events.

Prince George’s County Public Schools

Prince George’s County Public Schools work with district and community partners to create 3,000 jobs and build six state-of-the-art school facilities for more than 8,000 students and families.

GOVERNANCE

Governance Approach

Fengate typically invests greater than 50% of the equity required in each infrastructure investment, with the intention of securing a majority ownership stake in the project and majority board representation. At a minimum, Fengate requires a seat on the Board of Directors to ensure sufficient control and oversight, to closely monitor asset performance and influence proactive risk mitigation. Fengate’s in-house asset management of its investments allows Fengate to better manage project risks (including ESG risks), protect equity returns, and identify opportunities for increasing asset values, which may include ESG improvements. Fengate’s asset-level investment style enables it to actively manage and monitor operations to ensure company management are considering and managing risks across the business, including ESG-specific factors.

Fengate will also contract key project services to high-quality industrial partners (e.g. design-builders, infrastructure operators) and carry out administrative services (e.g. financial reporting, cash management) with which it is familiar. During the investment process, when counterparties are appointed, Fengate looks to ensure that equivalent ESG policies are implemented by any service providers that it chooses to work with. Fengate engages with numerous service providers, including design-builders and operating partners, promoting the use of favourable environmental and social practices.

Fengate will consider opportunities to participate in collaborative engagement initiatives that support businesses and projects, Fengate’s stakeholders, and the industries in which it invests. To support positive growth and change within each industry in which it invests, Fengate is an active member in a number of industry groups including Association for the Improvement of American Infrastructure, Canadian Council for Public-Private Partnerships. In addition, Fengate sponsors relevant industry events annually.

Infrastructure Responsible Contractor Policy

The labour community remains at the core of Fengate’s vision, mission and purpose. Fengate has refreshed its Responsible Contractor Policy (RCP) that aims to support and promote the engagement of contractors who can be expected to provide both competitive and high-quality services, utilizing expertly trained and fairly compensated employees.

74%

of assets with Fengate as majority owner

500,000+

cumulative construction union work hours created across 5 projects 5.1M+ union work hours created in 2023 for ongoing maintenance and operations

Case Studies

Fengate invests in high-quality, sustainable projects that are not only good investments, but good for the environment and good for the communities we serve.

The Prairie Switch Wind project is a 48-turbine, 160-megawatt wind farm in Wharton County, Texas, and the closest wind energy source to Houston. It will provide enough clean, pollution-free energy to the local Texas grid to power the equivalent of 50,000 average U.S. households for an entire year, and reduce grid-related greenhouse gas emissions in Texas by an estimated 190,000 tonnes of CO2e annually – comparable of taking 91,000 gasoline-powered cars off the road every year.

The state-of-the-art 3.4 MW turbines are climate resilient and specifically designed to meet the unique weather challenges of Texas. Cold-weather technology enables the turbines to operate at temperatures as low as -22 degrees Fahrenheit and continue operations when ice is on the blades. More than 200 local jobs were created and US$12 million was invested in the local economy throughout construction, and the project will continue to benefit generations to come with approximately US $60 million in tax revenue going directly back into the community.

The U.S. witnessed an unprecedented public-private collaboration with the completion of the Prince George’s County Public Schools (PGCPS) in Maryland. The project comprised five middle schools and a K-8 academy, collectively providing 8,000 desks to one of the most in-need school districts in the U.S.

A focus of the Fengate-led consortium, Prince George’s County Education and Community Partners (PGCECP), was bolstering minority and locally owned small businesses. In 2023, the project team surpassed its target by allocating 33 percent of contracts (US$134 million) to Minority Business Enterprises. This included US$68 million for businesses within Prince George’s County and US$65 million specifically for County MBEs.

During the two-and-a-half-year delivery phase, PGCECP also spearheaded a community benefits program. This included a one million dollar endowment fund for students and educators, US$60,000 in scholarships for 30 Prince George’s Community College students over three years, and an annual US$10,000 scholarship program commencing at operations.

With these new schools, students are equipped with the necessary tools to compete and succeed in today’s world, including modern learning spaces such as Science, Technology, Engineering, Art, and Math (STEAM) labs and creative arts spaces. Additionally, all schools are equipped with solar and electric vehicle charging.

Prince George’s County Public Schools Blueprint Schools Program

Prairie Switch Wind ENERGY TRANSITION SOCIAL & TRANSPORTATION

Case Studies (cont.)

