Macquarie Group Limited (MQG) Earnings Call Transcript & Summary

Very good morning, everybody. Welcome to Alumina and to Macquarie's 2026 Annual General Meeting. I'm Glenn Stevens, Chair of the Board. I warmly welcome you today to the meeting. I know the quorum is present, and so I declare the meeting open. I acknowledge the Gadigal people of the Eora Nation, the traditional custodians of the land on which we meet and pay my respects to elders, past and present. Today is a hybrid meeting, and so that allows us also to welcome shareholders joining online from around the world. To ensure the meeting is conducted in a courteous and respectful manner, can I remind you, both here in person and online to observe the conduct rules that we set out in the Notice of Meeting. We can't accept disorderly conduct. Please don't do that. If there is disorderly conduct, you'll be asked to leave. With me up here on stage are our nonexecutive directors, Rebecca McGrath, Phil Coffey, Susan Lloyd-Hurwitz, Jillian Broadbent, Mike Roche, Michelle Hinchliffe and William Vereker, our CEO, Shemara Wikramanayake, CFO, Frank Kwok; and Company Secretary, Simone Kovacic. Also in the room are our bank-only nonexecutive directors, Ian Saines, David Whiteing and Wayne Byres and present in the room or online are the Macquarie Bank CEO, Stuart Green, group heads, Simon Wright, Greg Ward and Ben Way, Michael Silverton, Nicole Sorbara, Andrew Cassidy and Evie Bruce. Shemara will shortly take you through the 2026 full year results, she'll should provide a first quarter 2027 update and then speak to the outlook for the 2027 financial year. We'll then hear from directors seeking election or reelection to the Board today. That's William Vereker and Susan Lloyd-Hurwitz. Following that, I will formally open the polls. And then we will take a break as we customarily do, and we look forward to meeting those of you who are here in person during the break. After the break, we will reconvene to address the formal items of business on the agenda and take questions. If you're participating online, you can start to send your questions in now, and we will address them during the formal business of the meeting. Let me turn briefly to financial results. And for the year, Macquarie delivered a profit of $4.8 billion in fiscal '26, and that's up 30% on the preceding year. Each of the 4 operating groups contributed to that improved results, and that says something about the breadth and diversity of the group's businesses. The return on shareholders' funds was 14%. That's up from around 11% in the preceding couple of years. And it's broadly in line with what Macquarie has typically achieved over the past decade. Looking forward, a disciplined approach, including being willing to reallocate capital towards those activities most likely to offer attractive risk-adjusted returns remains key to ongoing improvement. The company ended the year in a strong position with surplus capital at the group and bank levels. And with Macquarie Bank Common Equity Tier 1 capital of 12.8% of risk-weighted assets as per the APRA standards or 17.5% as measured on a strict Basel III basis at 31 March 2026. The Board declared a final dividend of $4.20 per share, making for a total dividend of $7 per share for the full year. The Board has also resolved to issue shares on market to satisfy the Dividend Reinvestment Plan for the final part of the dividend, and that's at a discount to the prevailing market price of 1.5%. The Board also resolved to conclude the on-market share buyback. Turning to risk culture. Our remediation work, the past regulatory and compliance shortcomings continues and there's been good progress both on platform and data upgrades and on regulatory engagement. We seek to uphold the highest standards in meeting the expectations of markets, customers, clients and regulators. If something goes wrong, then we have to report that issue, and we do. We engage constructively with our regulators fix the problem and then apply the learnings across the organization. Speaking up as part of the culture. We do value listening, and we value what our people have to say. And there are various ways for staff to raise their concerns, and we take pride in the approach we take to that when issues are raised. I'd like to talk a little about sustainability. Macquarie is well positioned to continue to play a constructive role as a financier, an adviser, an investor and a fiduciary in the sustainability space, and we expect that to the benefit of shareholders. We do have this year the proposed resolutions, requisition by a group of shareholders and their items 5a and 5b on the agenda. The Board's response to each of those resolutions or those proposed resolutions is set out in the notice of meeting and in the explanatory materials, including our recommendation that shareholders vote against both those resolutions. As we stated last year, the Board does not believe that constitutional amendment, as proposed in item 5a would improve the ability for shareholders as a whole to provide feedback on how the company is managed. Item 5b is an advisory resolution that will only be put to the meeting if Item 5a is passed. I should say that Macquarie remains committed to the goals of the Paris Agreement. Our long-standing view, and we've articulated this for many years now, is that an orderly energy transition is the only way to balance availability, affordability and emissions reduction. Macquarie continues to foster investment in green energy and climate solutions. There's over $30 billion of such assets now on the MAM platform, where we invest alongside our clients over the full life cycle of assets, and we remain focused on supporting real-world emissions outcomes by scaling investment in green and climate-resilient assets and by working with clients across carbon-intensive sectors to decarbonize their operations in a practical and sustainable way. I'd like to make a few remarks about KPMG. As you will recall, we announced in May 2024, 2 years ago now that we had decided to tender our audit services every 10 years and that the first tender would be conducted no later than 2026. We did indeed conduct the tender in 2025, and we informed the market in November of 2025 that KPMG had been selected as our recommended auditor for the financial year beginning in 2028. And that, of course, is subject to regulatory consent and are subject to your approval with shareholders at next year's AGM. Subsequent to that announcement, as you've no doubt read KPMG has been the subject of intense scrutiny. Obviously, we continue to monitor that situation very closely. Regarding the tender process that we undertook, that commenced in March of 2025 and the competitive process attracted 4 highly capable credentialed audit firms, each of which could have been suitable or was suitable to tender for the role of our global auditor. The management team designed and operated the process. The Board approved appropriate protocols, including oversight by the Board Audit Committee and the appropriate role of Michelle Hinchliffe, our Audit Committee Chair. As the process continued, the field of tendering firms was progressively narrowed down to 2 on the basis of management scoring against preset criteria and management's unanimous recommendation of who the final 2 firms should be. That was endorsed by the Board. From the 2 firms, KPMG was eventually selected as the recommended auditor. And as I said, that's subject to -- that was following final selection presentations, which the Board attended and subject to approvals before that can be activated. Let me be clear about what Michelle's role was and what it wasn't. She is a highly respected former audit partner with a long tenure at KPMG prior to joining Macquarie's Board in 2022. Michelle attended an equal number of presentations for each tendering firm, but she recused herself from any scoring of any of the firms and from the decision process where the Board came to a decision to appoint KPMG. So we remain confident that the process that we ran was a robust one and that we found the right balance between using Michelle's highly developed skills, which are very beneficial for the company and very beneficial in ensuring we have a good tender and managing her potential conflicts resulting from her previous employment, which were all fully disclosed and managed. Where does this stand at the moment? The Board has made formal inquiries of KPMG and may include regarding KPMG's ongoing capability and capacity to deliver the audit given that some people have left that firm and an assessment of the integrity of KPMG's pursuit of our audit tender process, and that's to be supported by an external review conducted by Allens with a scope that has been agreed by Macquarie management. We'll keep shareholders informed as this matter unfolds over the period ahead. I'd like to turn to the Board now. In February, William Vereker to my left, who you'll hear from shortly joined the Board as an independent director. When he was based in Europe, he brings considerable global experience in financial services, both as an executive and as a director. Jillian Broadbent has decided to step down from the group and bank boards in December this year, having served for 8 years. And I'm very grateful for Jillian's significant contribution to the Board over that time including as Chair of the Remuneration Committee. Susan Lloyd-Hurwitz, who's been serving on the Board for 3 years now offers herself for reelection to the Board. And if reelected, Susan will assume Chair of the Remuneration Committee as Jillian departs and Sue will pick up that role effective August 1. Now you will have seen that this morning, we announced that Greg Ward, who leads our Banking and Financial Services business will succeed Shemara as Macquarie Group Managing Director and CEO later this year, subject, of course, to the receipt of necessary regulatory approvals. On behalf of the Board and the Macquarie team, I want to pay tribute to Shemara for her significant contributions to Macquarie over almost 40 years, not least over the past 8 years as CEO. In that time, she's delivered significant growth and momentum. She steered Macquarie through expansion into new markets through the dislocation of COVID, through other massive geopolitical events, some of which we're still living through. She's greatly enhanced the brand recognition of Macquarie and the value that we bring to our clients and communities. She's done all that with remarkable strength and incredible growth. And I have to say an unwavering commitment to the company, to its people, to its businesses and to its ethos and its culture. So Shemara, we salute you for that. Thank you for your incredible service for the organization over so many years. I can say that the Board's nonexecutive directors who oversaw the process of selection were unanimous and deciding to appoint Greg as Shemara's successor. He's a 30-year veteran of Macquarie, including 14 years as our global CFO, including through some interesting times like the Global Financial Crisis. And of course, he has led the BFS business transforming that to be the market leader and source of innovation and competition that it is in the market today. The Board is excited at the prospect of working with Greg and the whole management team as they write the next chapter in Macquarie's remarkable story. So it's my honor having paid tribute to Shemara and congratulating Greg on his new role. It's been my honor to do that. They'll be working closely together on a transition over the next several months. And I'll shortly invite Shemara to say a few words on that news before handing over Greg to make some comments and Shemara will then discuss the FY results in more detail and update you on recent performance. And with that, can I thank my colleagues on the Board, the staff and this outstanding management team for your amazing efforts over the past years. Fellow shareholders, that concludes what I want to say right now. Thank you for your attention and your continuing support of Macquarie. I'll hand to Shemara. Thank you.

