MIIF comes within the Macquarie Capital (MacCap) Risk Management Framework, which itself lies within the broader operational and compliance risk management framework of Macquarie Group Limited (MQG). The Board and Management of MQG have made a public commitment to good corporate citizenship, which can be found on the MQG website.

MIIF considers that social, environmental and economic benefits arise from responsible private-sector investment in the construction, development and operation of high-quality infrastructure. Such infrastructure underpins much social and economic development – it helps people to travel, trade and communicate, and it facilitates improvements to the quality of their lives through the provision of essential services.

Many new infrastructure projects undergo extensive social and environmental impact reviews before being given approval to proceed. The process is typically run by governments, which will have balanced the costs and benefits of the project. Accordingly, a government-run process will usually require new infrastructure to produce more efficient environmental outcomes than existing alternative infrastructure; or, where an investment is made in existing infrastructure, for that investment to produce improved environmental outcomes than those that existed prior to the investment being made.

Consequently, and as a fundamental part of how investment in infrastructure comes about, MIIF is aware of the potential environmental and social risks as well as significant benefits. MIIF is conscious that its investments therefore create environmental and social responsibilities as a result of the essential services provided by those assets.

Against this awareness of risk and responsibility, there are relevant practical and structural factors which must be considered when determining what steps can be taken to address environmental and social responsibilities. MIIF holds and manages an investment stake on behalf of its investors in the underlying asset. The majority of the social and environmental footprint of MIIF's investments are therefore at the asset level and are dealt with by each asset's management, who are separate from Macquarie and those Macquarie management company staff who administer the fund and monitor the assets through board representation and regular asset reporting.

Accordingly, MIIF approaches its environmental and social responsibilities through an overarching risk management framework governing its investments. Key within that framework is MIIF's environmental policy. In essence, this policy recognises that it is the responsibility of each asset to comply with relevant laws and regulations. In addition, the framework requires that, to the maximum extent possible depending on MIIF's degree of control over the asset, each asset complies with the regulatory framework and minimum standards of the jurisdiction within which that asset operates, and with any additional requirements imposed by governments or other relevant authorities as part of the investment approval process.

MIIF's environmental and social responsibilities are identified and acknowledged through the investment process, as follows:

• Asset selection – social and environmental obligations are identified as part of the acquisition process;
• Ongoing asset management – compliance with environmental requirements is monitored and potential social and environmental issues are identified; and
• Stakeholder reporting – policies, social and environmental initiatives and compliance performance are reported internally and, where appropriate and/or required, externally.

Environmental and social responsibility-related regulatory requirements

MIIF is not aware of any material breaches of relevant environmental or social responsibility-related regulatory standards by its assets during the year ended 31 December 2007.

Environmental and social responsibility-related initiatives at MIIF assets during 2007

Examples of notable environmental and social responsibility-related initiatives undertaken during the past financial year at assets in which MIIF invests include:

Changshu Xinghua Port (CXP) - Helping the poor with their schooling

CXP participated in a program aimed at improving the schooling provided to students of low socio-economic backgrounds within the Changshu city region. CXP contributed RMB100,000 to this program, initiated by the Changshu City Government. The donation will be used to fund the children's school fees and assist with their living expenses.

As well, CXP donated RMB75,000 to the local government, facilitating completion of tree planting along a one-kilometre stretch of road within the port area. The initiative is aimed at improving regeneration over the long term within the region.

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Taiwan Broadband Communications (TBC)

In 2007 TBC continued its successful program supporting an initiative which provides English language training for children. A well-respected English language institution in Taiwan conducts summer training camps where students learn to speak English and develop their skills in crosscultural communication. Feedback from students who attended these camps, and from their parents, revealed they were impressed with the quality of the program, the professional staff and the learning environment provided.

In addition, TBC supports a schooling program for orphans, provides lunch for students in local schools and sponsors sport and recreation programs for children across TBC's five regions. TBC also provides air time and financial support for community announcements which promote public welfare issues and subsidises subscriptions for low income community members.

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Hua Nan Expressway (HNE)

In response to the government's call for blood donors, HNE led a blood donation campaign. Employees were briefed about the benefits of giving blood to those in need whose lives are often saved by blood donors. Government incentives for blood donors were discussed, and the blood donation was conducted in HNE's main administration buildings at Cencun.

During the period HNE's volunteers association organised a half-day visit to New Happy Village Nursing Home in Laiwan District. Twenty HNE employees assisted the elderly with their morning exercises and spent time interacting with them. Following the success of this visit, the association plans to organise more visits to homes for elderly, orphans and/or disabled people in 2008.

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Arqiva

Arqiva operates over 3,500 sites around the UK and is conscious of the importance of behaving responsibly, particularly with regard to the countryside and its rural habitats.

Arqiva has in the last year instituted a matched funding scheme whereby the company doubles any money raised by individual employees for charitable causes (up to £250 per initiative). This means that Arqiva employees are empowered to determine which charities the company contributes towards and are encouraged to undertake worthwhile fundraising, while feeling supported by their employer in their endeavours. After only a few months, 22 people were allocated £5,500 for their chosen charities and the scheme is proving very popular.

Further, Arqiva installed a suite of observation cameras to aid the treatment of "patients" in the bird of prey hospital at The Hawke Conservancy, the rescue and research centre near Andover, Hampshire. The facility is the only one of its kind in the UK and each year it treats a wide range of sick raptors brought in by members of the public and other wildlife centres. The new camera equipment means that not only staff but also visitors can see behind the scenes and view the recovery progress of injured birds first-hand. Cameras were installed in each of the eight treatment and recovery bays, all linked to viewing screens, allowing discreet observation of the birds without causing unnecessary additional stress.

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Canadian Aged Care (CAC)

CAC's focus on the quality of care includes a commitment to ensuring a safe work environment for residents and employees alike. In 2006 CAC launched an extensive education program for the 3,200 employees across its portfolio of homes. In 2007 CAC's homes covered 87 different topics related to resident care and staff development including hydration therapy, pain and comfort management, mechanical lifts and transfers, and customer service excellence.

In addition, each CAC home has a Joint Health and Safety Committee (JHSC). Members of each JHSC are certified every year in accordance with standards set by the Ontario Ministry of Labour. CAC conducts annual health and safety training, delivered by a provincially-certified OH&S provider, on topics ranging from emergency response to personal protective equipment to preventing workplace violence.

CAC is also active in the communities it serves, including fundraising for the Alzheimer Society of Toronto and participation by staff in the Alzheimer Society of Ontario's annual Walk for Memories.

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