SOCIAL & TRANSPORTATION

LAX Consolidated Rent-a-Car Facility

Los Angeles World Airports (LAWA) and LAX ConRAC Partners (LAXCP) – The project’s design, build, finance, operate and maintain (DBFOM) consortium led by Fengate – had positively impacted the community by operating sustainably and balancing economic, social and environmental responsibilities throughout design and construction.

The ConRAC facility achieves a 36% energy use reduction and an operational carbon reduction of 1,220,000 pounds per year, solely due to efficiencies, with additional carbon savings gained through sustainable electrification measures, reduction of heat island effect and alternative transportation options.

By relocating rental car companies into one convenient location adjacent to the main freeway, as well as providing a direct connection to LAX’s Automated People Mover (APM) train system, the ConRAC facility will eliminate approximately 3,200 daily shuttle trips and alleviate traffic congestion on surrounding streets.

A 4.8-megawatt photovoltaic solar panel array integrated into the facility’s façade, roof and parking canopies will produce 8,400 megawatt hours of electricity annually, which will be sent directly to the Los Angeles Department of Water and Power via the department’s Feed in Tariff (FiT) program.

Additional ESG Benefits Include:

▪ Creating more than 5,000 jobs and $200 million in wages for the local workforce

▪ Reducing cooling loads through the building’s envelope design

▪ Selecting a HVAC system that minimizes energy waste

▪ Installing high-efficiency lighting and a control system created specifically for the ConRAC facility, which eliminates unnecessary wire and plastic

▪ Designing a cleaner grid in the site area that allows for an all-electric project, significantly reducing operational carbon

Underscoring the project’s extensive ESG achievements, LAX ConRAC received LEED Gold v4 certification from the U.S. Green Building Council’s national assembly, and an Energy and Operational Carbon Design Merit award from the U.S. Green Building Council’s Los Angeles chapter.

Case Studies (cont.)

Fengate is a developer and equity investor in Oakville Trafalgar Memorial Hospital (OTMH), one of the largest healthcare public-private partnerships in Canada. Opened in 2015, OTMH is a fullservice acute care community hospital offering a range of primary and secondary care services and internationally recognized surgical patient care, in addition to a roster of tertiary services. Built with world-class technology, the hospital cares for 15,000 inpatients each year in addition to 240,000 outpatient visits, has 2,300 births and more than 70,000 visits to its 24-hour emergency department.

Fengate is an equity investor in the $1.7 billion project to design, build, finance, operate, maintain and supply vehicles for the Edmonton Valley Line Southeast Light Rail Transit (LRT), the largest project in Edmonton’s history to be delivered using a public-private partnership model. The project was completed in 2023 under a contract to design, build, finance, operate, maintain and supply LRT vehicles. With 13 kilometres of track and 11 stops connecting the Mill Woods neighbourhood to the heart of downtown Edmonton, it is a significant part of Edmonton’s transportation plan to meet the demands of one of Canada’s fastest growing cities.

Edmonton Valley Line Southeast Light Rail Transit

Oakville Trafalgar Memorial Hospital

SOCIAL & TRANSPORTATION

SOCIAL & TRANSPORTATION

ESG Screening

ESG Due Diligence

Established in 2016, Fengate Private Equity is a Toronto-based investment platform focused on partnering with growth-oriented businesses in the healthcare, business services and industrials, and consumer products and services sectors. With more than $700 million in assets under management, our mission is to partner with entrepreneurs to help them realize their growth ambitions and drive lasting positive change in their businesses –an approach we describe as providing Transformative Capital.

The Fengate private equity team ensures each potential investment opportunity meets the investment mandate and aligns with Fengate’s ESG policy. Fengate performs an initial investment screening which includes a risk assessment, and the identification of material ESG factors. 1 2 3

As part of our investment due diligence, the private equity team identifies and assesses Material ESG Factors on an investment-by-investment basis during the process, utilizing the SASB Materiality Map. This includes:

i. Material topics selection

Using SASB’s website to provide a list of potentially material ESG topics for the potential investment industry and narrowing down high-risk items

ii. Compliance review

Ensuring all relevant ESG regulations and reporting requirements from high-risk items are met by potential investment

iii. Detailed due diligence

Working with Fengate’s Director of ESG to review all potential risks and if indicated hire third-party advisors to quantify high-risk items

Include a summary of all high-risk items including mitigation strategies in Investment Committee materials iv. Investment Committee approval

Post-100 Day Plan

The private equity business unit works with management to identify opportunities for risk mitigation and value creation. In 2024, the private equity team is working to put in place a more formal process for post-acquisition engagement and data tracking including items such as Energy Consumption, Health and Safety and Employee Engagement.

