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Sustainability
RFM recognises that its operations may affect the environment, its workforce and the communities in which it operates, and considers these impacts in its governance and management practices. As an externally managed fund, RFF operates in accordance with the Sustainability Policy set by its Responsible Entity, RFM, reflecting the Fund's dependence on natural systems and resources and the need to protect and value these assets to support sustainable productivity now and into the future.
RFF is expected to fall within the Group 3 entity classification under AASB S2 Climate-related Disclosures, issued by the Australian Accounting Standards Board, and is progressing toward alignment with this standard; the Group continues to disclose Scope 1 and Scope 2 emissions for all assets over which it has operational control, consistent with the operational control approach to organisational boundaries under the Greenhouse Gas (GHG) Protocol.
1. Climate related governance
The Board of the Responsible Entity holds ultimate oversight of climate-related risks and opportunities, embedded within existing governance and risk management processes, with the Internal Compliance Committee (ICC) reviewing the risk management framework quarterly and reporting material or emerging risks to the Board; climate-related opportunities are identified by management and advised to the Board where material.
Climate-related matters are integrated into standard decision-making, including Board approval papers and investment proposals, and the ICC monitors the risk register to ensure material climate-related risks are addressed and escalated.
RFF is an externally managed fund with no staff, owning a diversified portfolio of Australian agricultural assets; RFM, its manager and Responsible Entity, earns a management fee based on RFF's adjusted total asset value, which climate-related factors may affect.
2. Climate-related risks and opportunities
RFF's primary exposure to climate-related risk arises through its ownership of agricultural assets, since most income comes from triple-net leases under which lessees generally bear operating and insurance costs; these risks are managed through active asset management, diversification across commodities, regions and climatic zones, and consideration of climate factors in property valuations.
A proportion of assets (FY27f 20%) are directly operated, exposing their earnings to climate risk and generating the Group's Scope 1 and Scope 2 emissions, managed through operational controls, monitoring and diversification.
RFF also sees potential opportunities from changing climate-related expectations, such as carbon credits and renewable energy projects, assessed against commercial and land-use considerations, and continues sustainability initiatives including integrated pest and disease management, an enhanced rock weathering trial, best management practice certification and carbon crediting, supporting continuous improvement in asset value.
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 in the RFF FY26 Corporate Governance Statement.
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 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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