Thanks, Glenn, and good morning, everyone, from me as well. Thank you for joining. And before I go through the results, let me just say it's been a huge privilege for me to work with a lot of the 80,000 people who contributed to making Macquarie what it is today, including just over 19,000 people who work for us right now. And I wanted to say huge thanks to them. Part of the reason I've stayed so long is because it's been an incredible intellectual and social stimulation to come in to work every day and work with all these people using our deep expertise to have impacts in communities. And I was reflecting that it's amazing just over 40 years ago when I joined or it was 40 years ago, near 39 and a bit, but we were earning $12 million at the time, which was quite an achievement for a little Aussie business with 300 people in it. Today, as Glenn just mentioned, we've earned just over $4.8 billion. So it's a 400x growth in earnings, which is amazing, and we're in 33 global markets. And the thing I'm most proud of is all the franchises. Our teams have built, pioneered infrastructure as an asset class here for investors with a few others and are now the largest manager in that sector in the world, plus in real assets with Greg and his team, we built a leading digital bank, not just in Australia, but globally. Our commodities and financial markets business is quite unique in regulated banks around the world in terms of the global commodities, financial markets and asset finance business we have and then Macquarie Capital as well, where we not only provide advisory and capital market solutions, but bring debt and equity to drive results for investors and supported by our incredible 4 central service groups. But I think the most exciting thing is the huge runway that the business still has from here in all of those areas. And I did want to remark that our culture has been critical, our unique culture to driving that. And we'll be going forward where we empower this entrepreneurialism and innovation together with a disciplined risk framework of taking accountability for identifying and owning risks and thinking about long-term integrity and impact on stakeholders. And I think as we scale, it gets more challenging to have that nimbleness and responsiveness, and that's why I'm so pleased, Greg, that you're stepping up, having worked with you for 30 years to take on leading our incredible teams together with the leadership we have, to respond to those challenges and deliver on the opportunities. And also, I think what I'm excited about is the fresh perspectives that you will be able to bring now with the teams as we go to the next and next chapters and lift the business to the next height. So I might just hand over to you, Greg, if you don't mind, to make a few comments to our shareholders before going through results.

Well, thanks very much, Shemara. Thanks for the opportunity to speak to and thank you, Chairman, for the opportunity to speak to shareholders. I just want to say I'm incredibly humbled to have been chosen by the Board to lead this wonderful organization on our next phase of growth. I want to pay tribute to your amazing career, Shemara, 40 years is extraordinary. You've done wonders for the business and our team. Your career as the -- your tenure as CEO has been highly successful and a challenging one in terms of global events, as Glenn said, the momentum that we have across the platforms, as you've heard from the Chairman, today is fantastic. We are incredibly well set up for the future. We've got an amazing senior leadership team here, which I'm really pleased about. And of course, we've got a 19,000 strong organization all around the world, some incredibly inspiring people and I'm looking forward to working with that team to continue the Macquarie story of observing our communities and serving our stakeholders all around the world, and I hope I can continue to deliver outstanding returns for shareholders. Thanks very much.

Thanks, Greg. So with that, I'll turn now to the usual business we have of going through our results for the last financial year. How we're going for this most recent quarter and the outlook. And so starting with the history, as you saw, after 57 years of unbroken profitability since inception, we delivered a result of $4.847 billion this last FY '26 year that you can see in this slide, was up 30% on the $3.715 billion we delivered the year before, and our return on equity was up 25% to 14%. Pleasingly, all 4 of those business lines I talked about, our operating groups grew their earnings, and I'll go through in more detail what drove it, but in Macquarie Asset Management, principally increased performance fees, banking and financial services, ongoing growth in our books, subject to margin pressure. Macquarie Capital, we had increases across the business in our fee income, but also returns from the debt and equity books and in Commodities and Global Markets, we had increased from both the risk management, but also the inventory management and trading in the commodities business and in the asset finance, we had 1 particular large divestment. So before I step through the groups, let me also just note the global diverse footprint of the business, we now earn roughly 30% each of our income in Australia, the Americas and Europe, Middle East and Africa and about 10% out of Asia. And as Greg and I have both mentioned today, we have just over 19,000 people delivering that and another 265,000 people in our asset management business also working to deliver the results we do. So looking at the businesses, Macquarie Asset Management, as you can see, they delivered 2.602 billion, that was up 27% on the year before. And some of the key things there noted in the right-hand column, we raised capital at just over $20 billion, and we have just over $21 billion now to deploy in our private markets business and in our public investments where we divested our North American and European business, we've had ongoing growth there with $19.3 billion of positive flows into that business. So Macquarie Asset Management, great result last year and good momentum. Same with Banking and Financial Services, it was up 17% to $1.6 billion, continuing the trajectory of year-on-year growth. We had meaningful growth last year. So you can see, again, in the box on the right that our home loan portfolio was up 28%, supported by a 25% growth in our deposits and we also had an 8% growth in our business banking and our funds on the platform were also up. So again, great franchise, great trajectory, growing really well. Commodities and Global Markets had a very large step-up of 49% to $4.221 billion. And as I said, the underlying businesses there grew really well. In commodities, particularly we had really good risk management income in Global Oil and Global Gas and Power and inventory management and trading increased income in North American Gas and Power and in financial markets as well across the board, strong client activity in FX rates, solid contribution in futures, increase in equity derivatives. Our asset finance business, particularly made a large contribution with that onstream meters platform that we acquired, restructured and divested and also the book there grew 25% from $6.1 billion to $7.6 billion. So again, great performance, great franchise set to grow. And Macquarie Capital, also a 43% increase to $1.491 billion. We had really good fee income in terms of our -- particularly our brokerage income led by Asia. And we also had our private credit book a step-up to $27.3 billion and our equity investing book at $5.2 billion. So a good year there as well from a great business. They were supported, obviously, by very strong funding and capital, our balance sheet with our term funding exceeding our term assets comfortably as ever, a 12.8% CET1 ratio and $9.3 billion of surplus capital and all our ratings with the 3 major rating agencies also very strong. And in terms of the return we delivered on capital, as I mentioned, we did 14% across the whole business. That was made up of a 21% return from Macquarie Asset Management and Banking and Financial Services together, consistent with the 20-year record of 21%. And a 19% return from Commodities and Global Markets and Macquarie Capital, which was up on the 17% 20-year return. So after we take account of the $2.9 billion capital in the corporate level, and the $9.3 billion surplus that made 14% net. Now turning to this most recent quarter. We also had -- we had satisfactory trading conditions, but most of our groups were up on their prior comparable period. Macquarie Asset Management was the one that quarter-on-quarter was down, and that's basically because of the divestment of the North American and European public investments business in the second half of last financial year. But BFS was up on the prior comparable period, again, driven by volume growth in our loan portfolios and our deposits, partially offset by lower margins and that was due to changes in the portfolio mix because of the exit of the car leasing, but also deposit competition in terms of funding costs. CGM net profit contribution was substantially up on the prior comparable period, and that was from increased income in commodities, where we had a much more subdued prior comparable period because of the Liberation Day tariff impacts on markets in the prior comparable period. And we also had an increased contribution from the Asset Finance business, again, mostly due to higher activity. And lastly, Macquarie Capital also contributed up on prior comparable period, again, driven by investment-related brokerage income, but partially offset by lower advisory fees because we had a strong prior comparable period. Now just going through each of those groups in a little bit more detail, Macquarie Asset Management, we've got $748 billion of assets under management, which is up 4% on where it was at the end of last year. We had about $4.2 billion of capital raised in the private markets and $9.3 billion of net flows again into public investments. We've got some large transactions completed there, which is the divestment of our Mexican REIT FIBRA. And we made an acquisition as well of a European CLO manager called Spire. So that franchise continuing to grow over this quarter. Same with Banking and Financial Services, home loan portfolio up 6%, the business banking portfolio up 3%. Our deposits up 4%, our funds on platform up 5%, so ongoing growth in the franchise there as well. Commodities and Global Markets, as I mentioned, increased substantially on the prior comparable period and that was mostly from commodities driven by increased trading activity in North American Gas and Power and also from the asset finance book due to one-off activity, but strong contribution consistently again from financial markets. And then Macquarie Capital, as I said, higher investment-related and brokerage income, partially offset by lower advisory fees because that's strong prior comparable period. Our loan and equity books are holding at where they were at the end of last year. In terms of capital and funding and liquidity, again, we remain very strongly funded and capitalized 13.8% is our Basel III CET1 ratio. And the business has generally been absorbing capital in growing the business apart from in commodities and global markets. You'll see there on the bars on the right-hand side of the slide, there was a large release of capital due to the divestment of the onstream meters platform in asset finance. But apart from that, Macquarie Asset Management, continuing to invest in new strategies through funds and co-investments, BFS absorbing capital and growing the loan books, et cetera, Macquarie Capital, as I said, broadly flat on equity and debt. And then in terms of regulatory update, we've noted there the work we're doing with our key regulators and also on the situation in Germany. So I'll turn with that to just touching on the outlook for this financial year. And it's broadly consistent with what we've shared group by group, Macquarie Asset Management. As we said, we expect base fees to be broadly in line, excluding the divestment of the North American and European public investments business last year, but we expect net other operating income to be up including the divestment of our Macquarie AirFinance business that we are in the process of closing shortly. Banking and Financial Services, driven as ever by the growth in our loan portfolios and our deposits subject to, of course, market conditions and customer activity and also impacted by market dynamics in terms of competition and the portfolio mix driving lower margins. Macquarie Capital, subject to market conditions, again, we said that we expect an action activity plus investment-related income to be broadly in line with FY '26, but weighted to the second half of the year, particularly in relation to the equity realizations. And then in Commodities and Global Markets, again, subject to market conditions. We expect our net operating income to be broadly in line with the last financial year, but that's excluding, of course, the one-off positive impact we had from the divestment of the onstream meter portfolio last year. And at the corporate level, we expect our compensation ratio and our effective tax rate to be basically broadly in line with historical levels. Now these guidance indications that we've given as ever subject to a range of factors. So market conditions where there's a lot happening, obviously, in the world, volatility, et cetera, completion of period-end reviews and completion of transactions, the geographic mix of our income and foreign exchange impacts and potential tax and regulatory changes that may happen. And that's why we continue as ever to maintain a cautious stance in terms of our conservative approach to capital funding and liquidity and that should position us well to contribute together with our strong operating platform that we continue to invest in our disciplined risk management approach and our funding and capital positions, which, as you can see on this last page in terms of medium-term outlook, we think position us to continue to deliver over the medium term as we have for decades, particularly with those 4 very diverse franchises I talked about. So with that, I will hand back to our Chairman, Glenn to conduct the rest of the meeting.

