All companies included in the AP2's portfolio of equities are screened twice yearly, to identify those that contravene international conventions and guidelines. This analysis is conducted by an external consultancy. The screening results in a list of companies that are targeted for engagement either by AP2 through the AP Funds Ethical Council or by our external service provider.
A fundamental analysis is used in the management of Swedish equities. This means that companies are valued by forecasting their future development. In an analysis of the companies, consideration is given to sustainability aspects and how they can affect the companies’ valuation. This may, for example, be tax issues, forthcoming environmental regulations and corporate governance issues. AP2 is working to increase its competence on how sustainability aspects can affect a company’s valuation and share price. This is done, among other things, by the sustainability and equity research analysts working together. During 2017, the Fund made in-depth analyses of sustainability work in ten Swedish companies within different sectors. The purpose of the analyses has been to gain a broader knowledge of the company’s risks and opportunities within sustainability. The Fund has held ownership dialogues with companies in connection with the analyses. Because AP2 believes that companies can create and protect values by working with sustainability issues, the Fund considers it important to be involved in the companies’ sustainability work. By being an active owner, the Fund can also affect the companies and support them in the development of their sustainability work
AP2’s management of global equities takes place primarily through active quantitative management. The models used are produced in-house and contain different factors, including sustainability factors. They are linked to a number of environmental, social and corporate governance factors. The Fund also works to create new indices in which sustainability is a fundamental pillar. Read more about this on page 22 in AP2's annual and sustainability report (http://www.ap2.se/globalassets/nyheter-och-rapporter/arsredovisningar/annual-report-and-sustainability-report-2017.pdf).
AP2 has made divestments in global listed companies that the Fund has determined have financial climate risks. This work is based on extensive sector and company analyses, where sustainability issues and financial information are interwoven. The Fund has so far investigated the utility sector, the coal sector and the oil and gas sector. The Fund has divested in a total of 79 companies.
AP2 also has a governance group that works on governance issues.