Current article
1. Governance
The Board has ultimate responsibility for overseeing the risk management framework and for approving and monitoring compliance within the framework. It receives regular reports on all material business risks related to the Fund, including a quarterly report of certain risks exceeding a defined threshold. The relevant managers of each business area provide ongoing management of the identified risks. These risks are reported to the Board and the Internal Compliance Committee, along with details of the effectiveness of mitigation measures.
2. Strategy
RFM employs a climate diversification strategy to mitigate portfolio risks. RFM recognises that climate change may pose risks to the Fund, primarily in the form of residual risk of the Fund’s assets at the end of the lease terms. External valuations consider these types of factors, as well as other risks, when determining the valuation of the assets.
Efforts to mitigate and adapt to climate change also present potential opportunities for the Fund that will vary depending on the region and the type of commodity. When acquiring new assets, RFM considers data such as long-term historical temperature, rainfall patterns, flood risk, fire risk and extreme weather events, as well as water availability and reliability. Asset development incorporates these factors, along with investments in asset design and suitable infrastructure such as irrigation systems, to mitigate risk.
3. Risk management
RFM, as the Responsible Entity, has established a Risk Management Policy for RFF. The Policy considers the management of material business risks and reflects the Board’s risk appetite for the Fund and associated entities. Both the Risk Management framework and the Policy are subject to an annual review. The risk review involves re-evaluating all risks, assessing whether the existing risk rating remains appropriate, and evaluating the suitability of both existing and additional mitigation measures. Risks are assessed based on their likelihood, potential consequences, existing controls and the portfolio’s tolerance.
The Risk Management Policy is located on the Corporate Governance section of RFM’s website.
4. Metrics
As an agricultural Real Estate Investment Trust, the majority of RFF’s assets are leased, with operational control resting with lessees. Consequently, operational emissions from these leased assets are managed and reported by lessees. This approach aligns with the Greenhouse Gas Protocol, which specifies that Scope 1 and Scope 2 emissions associated with leased assets fall within the operational control and reporting responsibilities of the lessees rather than RFF. Detailed disclosures on these Scope 1 and Scope 2 emissions are provided in the following pages of this Annual Report.
Additionally, RFF is developing systems and processes to support future measurement and reporting of Scope 3 emissions in line with regulatory requirements.
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