Thank you very much, Shemara. What we're going to do now is play a short video on how to vote and the process for asking questions at the meeting. [Presentation]

And thank you, Simone, for those very clear instructions. Let's turn now to the formal business. The Notice of Meeting and explanatory notes have been sent to shareholders. So I'm going to take those as read. The items of business are as on this slide. The Board recommends that shareholders vote in favor of Resolutions 2, 3 and 4 and against Resolution 5a, should Items 5b and 6 be put to the meeting. The Board recommends that shareholders vote against those conditional resolutions. Item 1 is to receive and consider the financial report, the director's report, the sustainability report and the auditor's report of Macquarie for the financial year ended 31st of March 2026. There's no formal resolution for that item. Items 2a and 2b are the reelection of Susan Lloyd-Hurwitz and the election of William Vereker as voting directors. They will each address the meeting before the break. Item 3 is the annual nonbinding vote on the remuneration report, which is in the 2026 Annual Report. Our shareholders that are familiar with the company will know that the remuneration framework is long-standing and it's designed to motivate staff to grow the businesses, to identify new opportunities and to be accountable for their decisions and behaviors, including risk management, customer economic and broader consequences of their actions. We see that and continue to see that as a key driver of Macquarie's success over the long run. Now you'll recall that last year's meeting, just over 25% of the votes were cast against the remuneration report, constituting what the Corporations Act calls a first strike. The Board took that feedback very seriously, and we've worked hard over the past year to carefully address shareholder concerns. We've reviewed existing remuneration decision-making processes and the disclosure of the remuneration outcomes that we decide. If the remuneration report again today would receive 25% or more votes against, then the Corporations Act requires that a resolution and this is item 6 on the agenda, would be put to shareholders today on whether all nonexecutive directors should stand for reelection at a spill meeting that would need to be held within 90 days. Item 4 is as usual, to approve the Managing Director's annual participation in the Macquarie Group employee retained equity plan. Item 5 has been requisitioned by a group of shareholders under the Corporations Act. Item 5a proposes a change to the company's constitution so that would need to pass as a special resolution. Item 5b would only be put to the meeting if 5a passes. As I've already mentioned, Item 6 is a conditional spill resolution that would only be put to the meeting if the resolution to adopt the remuneration report receive 25% or more votes against at this meeting, which would constitute a second strike as defined under the Corporations Act. If Item 6 is put to the meeting and passed as an ordinary resolution, then all directors other than the Managing Director would need to stand for reelection at a separate meeting that we would have to hold within 90 days. As I said, the Board recommends you vote against Item 6 should it be put to the meeting. And we're now going to turn to director elections. Item 2a on the agenda is the reelection of Susan Lloyd-Hurwitz, as Sue's been a member -- an independent voting director of Macquarie since June of 2023. She is a member of the Board Audit Committee, the Nominating Committee and the Remuneration Committee. She has significant global expertise in investment and real estate and her deep understanding of Macquarie's businesses continues to strengthen and support the Board's effectiveness as we try to oversee Macquarie's strategy, risk management and governance. The Board is confident that Sue will continue to serve shareholders effectively and recommends her reelection. I'm pleased to address Sue to -- to invite Sue to address the meeting, and she has some leg difficulties today so she is going to do that seated. Thank you.

Thank you, Glenn, and good morning, shareholders. It's a privilege to be speaking to you today in support of my reelection as a Director of Macquarie Group. Since joining the Board in 2023, I've worked closely with my fellow directors and management, including as a member of the audit, nominating and remuneration committees. As a Board member, I've also spent time engaging with staff in Australia and globally on topics that matter to them, including culture, inclusion and how we govern and leverage AI. This broad contact has allowed me to reinforce company expectations and bring staff insights into Board discussions. The skills and experience I bring to the Board draw on my prior executive and nonexecutive roles. My executive experience over 3 decades spans global investments and real estate sectors across Europe, Asia, the U.S.A. and Australia. I was the CEO of Mirvac Group for 11 years. And prior to that, Managing Director of Europe at LaSalle Investment Management in London. National President of the Property Council of Australia, and Chair of the Green Building Council of Australia and President of Chief Executive Women. Currently, I'm a Non-Executive Director of Rio Tinto, Chair of the Australian National Housing Supply and Affordability Council. I'm chair of the Australian Center for Gender Equality and Inclusion at Work Advisory Board at Sydney University, a trustee of the Sydney Opera House Trust and a fellow of the University of Sydney, Senate. These nonexecutive and executive roles across diverse industries and sectors, enhance the breadth of judgment I bring to Board discussions and complement the skills and knowledge of my fellow board members. My focus will remain on effective governance and oversight of Macquarie's global operations. I am confident I will continue to have sufficient time to serve the company and you, our shareholders. And I thank you for your support.

Thanks very much, Sue. Item 2b is the election of William Vereker, who joined the board as an independent voting director in February this year. William is a member of the Audit Committee, Nominating Risk and Remuneration Committees, quite a busy committee load. The Board is already benefiting greatly from his significant experience in global banking, financial services and his regulatory and governance expertise, and we're confident he will continue to make a strong contribution, and we wholeheartedly recommend his election. I'm pleased to invite William to address the meeting.

Thank you, Glenn, and good morning, shareholders. It's a privilege to offer myself for election as a nonexecutive Director of Macquarie Group. Since joining the Board in February this year, I've been familiarizing myself with Macquarie's diverse operations and its people in Australia and globally. I've also been engaging committee work as a member of the Board Audit, Nominating, Risk and Remuneration Committees. Based in Europe, I'm excited to bring to the Board and Macquarie my extensive executive experience across global banking and financial services, regulatory and government affairs. This experience includes my role as Vice Chair of the EMEA Investment Bank at JPMorgan, as Global Head of Investment Banking at UBS and other senior roles at Nomura, Lehman Brothers and Morgan Stanley. I've also served in public and advisory roles in the United Kingdom including as a member of the U.K. Investment Council and as the U.K. Prime Minister's Business Envoy. I'm currently a Non-Executive Director of a London Stock Exchange Group, where I chair the Board Remuneration Committee, and until earlier this year, I was Chair of Santander UK plc and Santander U.K. Group Holdings plc. Collectively, my nonexecutive and executive experience has given me broad and deep knowledge in important areas of board governance, international banking and financial services, risk management and organizational change that I believe will be a benefit to the company. If elected, I welcome the opportunity to continue contributing that experience, knowledge and expertise to Macquarie and to support the board in delivering long-term shareholder value. I confirm that I have the time and commitment required to discharge the responsibilities of Macquarie Director and appreciate your support. Thank you for considering my election.

Thanks very much, William. I'm going to turn now to Item 5, as I mentioned earlier. Items 5a and 5b have been proposed by a group of shareholders under the Corporations Act. Their supporting statements are in Appendix B to the Notice of Meeting. The Board does not consider these resolutions to be in the best interest of the company or shareholders as a whole. And so we've set out our reasoning, and we recommend you vote against 5a and 5b, but I now invite Morgan Pickett, a representative of the group of shareholders who have requested resolutions to address the meeting. Morgan. You have the floor.