Featured Projects

Services include:

▪ Asbestos and Lead

Abatement Solutions

▪ Mould Remediation

▪ Soil & Site

Remediation

▪ Demolition Services

▪ Emergency Response

▪ Donalco Fireproof

Founded in 1994, Inflector is one of Canada’s leading environmental services provider, specializing in hazardous material abatement, remediation, and related services. With more than 500 employees in five offices across Canada, Inflector provides mission-critical services to clients in the commercial, residential, institutional, and industrial sectors. Fengate Private Equity made its initial investment in Inflector in 2022, and the company was named one of Canada’s Best Managed Companies in 2024.

York1 is a leading, vertically integrated provider of environmental and infrastructure services with a 70 year track record. With over 800 employees, York1 provides comprehensive waste and soil management and remediation along with a variety of value-added infrastructure services to a diversified base of infrastructure, commercial, and residential customers in Ontario. Fengate Private Equity made its initial investment in York1 in 2021.

Remediation:

Inflector Environmental Services was awarded the abatement portion of this large-scale, multi-phase project. Located on Parliament Hill in Ottawa, the Centre Block building is home to an array of heritage pieces that the team worked diligently to preserve while completing commercial asbestos and lead removal.

▪ Coxwell Tunnel Project - loading, transportation, and beneficial re-use of approximately 1.5 million tonnes of soil and rock

▪ Victoria Park Landfill - off-site disposal of 80,000 metric tonnes of contaminated soils, earthworks, grading

Scap Metal Recycling:

▪ Frood-Stobie Mine - approximately 13,000 tonnes of scrap processed and 100% of the waste was diverted from the landfill

▪ PPG Plant - 95% of waste was diverted and over 7,500 tonnes of scrap metal was recovered

Diverted 3.85M+ tonnes of waste from landfill in 15,000+ projects

Inflector

York1

LOOKING AHEAD

Through our investment and asset management activities, we are committed to building on our achievements and exploring new avenues to drive

Next Steps in Fengate’s ESG Journey

In 2023, Fengate made significant strides to elevate our ESG practices, including standardizing our ESG integration approach, building internal tools and capabilities, focus on data-driven monitoring and engagement, and enhancing our disclosures. We believe that these foundations will allow us to further drive positive impact through our investments alongside our investors, partners, and communities.

Our ESG goals for the near term include:

Fostering a Diverse and Thriving Team 01 02 03 04

Amplifying Positive Impact on Communities

• We will continue to implement programs that support education, health, and economic development in local communities.

• We will continue to implement our Responsible Contractor Program across key investment activities including active project notification, inclusive bidding progress and labour hours tracking.

Minimizing Environmental Footprint

• We are committed to continue exploring opportunities to reduce carbon emissions, improving resource efficiency, and promoting the use of renewable energy sources.

• We will collaborate with partners who share our dedication to environmental responsibility, and engage with peers in our industry on sustainability subject matters.

Increasing Contribution to Energy Transition

• We will increase our investments in clean energy technologies and sustainable infrastructure.

• Aligning our portfolio with the principles of the energy transition, we aim to address climate change while seizing financial opportunities.

• We will enhance our diversity and inclusion programs to ensure our team reflects the varied perspectives and experiences of the communities we serve.

• Through targeted recruitment, professional development, and employee resource groups, we aim to create a workplace where everyone can thrive and contribute their best.

Through our investment and asset management activities, we are committed to building on our achievements and exploring new avenues to drive positive change. Together, we can make a meaningful difference today and for generations to come.

Assets Under Management (AUM): Represents Fair Market Value (FMV) of investments as of December 31, 2023

Business unit: Fengate’s investment strategies include infrastructure, private equity and real estate. This report excludes LPF Ventures Fund.

Funds: Investment vehicles within each business unit.

Assets: Investments made within each fund including portfolio companies, platforms, properties, and development sites. Glossary of Terms

*All values presented in this report are in Canadian dollars. unless otherwise specified

*Fengate refers to the Fengate group of companies which is comprised of Fengate Capital Management Ltd., its affiliated entities and the funds or other investment vehicles that they manage. Fengate has produced this Report for informational purposes only. The information contained in the Report is believed to be accurate at the time of publication of the brochure; however, Fengate does not guarantee or warrant or make any representations concerning the quality, suitability, accuracy completeness or timeliness of the information contained in the Report.

© 2024 Serafini Holdings Corporation. All rights reserved. Designed and produced by Fengate in August 2024.

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