This report shows public data only. Is this your organisation? If so, login here to view your full report.

AP2

PRI reporting framework 2018

Export Public Responses
Pdf-img

You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes

Implementation processes

LEI 01. Percentage of each incorporation strategy

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate (1) which ESG incorporation strategy and/or combination of strategies you apply to your actively managed listed equities and (2) the breakdown of your actively managed listed equities by strategy or combination of strategies (+/- 5%)

ESG incorporation strategy (select all that apply)

Percentage of active listed equity to which the strategy is applied
100 %
Total actively managed listed equities 100%

01.2. Describe your organisation’s approach to incorporation and the reasons for choosing the particular ESG incorporation strategy/strategies.

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.

01.3. If assets are managed using a combination of ESG incorporation strategies, briefly describe how these combinations are used. [Optional]


LEI 02. Type of ESG information used in investment decision

02.1. Indicate what ESG information you use in your ESG incorporation strategies and who provides this information.

Type of ESG information

Indicate who provides this information  

Indicate who provides this information 

Indicate who provides this information 

Indicate who provides this information 

02.2. Provide a brief description of the ESG information used, highlighting any different sources of information across your ESG incorporation strategies.

02.3. Indicate if you incentivise brokers to provide ESG research.

02.4. Describe how you incentivise brokers.

ESG assessment part of brokers review.

02.5. Additional information.[Optional]


LEI 03. Information from engagement and/or voting used in investment decision-making

03.1. Indicate if your organisation has a process through which information derived from ESG engagement and/or (proxy) voting activities is made available for use in investment decision-making.

03.2. Additional information. [Optional]


(A) Implementation: Screening

LEI 04. Types of screening applied

04.1. Indicate and describe the type of screening you apply to your internally managed active listed equities.

Type of screening

Screened by

          All conventions the Swedish state has signed.
        

Description

The entire portfolio is screened twice a year by an external service provider.

04.2. Describe how the screening criteria are established, how often the criteria are reviewed and how you notify clients and/or beneficiaries when changes are made.

The screening criteria are based on the core values of the Swedish state. Information is given to beneficiaries in AP2's sustainability and corporate governance report and in the AP Funds' Council on Ethics annual report.


LEI 05. Processes to ensure screening is based on robust analysis

05.1. Indicate which processes your organisation uses to ensure screening is based on robust analysis.

05.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your ESG screening strategy.

05.3. Indicate how frequently third party ESG ratings are updated for screening purposes.

05.5. Additional information. [Optional]


LEI 06. Processes to ensure fund criteria are not breached

06.1. Indicate which processes your organisation uses to ensure fund criteria are not breached

06.2. If breaches of fund screening criteria are identified - describe the process followed to correct those breaches.

06.3. Additional information.[Optional]


(C) Implementation: Integration of ESG issues

LEI 08. Review ESG issues while researching companies/sectors

08.1. Indicate which ESG factors you systematically research as part of your investment analysis and the proportion of actively managed listed equity portfolios that is impacted by this analysis.

ESG issues

Proportion impacted by analysis
Environmental

Environmental

Social

Social

Corporate Governance

Corporate Governance

08.2. Additional information. [Optional]


LEI 09. Processes to ensure integration is based on robust analysis

09.1. Indicate which processes your organisation uses to ensure ESG integration is based on a robust analysis.

09.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your integration strategy.

09.3. Indicate how frequently third party ESG ratings that inform your ESG integration strategy are updated.

09.5. Describe how ESG information is held and used by your portfolio managers.

09.6. Additional information.[Optional]


LEI 10. Aspects of analysis ESG information is integrated into

New selection options have been added to this indicator. Please review your prefilled responses carefully.

10.1. Indicate which aspects of investment analysis you integrate material ESG information into.

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

10.2a. Indicate which methods are part of your process to integrate ESG information into fair value/fundamental analysis and/or portfolio construction.

          
        

10.3. Describe how you integrate ESG information into portfolio weighting.

Expected return and risk model has ESG-factors integrated in their construction.

10.4a. Describe the methods you have used to adjust the income forecast / valuation tool

Expected return and risk model has ESG-factors integrated in their construction.

Proportion of actively managed listed equity exposed to investment analysis

10.2b. Indicate which methods are part of your process to integrate ESG information into fair value/fundamental analysis and/or portfolio construction.

          ESG-factors to predict future returns.
        

10.4b. Describe the methods you have used to adjust the income forecast / valuation tool

Utility companies with more than 30% of the profit (EBIT) from coal-based power generation has been idemtified as companies with high financial climate risks. All pure coal mining companies and oil & gas companies dependent on new high cost project for futher earnings are also regarded as companies with high financial climate risks.

10.5. Additional information.


Top