Thank you, Chair, and good morning, shareholders. I am here to introduce Item 5b, the resolution on climate strategy and management. This resolution was filed on behalf of hundreds of shareholders, both institutional and retail, seeking clarity and accountability. At last year's AGM, more than 35% of votes cast back to stronger climate risk reporting, a clear shareholder signal Macquarie has ignored. This year's resolution asks, does Macquarie remain committed to aligning its financing with net zero emissions by 2050. And if so, how does it assess whether its fossil fuel financing is consistent with that commitment. The Board's response in the Notice of Meeting failed to answer this simple question. If anything, it reinforces shareholder concerns. Macquarie's long-standing commitment to align financing with net zero by 2050 and has been scrapped and replaced with a vague commitment to the goals of the Paris Agreement with little evidence that this commitment is in any way guiding decision-making of the group when it comes to fossil fuels. The Intergovernmental Panel on climate change has warned that lifetime emissions from existing and committed fossil fuel infrastructure. This was in 2018 would exceed the carbon budget for the Paris agreements well below 2-degree warming limit. The International Energy Agency concludes that achieving net zero by 2050 allows no new coal mine expansions, new oil and gas fields. Despite this, over the last year, Macquarie has increased its support for a new wave of LNG developments. It has upsized and extended its support for fracking in the Beetaloo Basin, Macquarie has signed multiple 15- to 20-year LNG offtake agreements with yet to be approved projects and is acting as a financial adviser for Alaska LNG described as one of the biggest and most devastating LNG mega projects currently slated globally. This is not a passive exposure. Macquarie is helping construct the financial architecture for decades of new fossil fuel production and combustion. To justify these activities, the group has stated that under the International Energy Agency's current and stated policy scenarios, more gas will be needed. However, the IEA has made clear, these are not forecasts and should not be considered as the business as usual scenarios. These models, imagine a hypothetical world where climate policy stalls, clean technology progress slows, renewables uptake flattens and rapid cost declines halt. Naturally, in this imagined world, fossil fuel demand persists, but Macquarie amidst 3 critical facts that accompany these scenarios. These pathways lead to 2.5 to 3 degrees of warming by 2100. This level of warming carries severe systemic risks that should be avoided. And the IEA points to significant LNG oversupply not unmet long-term demand. Macquarie is treating a scenario where the world reaches severe levels of warming as a business opportunity for fossil fuel expansion rather than treating it for what it truly is, a catastrophe that can and must be avoided. Macquarie's claim that fossil fuels, particularly gas will be required for some time, does not justify financing new long-lived gas fields that are inconsistent with Paris-aligned pathways. The question from a risk management perspective is not whether some gas remains in the system during the transition, but whether Macquarie is enabling new large-scale projects intended to operate for decades. Exposure to the proposed Beetaloo Basin exemplifies these risks, demonstrating how Macquarie's financing activity undermines the climate goals it claims commitment to and invalidates representations regarding supporting clients to decarbonize. Macquarie's clients Beetaloo Energy Australia and Tamboran Resources are the Beetaloo Basin's leading proponents. They are nondiversified pre-revenue fracking companies with no transition or decarbonization plans. Their sole business strategy is to develop full-scale Beetaloo production. Macquarie's ongoing catalytic financial support to these companies could enable one of the world's largest frac shale gas basins, a major source of new emissions coming into market in the 2030s and with a commercial incentive to operate 4 decades. There is no indication that Macquarie has assessed this development against the Paris goals. In fact, at last year's AGM, the chair explicitly stated as these projects are still at pilot stage, they have not been assessed for Paris compatibility. It was only a few years ago, the company CEO was quoted in Time Magazine as saying there's just a lot of change we need to do to stop our planet from burning. One thing Macquarie can do is to stop our planet from burning is to stop pumping hundreds of millions of dollars into what could become one of the world's biggest gas fracking developments. Investors now have more evidence to suggest Macquarie does not assess fossil fuel financing against even its revised core climate commitment supporting the goals of Paris. Macquarie's near-sighted and cavalier approach to financing fossil fuel expansion is cementing a path where the Paris Agreement fails and warming reaches catastrophic levels. Macquarie is not a passive actor in this, its shareholders, stakeholders and the broader community expect and demand the group to demonstrate its support for Paris rather than merely stating it. I urge shareholders to vote for Resolution 5b and no matter the outcome, I implore Macquarie to change course, revise its strategy and commit to providing no further financial to support for major fossil fuel expansion. Thank you, Chair.

Thank you. I'll now open the polls on all the resolutions put before the meeting today. They will remain open until just before we close the meeting. We're going to adjourn at this point for a refreshment break, and we'll reconvene in about half an hour. If you've already voted with the handset and you don't wish to return after the break, could you please hand the handset in at the registration desk. For people in the room, shareholders or proxy holders, if you'd like to ask a question. When we come back, it'll be handy if you could sit near one of the microphones. For those online, there will be a notification on screen when we're about to resume. Thank you. See you in about half an hour. [Break]

Welcome back, everyone. I'll now reconvene the meeting. We still have a quorum. So let's continue with the formal business. Please be reminded that the polls remain open, and we're going to take questions and comments now. Just as a reminder, we are committed to ensuring that people attending the meeting feel safe and respected at all times. And that means we have to conduct the meeting in an orderly fashion, and we can't tolerate disruption. Thank you for your cooperation on that. We're going to start with questions that are submitted in advance, of which there are a number and then work through written questions submitted online, questions from members in the room and audio questions. As usual, you're welcome to ask 2 questions at a time. After that, we'll give other people a chance to ask their questions, and then we'll come back if you have more than 2 questions. We need to address a wider range of issues as possible. So I may group some questions or defer consideration of a question until later if that makes sense for the running of the meeting. Now if you have an individual customer issue or another matter that isn't related to the business of the meeting today, there are people, there are staff at the back at the shareholder table, they'd be happy to help. We're not really able to resolve customer problems at this forum. I note that Voula Papageorgiou from PricewaterhouseCoopers, our external auditor, is here today. She is available, if needed, to take questions on the conduct of the audit, the preparation and content of the auditor's report, the accounting policies adopted by the company in relation to preparing the financial statements and the independence of the auditor in relation to the conduct of the audit. The external auditor did not receive any written questions in advance prior to the meeting. So we'll now take questions that were submitted in advance. Can I have the first one, please?

Chair, our first question comes from [indiscernible] Proprietary Limited. Their question is, why has the shares remained the same for 2 years?

Look, we don't encourage the management team to try to run the company with a view to short-term share price performance. There are many things that affect share prices, many of which are not under our control. So the focus of the management team is on the things they can control. And I think we can say that they've delivered great value for shareholders over the long run. As it happens, I think the share price today is noticeably higher than a year ago. But as I say, we don't try to run the company on the basis of short-term performance and we're well positioned, I think, for the future as Greg and Shemara was saying earlier. Can I have the next question, please?

Chair, our next question comes from Mr. [ David Yule and Mrs. Elizabeth Jane Yule ]. The question is, does the Board still see there is no conflict of interest in Director, Michelle Hinchliffe, an ex KPMG partner being involved in the meetings to appoint new external auditors?

Well, I covered the KPMG matters earlier on. And I think the key point is it's not a matter of not having ever any conflicts. It's a matter of knowing what the conflicts may be, disclosing and then managing appropriately. And we feel that we got the right balance between being able to draw on Michelle's skills and managing the conflicts. And as I said before, she took no part in the scoring or the decision on which firm we ultimately chose. Can I have the next question, please?

Chair, our next question is from Mr. David Yule and Mrs. Elizabeth Jane Yule. The question is, in the light of the recent and ongoing disclosures about the business practices of KPMG, including hounding of a whistleblower, resignations of senior staff and the upcoming Senate inquiry, does the Chairman still stand by his reported comments of silly talk in regard to Michelle Hinchliffe's links to KPMG?

I've got nothing to add about KPMG beyond what I outlined earlier for shareholders. And I think the question of Michelle's appropriate role that was covered in the previous answer. The next question, please.

Chair, our next question is from [ Mr. Evan Nicholas and Mrs. Barbara Nicholas ]. The question is, Shareholders who have elected to receive communications by paper should automatically receive a paper Notice of Meeting and voting form as a matter of course. They should not have to trouble someone to use their computer to do an online vote. This sort of action is typical at Macquarie, who really don't care for retail investors.

Well, Mr. and Mrs. Nicholas, I'm sorry that you had an unsatisfactory experience there. I understand the share registry has reached out to you to review the instructions. There are representatives of the registry here today should you need any further help, and we'll try to make sure that works better next time. Can I have the next question, please?

Chair, Our next question comes from [ Ms. Ann Murray Bevis and Mr. Sean Brooklyn Salisbury ]. Their question relates to credit reporting leverage. The question is, is the Board aware of documented evidence indicating that Macquarie linked the correction of adverse credit reporting to the withdrawal of credit related and unrelated complaints? Does the Board consider this an acceptable regulatory and reputational risk for shareholders?

Look, I think this is a particular customer matter, and I don't think this is the right forum in which to address it, where a problem arises, we will seek to address that and fix it. But I can't -- I don't think I should seek to address particular customer concerns in this forum today. Next question, please?

Chair, our next question comes from Ms. Ann Murray Bevis and Mr. Sean Brooklyn Salisbury. Their question relates to external dispute resolution integrity and enforcement. Their question is, do Macquarie Group's governance and risk frameworks permitted business, while an Australian Financial Complaints Authority determination is pending to make an unagreed nonconsensual payment into a disputed loan and simultaneously directly ask the authority without informing the customer to expedite its decision and permit collections including possible enforcement after closures. Concerns regarding possible inducement were raised at the 2025 AGM. Macquarie Group's Integrity Office after consulting external independent counsel concluded that the conduct did not amount to bribery or inducement and was ethical. Macquarie subsequently and shortly after issued a default notice while related matters remained with the independent external ombudsman and admitted it was an error only after it was challenged. Does the Board endorse that conclusion and what controls protect shareholders from recurrence?

We do endorse the integrity offices work. We stand by those, and we're confident in that process. Beyond that, this is a particular customer matter, which I understand has been addressed, and I'm not proposing to do any more on that in this forum today. This is not a forum for customer issues. Again, there are people here who can give any further assistance, if needed. Can I have the next question, please?

Chair, our next question is from Mr. [ Tian Yu ]. A question relates to the commodity business. The question is, I have often heard remarks that Macquarie makes a lot of money when commodity prices are volatile. Would you be able to share with us if Macquarie derives its profits via transaction fees taking calculated positions and/or any other trading strategies or factors.

Macquarie is active in the commodity space. But I think this question, perhaps I can refer to Shem and/or Frank?

Of course, I'm happy to answer that and Frank can join -- add anything if you like. But we actually do generate revenue from all of those things. The main thing we do is serve customers in our commodity and financial markets business. So we, in commodities, connect consumers and producers with transportation offerings, risk management, hedging, financing and we principally get paid fees for that for the services that we offer, the financing we offer, et cetera, because of the insights our people have and our access to storage and transportation infrastructure, et cetera, we might have the ability to take some positions around that. But generally, our inventory management and trading income, as we call it, is a smaller portion of our income than the service-based annuity income that we generate each year by growing the franchise. I don't know Frank, if you want to add?

Nothing to add. It's really client business where we're managing their risks. So we provide them risk management services by providing them things such as derivatives. And so that's really what we do, which is very much a client-led business.

Thank you, Frank. Can I have the next question, please.

Chair, our next question is from Mr. Tian Yu. The question relates to share price split. The question is, congratulations to Macquarie for its share price getting heavier and heavier, especially in our local ASX context. So is there any merit to split Macquarie Group stock in some meaningful way? As a small retail investor, it feels psychologically better to own 5,000 Macquarie shares versus 1,000, i.e. a split of 5, although value-wise, it is neutral. In addition, it will help to increase trading activity in the derivative market where 1 contract is fixed at 100 shares currently regardless of the market price of the underlying security.

I think on this one, share splits and so on, I'll pass to Frank.

Thank you, Chair. Well, thank you for that suggestion. I get any feedback from shareholders will take that under consideration. As you said, this is a question driven by the fact that the share price is increasing, which is probably a good thing, but we know that feedback, and we'll take it under consideration.

Thank you. Next question, please.

Chair, our next question comes from Mr. Craig Caulfield. The question is, Mr. Ward, shareholders and the wider market are interested to hear directly from you regarding our future direction. Your audit chair met with KPMG pitch partner, Rachel Gatt and Charles Hatchman before the tender opened, brought Mr. Hatchman in to teach Macquarie how to run the tender than attended EY's early bid meetings before the committee blocked EY from applying. Eileen Hoggett, also on Macquarie's pitch team has since been sanctioned over the Westpac pitch and the federal government has now barred KPMG from bidding for new Commonwealth work all together, while it's investigated. Mr. Ward, as incoming CEO, will you personally pause the KPMG transition pending that outcome or proceed regardless?

Well, I'm going to respond to that by saying, as I said earlier, we have some inquiries with KPMG on the integrity of the way in which they pursued the Macquarie tender. And in regard to Michelle's attendance at meetings, as I said earlier, she attended in the pre-tender period meetings with likely tendering firms on an equal basis across firms. So there were no particular special favors to KPMG. I think that was a proper process. The Board stands behind that. Going forward, we have sought some information from KPMG. We don't have all of that yet. We probably will have that before too long, but I don't have it today. When we have that, we'll consider what, if anything, further needs to be done. Next question, please?

Chair, our next question comes from Mr. Craig Corfield. The question is Macquarie snubbed Senator O'Neill's parliamentary inquiry invite in June with the CEO's office replying through a junior com staffer than an HR executive. Dexus facing the same allegations had its Board summon KPMG's Chairman directly to explain himself. Mr. Wood, as incoming CEO, will you commit personally to appearing before the committee, if requested, rather than snubbing it again?

Well, let's establish on facts here. Macquarie didn't snub the committee. The committee made a request for any information that Macquarie might have about how the matters into which they are inquiring. I think initially that request came via e-mail to a media inbox, which probably complicated the process of responding. But Macquarie didn't snub the committee, what Macquarie did was to go back and say we didn't have any information that we could offer on the matter at hand. Can I have the next question, please.

Chair, our next question is from [ Mr. Chi Lee ]. The question is, considering the downturn for the residential property market, it may present a good opportunity to grab market shares from the Big 4. Will Macquarie provide further incentives to owner-occupier loans or incentives for existing shareholders. For example, AMP has offered a slightly better rate and no fee offset account for their AMP first home loan to existing shareholders?

Well, on a business operational matter, perhaps I should -- that is one perhaps, Greg, I might refer to you or and/or Ben whichever you prefer. Thanks.

Thanks very much shareholder for the question. We've got some very compelling home loan product offerings. And of course, all of our home loans already come with fee-free offset accounts and all our deposit accounts have no fees or hoops or catches. So we think we have got a very compelling offer. And likewise, with our home loan rates, they're very, very competitive, and we're growing market share. So we don't have any special plans to change the offer at this point.

Thank you, Greg. Next question please.

Chair, we will now take questions from the floor. John Church, please stand to ask your question.

Thank you, Chair. I'm an oceanographer and a climate scientist. Fellow of the Australian Academy of Sciences, fellow of the Australian Academy of Technological Sciences and Engineering, and I've been awarded numerous high-level international prizes improving the world's understanding of climate change and the risks it poses. I've been a convening lead author of 2 IPCC reports. In the 2026 annual report, Macquarie Group claims to be committed to the goals of the Paris Accord. That is committed to playing its part in and I quote, "holding the increase in global average temperature to well below 2 degrees Celsius, above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5 degrees or so above preindustrial levels." The scientific consensus is clear. The world already has enough existing fossil fuel resources to breach the Paris goals. Achieving the Paris goals requires rapid and an immediate mitigation of the world's greenhouse gas emissions and no new addition of greenhouse gas resources. In direct conflict with this with its commitment, Macquarie is making critical financing and advisory decisions today to enable major new fossil fuel projects, projects that will enter the market in the 2030s and operate for decades into the future and well past 2050, when net zero needs to be attained. These projects will have long-term climate ramifications, increased world emissions and the likelihood of exceeding 2.5 to 3 degrees warming scenario by 2100. What your annual report refers to as a Hot House World. And I quote, "a world in which critical temperature thresholds are exceeded, leading to physical risks and irreversible impacts." The International Court of Justice has recently ruled that countries have a legally binding obligation to prevent significant harm to the climate from greenhouse gas emissions. Macquarie is creating risks to its investors, clients and other stakeholders as well as the broader national and international community, through supporting an increase in greenhouse gas emissions. Macquarie has acknowledged that a Hot House World would involve severe physical risks and irreversible impacts. So my first question is, does the Board accept the overwhelming evidence that Macquarie's decisions today to support new fossil fuel projects increases the likelihood of a Hot House World. And how can the group claim to be supporting the goals of the Paris Agreement given that its actions are just the opposite of what is required? And after you response, I have a second question.

Thank you for your question. We're not in a position to debate the science. We accept the science as it is. In regard to Macquarie's own activities, our understanding is that actually there will need to be investment in various fossil fuels, especially gas for quite some time ahead. And as I understand it, that is envisaged in many of the scenarios that get talked about. As far as our own activities are concerned, the things that we're doing are consistent with earlier numerical targets that we had set out in previous years. We're continuing to test the outcomes against those targets and report on that in the annual report and our appetite to continue supporting renewable energy of various forms are consistent with our client demand, and it's ultimately a matter of how much client demand there is for that continues as it was. And as I said earlier, under the Macquarie Asset Management platform, those green assets have gone up about sixfold in the past 5 years ago. So that is our position and what we're setting out to achieve. And as I say, our understanding of the world is that there will need to be some investment in fossil fuel types, especially gas for some time ahead yet, and our actions are consistent with that. Your second question?

Yes. Given your inadequate response to those questions. Will the Board commit to bringing a full and open climate change risk assessment to the next annual meeting, one that is not driven by internal inconsistencies, does not contain greenwashing, keep the market fully informed and is actually based on the best international science?

What we'll be doing for the next annual report is the sustainability reporting as per the standards as we have this year. Next year, we'll be seeing the MAM side of things brought more fully into the corporate reporting as the standards will require. There is no greenwashing. And what we said in the annual report, we actually have a greenwashing standard that rigorously test every statement we make and all the numbers we quote, the assumptions and estimations that we've made, it's all very transparent. And that's what we'll be doing for the next annual report. Thank you. Next question, please.

Our next question comes from Mr. Michael Sanderson.

Another year. Just got a quick comment before I ask questions. I was driving down from Hunter Valley and I heard on the radio that OpenAI was doing development work with their latest model. And it broke out of the sandbox, all on its own, no prompting, Anthropic's Claude Mythos had a similar issue recently also, I wish you well with AI. I assume it's 2 questions sit down and join the queue.

That's the rule, yes.

First question is treasury is consulting on harmful lead generation linked to superannuation. Has Macquarie gained any indirect benefit from lead generation involving superfunds, products, investments or members of money? If so, what benefits did Macquarie receive, what risk did this create? And how did Macquarie manage conflicts of interest, legal risks and damage to its reputation?

Perhaps I could get Shem or one of the management team to respond to the particular questions there.

Could you just repeat what you said in terms of treasury, sorry.

Lead generation.

Treasury is currently consulting Treasury put out consultation papers on different topics from time to time. One of the concentration papers -- constant consultation papers related to harmful lead generations. I think the financial Royal Commission called them introducers.

Yes. I was just going to say maybe Greg should talk about that because it impacts mostly the wealth area that Greg leads.

Yes. Thanks for the question. We're aware of the proposals around lead generators. Obviously, we had a little bit of experience of that in the Shield matter where some of that came about through lead generation, which we weren't aware of or involved in. We don't use lead generation of any form in our device business or in our private banking business. And we seek in cooperation with ASIC to identify financial advice businesses that are using lead generators, perhaps in an inappropriate way and we seek not to serve those businesses. So we're very supportive of the work that Treasury is doing.

Thanks, Greg. Your second questions?

Macquarie worked with the Australian government in 2025 and 2026. United States -- in the United States with regard to superannuation summits. The Summit is connected Australian super funds with foreign governments, investors and investment opportunities. Was this government backed lead generation on steroids? What business did Macquarie gain or expect to gain from these introductions? How did Macquarie manage any conflicts of interest? In my opinion that Mr. Trump is probably the biggest grifter on the planet right now?

Well, Shemara is actually present at some of the meetings, so I think I'll suggest that she respond.

Yes. And I think those summits were very different to lead generators, which are situations where people are trying to encourage less sophisticated retail investors to go into products and pay the commission for getting them in there. These were very sophisticated institutional investors that represent the multitrillion dollar pension funds in Australia going to the U.S. to understand the investment opportunities in those markets and make calls themselves. So we were not being paid any commissions to put them into products or anything like that. We were asked to help host this because we're very, very active in the U.S. and have been there for over 30 years in areas like infrastructure, commodities, et cetera. So we were one of the Australian companies that helped facilitate that. There were others in areas like tech, et cetera. I think they were a great initiative, letting the savings pool here is now growing to multiples of the GDP of Australia and is needing to invest globally and doing that in a very responsible paced managed way. And so it was a great opportunity to give those sophisticated investors insight into these markets where they're going in with a very patient, disciplined approach.

There's not those opportunities in this country?

There certainly are. But as I said, the pension pool has now grown to 2x the GDP of this country. So they are heavily invested in this country, but they have now a bigger savings pool than they can invest here. So they're in a very disciplined way, balancing other markets, just like all the huge pension funds globally come and invest here as well to diversify. It's just a responsible way of diversifying risk and return for the pensioners who ultimately they have great responsibility to delivering return on savings for.

I think we might move to the next question, please.

Chair, our next question comes from [ Mr. Philip Led ].

Global circumstances, including oil security and the need to reduce emissions almost dictate that Australia should be reducing its use of diesel. At present, we're using more diesel than ever. Just look at the increase in use in the last 6, 7 years. So my question is, has Macquarie increased its investments and measures that could see Australia reduce its dependence on diesel or second question is, would Macquarie be prepared to invest more in this area.

Look, our general position, as you know, is to be prepared to catalyze other people's capital and our own in pursuit of renewable energy where that makes commercial sense. And as I've set out some numbers on that earlier. On diesel, in particular, I don't actually know whether we have anything that specifically relates to that. I don't know whether anyone up here knows the answer to that in terms of potential future investments, Macquarie is always up for looking at things which commercially stack up. They have to commercially stack up before we would put your money into them. But on diesel, in particular, I'm not sure I can answer that.

We have no material exposure to diesel.

Okay. I think that's the answer, no material exposure. Did you have another question, sir?

The acquisition of Qube, could you comment on that? Because they are into land freight, including rail freight, you -- rail freight uses 1/3 the diesel that road freight users. So a bit about Qube, please, and what you might do with Qube.

Okay. Well, Ben Way, who is in charge of Macquarie Asset Management. Ben, I'll hand to you on that. Thank you.

Thank you for your question. It's true that sometime in August, we will become the owner of Qube along with other shareholders. It is also right to say that in most of those sorts of businesses that we own around the world, there will be a mixture, if you like, of fuel types used in the various vehicles that will be part of those businesses. Often a large part of our investment thesis is actually how we electrify and modernize those fleets. So while there may be some portion of any of our portfolio companies around the world when we initially invested in them that have perhaps traditional fuels. Generally, our investment case will be to modernize that and to electrify it because that's both often much cheaper, but also allows us to drive net zero transition plans through those portfolio companies. And as you probably have heard from the Board and Glenn today, a large part of what MAM does, where we have portfolio companies that we have -- we either control or have significant influence is to really move them to being net zero by 2040. And so that will have a similar program when we invest and become the owners of Qube here in Australia. Specifically, I do not know the fuel mix, I will say. And so we would have to come back to you and answer that question with more specificity after the meeting. But thank you for the question.

Thank you, Ben. Our next question, please?

Chair, our next question is from Mr. Ian Dunlop.

Thank you, Chair, for the opportunity to ask questions. I have a background in fossil fuels, initially in oil exploration with the Royal Dutch Shell group around the world, subsequently in coal developments here in Australia. I chaired the -- I was CEO of the Australian Company Directors in the late '90s. And I chaired the Australian Coal Association in the late 1980s. I've been working on Climate Solutions for some 40 years. Currently, I'm an executive of the Australian Security Leaders Climate Group, which is a group of former military intelligence and security experts who were concerned about the security implications of the existential risk that climate change actually represents. I congratulate the company on the action it's taken on developing its renewable energy portfolios and are obviously continuing to do. But renewables thus far are only meeting the increase in energy demand. We are not doing anything yet to reduce the legacy of fossil fuels and particularly the emissions from those fuels, which are at record levels and rising when they should have been dropping over the last 20 or 30 years if we are to have a safe climate. The actions I hear Macquarie taken seem to be disregarding the implications of what that really means. Your response to, I think, Resolution 5b in the Notice of Meeting places great emphasis on maintaining energy security and really fossil fuel expansion given the fact that renewables have not been growing as fast as they should be. And essentially, you seem to justify on a base of these IEA's current policies and stated policy scenarios, which essentially are providing for the depletion of existing oil and gas reservoirs and also to meet sort of increasing extra demand, despite the fact that we're actually heading into an LNG glut at the moment and that the fossil energy return on investment is dropping because it's becoming more and more expensive to actually produce those fuels. I also note that you've abandoned the essential target of an absolute reduction on emissions in favor of reducing emissions intensity, which allows you, of course, to increase production and emissions whilst meeting the intensity reduction targets. Yet in all of this, what I don't see is any reference to the human security dimensions of what is happening with climate change by prioritizing fossil energy. It's the damage to all the other staples of civilization and human survival such as water, food, livable environment, health, social cohesion, which are really now under threat from climate change in many parts of the world, not to forget the supply chain problems, of course, that are obvious coming out of the current U.S.-Iran war. Those IEA scenarios are not predictions of fossil field demand that basically what happens if you keep doing things in the way we've been doing it. And they lead to the potential temperature increases that have been mentioned at 2.5, 3 degrees C, which are not -- they're not livable world. These will be catastrophic, absolutely catastrophic. Even at 2 degrees C, we're going to see, I think, widespread mortality, food and water shortages and conflict, let alone economic devastation. So my first question, Chairman, is, I know this is a wicked problem, but really what is the Board's justification of prioritizing energy security and fossil fuel expansion in this way, whilst at the same time, ignoring the human security dimensions of it?

I think the basis of Macquarie's approach is our understanding that there will need to be some fossil fuel investment for quite possibly some time yet. You mentioned energy security. I think the world has changed quite materially in the past couple of years and the security and availability as well as the price and who you get it from has become something much more to the fore. There may be a gas clot at some point in the future, I'm not going to try to predict that right at the minute from what we see, there's the shortages around. There's talk of gas reservation in our own country, for example. So what we're trying to do, I think, is we're commercially viable and sensible meet needs that seem to be emerging. We continue to, as I said earlier, to support the energy transition mainly by the green energy investments. You mentioned abandoning targets. Actually, the targets that we set several years ago are the same targets now. It's true that there are emission targets in -- for both mortgages and upstream oil and gas, but we haven't changed those. They're still in place. Quite possibly, you disagree with the targets we set, but they are the ones we set, and we continue to track our behavior, our outcomes against them. It is a wicked problem. We're seeking to play a role. We can't determine global policy. We are unable to do things, really which address these problems for the world, but we're seeking to play our part in a way that we think makes sense, is tractable, practical and is in the interest of shareholders. That's as good as I can give you, I think, on that. Do you want to add anything?

No. Nothing else.

Did you have another question?

Yes. I would, Chair, if I may. Thank you for those comments. If you look at the sustainability report, it indicates that assessing anticipated climate-related risks and opportunities, there are going to be no material financial impacts in the short to medium term on Macquarie. In other words, for up to 5 years from execution of the current strategy. You indicate also that as the time horizon extends over the medium to long term, the range of outcomes becomes increasingly broad. Consequently, the uncertainty involved in estimating financial effects as such that you've chosen not to disclose any financial information. On that basis, the strategy, as I understand it, which includes increasing finance for long-term oil and gas projects is supposedly robust against climate impact. Chair, I would suggest this is a extremely dangerous way in which to treat uncertainty. You'll be well aware at the moment that the 1.5 global average surface temperature increase, which is the lower bound of the Paris Agreement is to all intents and purposes here, we've exceeded it, more than a decade earlier than we expected. Climate change impacts recently in Europe, the U.S. and China are extraordinary by any historical standards. The predicted Super El Nino, which is currently developing in the Pacific, promises way beyond any previous experience. It is really quite scary stuff if you've been looking at what it means. This week's addition of the Economist magazine, which you may have read sets out why this is happening. The key point in the whole thing is that while the basic science has settled, the uncertainties remain about the implications of that science, and they're all pointing in the wrong direction. That basically means the climate impact is probably going to be far worse and far sooner than the scientist thought. I'm certain the way in which governments and corporates are currently planning for. So in these circumstances, I suggest that you can't ignore uncertainty, awaiting quantification as you're doing. They are almost certainly going to a material financial impact on Macquarie's operations even within 5 years, let alone the longer term. And this comes through second and third order effects. So I suggest it requires a fundamental recasting of the way you actually think about risk and uncertainty, incorporating the precautionary principle of taking an emergency action now in anticipation of worst-case scenarios. This includes dramatically reducing absolute emissions and operations in which you're involved. There must be some limited use of fossil fuels. I accept that. But that does not require expansion from the opening up, for example, of new gas basins like Beetaloo. We have enough already. We just can't afford it. There must be far more focused on reducing fossil fuel demand, which I know you're hardly involved in doing. So in these circumstances, my second question, Chairman, is to secure Macquarie's future, will you please consider reframing your current treatment of risk and uncertainty to focus on emergency action to reduce emissions using the core capabilities that you have at your disposal for both fossil fuel supply and demand?

Well, thank you for the suggestion. I'll just say on the material that's in the sustainability report. As you say, it was difficult to find material effects on the business over a short to medium horizon. It is highly uncertain in the longer term. I would note that, that uncertainty could cut the other way, not just the way that you set out. But some of this, no doubt, is a result of limitations in our ability to model these things, and that's an area of our work that we hope to improve in the future. But thank you for the suggestion. Next question, please.

Chair, our next question is from Mr. Kyle Robertson.

Okay, I'll keep it brief. I just want to ask a pointed question about the group's current position on climate change, which is that it claims commitment to the Paris Agreement, claims to accept that the climate science on climate change is clear and unequivocal. I'm getting to a question. I'd like the Chair to enforce the disorderly conduct thing that was raised at the start of the meeting.

Go ahead, Kyle, on the question.

So Macquarie claims commitment to the Paris Agreement, claims to accept the science on climate change is clear and unequivocal while simultaneously supporting new fossil fuel projects. It justifies this behavior in its Notice of Meeting by saying that, under scenarios that are aligned with catastrophic warming, such new projects are required, it disregards the severity of the physical climate risk from these projects and then openly acknowledges that the group's assessment of physical climate risk has led to no anticipated changes in strategy or decision-making, implying the behavior will continue. Does the Board acknowledge there's a contradiction here?

No, I don't. We -- I think we've set out our case quite clearly. I've answered this in some of the previous answers as well. And I don't think there's a contradiction at all. We're trying to navigate a balanced approach to all these things. And I think Macquarie has a pretty good track record actually on supporting the energy transition. And all the things that we're doing in the oil and gas space do get tested against the targets we've already set out in earlier years that remain in place. Do you have another question?

Well, it would be further to that, which is that the Notice of Meeting said that the new gas projects are needed in scenarios where they were warned by 2.5 to 3 degrees of warming. So is that Macquarie's justification for supporting the new gas projects it does? Because if that is the case, that would seem to be an apparent contradiction with its commitment to the Paris Agreement.

Well, I don't think there's any value to be added by getting into debates about particular scenarios. We're comfortable with the risk appetite that we've taken on in that particular project, which is actually quite a very small part of Macquarie's overall balance sheet. Next question, please?

Chair, next question comes from Morgan Pickett.

Having scrapped your commitment to aligning finance with net zero by 2050, is the group committed to aligning finance with the temperature goals of the Paris agreement?

We've made the commitments we've made in the documents, nothing further to add. Next.

So you're not aligning finance with Paris. Is that correct?

We've said we are committed to the Paris goals. We support those goals. That's what we've said.

Yes. That's about as much substance as I found in the report as well. Okay. regarding Beetaloo, you claim to be supporting your oil and gas clients to decarbonize. How are you supporting these clients to decarbonize their operations?

I don't think it's sensible to get into particular client situations. We do have an active process of trying to help clients decarbonize where that's their intention that extends a long way beyond just oil and gas to other sectors of the economy. But I don't think it's right to try to talk about particular client instances.

I understand that, Chair, but in your Notice of Meeting and the response to Resolution 5b, you specifically speak to Beetaloo as a project that you believe will be required for energy security. You specifically state that you're working with these clients to decarbonize their operations. So it's a simple question. It should be a very simple to answer. How are you working with them to decarbonize?

I can't give you the fine detail on that particular case. I don't have that information. I'm not sure whether anyone up here does.

Will you take it on record to address that?

We'll take it on notice, thank you. Can I have the next question, please.

Chair, our next question comes from Amanda Richmond.

First, congratulations to Shemara on her tenure CEO and Greg Ward on his new appointment. So I'm Amanda Richman from Australian Ethical Investment, we're an institutional shareholder in Macquarie and we co-filed the shareholder resolution. I think Macquarie has heard feedback from shareholders on its climate commitments and implementation, which I hope Macquarie will consider, and we're keen to continue to engage on this. Just a couple of points of clarity based on questions that we've heard today. Chair, Macquarie's Notice of Meeting, as many have mentioned, refers to IEA's current policies and stated policy scenario. I suspect there might be some perhaps a misunderstanding about what Macquarie intended to communicate by referencing those. So as I understand it, those scenarios describe outcomes, which would result in warming well below -- well beyond the goals of the Paris Agreement and the IEA presents them a scenarios to be avoided. Could you clarify why Macquarie chose to reference those scenarios and confirm whether Macquarie also views them as outcomes to be avoided?

I think we use those scenarios is just a way of framing discussion. At the moment, the world is not on track as far as we can see with the net zero by 2050 scenarios that the IEA has set out, and I'm not an expert in these scenarios, but that's my understanding, that scenario has seen consistent upward revisions to its near-term emissions trajectory because as has been earlier outline, emissions actually have not fallen other than in COVID. So we reviewed the current policies and stated policy scenarios, which is a useful framing for where the world may be hitting. I don't think we're endorsing those as any particular desirable, we're not expressing that view. They were just things that we use for framing the discussion. I think we would say that if the science is 2.5 to 3 degrees warming to be damaging, then we would accept that.

And just one other clarifying question. I think Ian Dunlop's question related to how Macquarie is thinking about the impacts of physical risk on Macquarie's own business and understand the difficulty of looking ahead when there's a lot of uncertainty beyond a 5-year period. I understood Macquarie's approach to risk management is to understand worst-case scenarios. Has that principle been applied to how Macquarie considers physical climate risk?

That is the approach that we take to all risks and to the extent we can quantify them, we do look through those worst case possible outcomes in all those things. In this particular case, of course, it's not possible to do that quantification to the same extent for the very reason that potentially some of these things don't have precedent in the data. So we seek to adopt that practice wherever that's possible. This is inherently difficult to model out beyond, I guess, the medium term. We will keep working on that, but that is as good as we could do on this occasion. Next question, please.

Chair, our next question is from the Australian Shareholders' Association.

Peter Gregory is my name, and I'm here today representing the Australian Shareholders Association, which is a not for profit body that represents the interest of small and individual shareholders. I have proxies from shareholders today totaling 367,000 shares. And I also note that Macquarie has 205,000 shareholders on its registry that own less than 1,000 shares. This is 90% of the shareholders on Macquarie's register and as well as ASA members, we do work to represent and be the voice of all small and individual shareholders. I'd like firstly to comment on the remuneration report. In spite of the improved financial results delivered by Macquarie's leadership this year, ASA has reservations about the remuneration plan and for the following 3 reasons: ASA is voting open proxies against the remuneration report. See, ASA is of the view that the CEO and leadership team need to be rewarded to attract and retain and motivate the best people. We also believe that the overall quantum needs to be reasonably -- reasonable and supported by appropriate benchmarking of peers. We have completed a detailed analysis of data, benchmarking data that largely being provided to us by Macquarie and have concluded that the quantum of remuneration is at a higher level than it needs to be to meet our shared objectives. Secondly, in terms of the mix of the remuneration components, we see that the long-term incentive plan is based on earnings per share and return on equity and that growth of these metrics, as stated in the annual report drives long-term shareholder value. Yet this measure is only 12% of the CEO package. We ask that to give a better alignment of leadership and shareholders that the proportion of long-term incentive be increased. We also note that the earnings per share growth, as I read the data in the annual report, has not met its hurdle for 50% of the time since it was introduced in 2009. And thirdly, to the profit share which is 84% of the CEO maximum package. While we welcome the greater amount of disclosure this year, we don't see transparency about how the size of the maximum award has arrived at, nor do we see clear performance hurdles or how specific outcomes are linked to defined rewards. That is, in our view, an over reliance on board discretion. In short, ASA believes that shareholders should be able to understand how remuneration outcomes have been determined and how they reflect performance over time and we don't have this understanding with Macquarie's profit share. I know there's a lot of material that I presented to you in that, Glenn, and I'm not expecting a full resolution to our points of view here, but I would appreciate your overall comment and also would like to add that ASA is willing to work with Macquarie to achieve what we think is a better alignment of the interest of Macquarie leadership and shareholders.

Well, thanks, Peter, for your comments and welcome suggestions. We've done a lot of work on the rem framework and disclosure, as you said, over the past year. I respect your responsibility to vote your proxies as you see fit, absolutely. We do think the remuneration system, which is very long standing, has worked well. We're always open to continued evolution and continued evolution is something that's ongoing. So thanks for the suggestion. I would only add that in the discussions we've had with shareholders thus far in recent weeks as we lead up to the AGM, I think the rem outcomes have been, I think, have been well received, what we've tried to do. And I would say my assessment and Jillian, if you'd like to add, feel free. I think the framework overall is very, very strongly supported by the vast bulk of shareholders, but thank you again for the engagement we had with you and for your observations.

To reinforce that comment that we found there was broad support for the framework even when there was more information requested on the consequences of regulatory matters that arose and we certainly -- and that we -- could we have more disclosure on the process of making those judgments on consequences. So we addressed all those things. But overall, I think the framework has been supported because it is a profit share arrangement. So it is very much aligning the shareholders with the focus of the executives. And that's what other shareholders have indicated they support. But if you say it's just too high, that's sometimes because our profit is outperforming other financial institutions.

Thanks, Jill. Peter, did you have another question?

Yes, I do. And I just -- if I can say thank you for taking consideration to our point of view. On the regulatory question, there's been a resolution of the issues of short-selling reporting to ASIC and Shield's Financial Master Funds inclusion on the Macquarie Wrap program. This has come at of cost and more importantly, has brought reputational risk to our company. With the regulatory issues, specific known causes I understand are being dealt with, as you've referred to earlier, but I don't think we've heard much disclosure about what you referred to as underlying root causes. Has there been a sufficient review to ensure regulatory compliance and confidence that there will be no more surprises in this regard. And then with the Macquarie Wrap Platform, we note that there's been a greater degree of screening of included products, and we would ask, has this action being sufficient to mitigate this risk, both financial and reputational consequences of possible future occurrences?

Thanks for the question. On the short-selling matter, there's a large program of work underway to rectify those issues that's making good progress. And importantly, to pick up a point you made, there is a thorough root cause analysis that's part of that. And we've identified a few common themes going back through history, which I won't go through, but we've done that work, and we believe there's good progress underway to rectify those things. On the Shield matter, I would say that we have felt that the way Macquarie responded to that matter has actually been reputation enhancing for the company. We believe it's been brand positive. I acknowledge that there was a cost to shareholders for doing that, but that has been brand positive, and I think has also improved our standing with regulators. On the specific things we've done, Greg, perhaps would you be able to comment on the way we've been revising access to the Wrap platform and so on.

Thank you, Chairman. Yes, I think we thought we've responded well to the Shield matter. And obviously, there were a lot of parties involved in that in the industry that are being investigated by ASIC and their work continues, and we're very supportive of that work. We made extensive enhancements to our compliance and governance arrangements, including to the fund menu to provide additional protections on -- for investors that are investing in funds on the Macquarie menu, and we're really satisfied with the work that we've done there.

Thanks, Greg. Can I have the next question, please?

Chair, our next question is from Mr. Enzo Prater.

I have 2 questions today. My first question is actually a request to Macquarie Bank, and it is, can you please publish on your website the interest rates on offer for business term deposits, as you already do for personal term deposits. The reason for my question is this, I am treasurer in 4 strata schemes. All of them, all the 4, invest the surplus cash in Macquarie Bank term deposits, business term deposits because strata scheme is a business. Every time one of those term deposits matures in order to decide what to do next to roll over, for how long or not, I needed to call the strata manager who in turn calls Macquarie Bank, gets the rates for me and communicates them to me. This process add additional costs of the owners that I present. So I was wondering whether it will be possible to publish the interest rates and offer on the website so that I do not need go through this long detour to decide what I have to do.

Okay. I'm going to look at the front row as to whether there's anything we can say about publishing rates on the website, Greg or Ben?

Thanks very much for the question, and thanks for your support of the Macquarie product offering. A term deposits at Macquarie and in the market are quite a historic sort of operating product. And you may have seen media in the last couple of weeks that we've launched a new term deposit offering, which we think is a dramatically different and better offering than is available in market more broadly. And as part of that, you'll be able to see the rate of interest that is available on the term deposits, and you'll be able to roll over term deposits very, very quickly. And it will also show the total interest that will be earned on a term deposit as well. So I think going forward, I appreciate the feedback, and you'll be able to see this going forward.

Excellent. Just a quick question. Is it for business as well or only for personal investors?

Yes, it will be for business as well. All types of customers.

Okay. My second question is a procedural. At this AGM, we have a numeric limit for every shareholder and proxy holder to ask a maximum of 2 questions. At the next AGM, can we have a time limit as well, I would say, 90 seconds per question. The reason for that is I believe that a question that cannot be articulated in 90 seconds is probably too complicated to be addressed in the general meeting.

Thank you. Thank you for the suggestion. On that very note, we do have a lot more questions yet, so if people could keep the questions short. Can I have the next question, please.

Chair, our next question comes from [ Helen Scotts ].

Thank you for a very informative presentation. And I just want to commend you on the way that you run this meeting. It's very well done, having a break and then coming back and having the question. So those that want to leave can leave. Look, I just want to commend you, Macquarie Bank on investing in oil and gas. I don't know a country -- of a country, I might be wrong. I don't know of a country at the moment that relies totally on renewables for their energy. And while we do need to invest in renewables, I just think we're on this fast pathway to Paris 2050. And it's involving a lot of collateral damage along the way. And I think 1 in 5 families is under energy stress at the moment, and there have been reports of suicides due to financial stress. And I personally have been a victim of financial stress due to the recession that we had to have and thankfully, due to hard work and resilience in Macquarie Bank shares, we got back on top of it. So I just want to say, I think it's really wise to be investing in fossil fuels because while we do want to invest in renewables, we really need to keep going with fossil fuels to supplement the renewables until we're ready for the changeover. And I just hope down the track somewhere, we hear about Macquarie Bank investing in nuclear energy.

Thanks for your comments. Next question, please.

Chair, our next question comes from [ Mr. Andrew Somerville ].

My first question is to Jillian Broadbent, what were the 2 major things that you did on the Board during your time? And do you have any regrets in your time on the board, anything you shouldn't have done. And my second question, if you like, is to Shemara on the same question. What 2 good things have you done? And do you have any regrets? And 1 comment, if I may, Chairman, could I suggest we have a clock in 2 minutes. And when the question starts, you start the clock. And when 2 minutes is up, the person sits down.

Thanks for the suggestion limiting the great things. Both of these people have done to 2 might be difficult, but your...

Will I go first, I'm glad to contain to 2 minutes. It's hard to say 2 things I have done or haven't done, but it has been an extremely stimulating Board to be part of. And I think Shemara's expressed this view, there are so many changes. And I've been lucky to be able to draw on a fairly diverse financial background in the commodities derivatives business and financing generally to both enjoy and contribute to Macquarie's journey, I feel. In terms of whether I was supposed to specify things I wished I hadn't done, I don't think there are any of those. It's -- one good thing about Macquarie or there are lots of good things about Macquarie is that things evolve and change. So if you do make a bad decision, you correct it pretty quickly and you're open to input. And I think that applies both at the board and across the executives. So we're -- it's very dynamic, and I don't think if I made any mistakes. I haven't corrected them pretty quickly.