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AP2

PRI reporting framework 2018

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Asset class implementation not reported in other modules

SG 16. ESG issues for internally managed assets not reported in framework

Describe how you address ESG issues for internally managed assets for which a specific PRI asset class module has yet to be developed or for which you are not required to report because your assets are below the minimum threshold.

Asset Class

Describe what processes are in place and the outputs or outcomes achieved

Forestry

Sustainability factors are central to  AP2’s investments in forestry and ESG aspects are considered in the entire investment process.

Where possible, AP2 makes it a condition that fund managers should certify forest real estate in compliance with one of the international sustainability certification systems, Forest Stewardship Council (FSC) or the Programme for Endorsement of Forest Certification (PEFC). Even if the forest assets cannot be certified (as in the case of biomass plantations not covered by FSC or PEFC certification) they will be managed in compliance with the certification principles implemented by these organizations.

In Dec 2016, 95% was certicied, 4% was in the process of certification and 1% was land that could not be certified e.g. land used for roads, buildings etc.

Farmland

Sustainability factors are central to  AP2’s investments in farmland. The strategy is to invest in large-scale agricultural real estate in countries that possess clearly-defined legal structures.This means that many geographic regions are not suitable for investments

AP2 has elected to invest in agricultural real estate by establishing joint ventures with other investors, a form well suited to a long-term investment approach. AP2 has a board representative on the board of TIAA-CREFGlobal Agriculture (TCGA),  which is actively engaged in improving the company’s work with sustainability. AP2’s representative is, among other things, a member of the ESG committee. 

AP2  maintains an ongoing dialogue with its managers, as well as visiting its agricultural assets several times a year. Every year, with a view to gaining a comprehensive impression of the way managers are applying the Guidance in practice, they are required to report on the  PRI Guidance for Responsible Investment in Farmland. A summary of these responses including some key indicators are available in AP2's Annual and Sustainability Report.

16.2. Additional information [Optional].


SG 17. ESG issues for externally managed assets not reported in framework

17.1. Describe how you address ESG issues for externally managed assets for which a specific PRI asset class module has yet to be developed or for which you are not required to report because your assets are below the minimum threshold.

Asset Class

Describe what processes are in place and the outputs or outcomes achieved

Farmland

Sustainability factors are central to  AP2’s investments in farmland. The strategy is to invest in large-scale agricultural real estate in countries that possess clearly-defined legal structures. This means that many geographic regions are not suitable for investments.

AP2 has elected to invest in agricultural real estate by establishing joint ventures with other investors, a form well suited to a long-term investment approach. The Fund has invested in three jointly-owned companies as well as one fund: TIAA-CREF Global Agriculture (TCGA), TCGA II, Teays River Investments and TIAA European Farmland Fund (TEFF). AP2 has a board representative on the board of TIAA-CREFGlobal Agriculture (TCGA),  which is actively engaged in improving the company’s work with sustainability. AP2’s representative is, among other things, a member of the ESG committee. 

AP2  maintains an ongoing dialogue with its managers, as well as visiting its agricultural assets several times a year. Every year, with a view to gaining a comprehensive impression of the way managers are applying the Guidance  for Responsible Investment in Farmland in practice. A summary of these responses including some key indicators are available in AP2's Annual and Sustainability Report.

17.2. Additional information.

TCGA, TCGA II and TEFF are managed by Nuveen, whose company Westchester is responsible for the operative management of farmland.

TCGA is working continually to increase transparency, among other things, for where the farmland is located geographically. More information at www.tiaa.org/public/assetmanagement/ strategies/alternatives/agriculture

 

Sustainability audits of farmland in Brazil

TIAA-CREF Global Agriculture (TCGA) leases out farmland in Brazil to Brazilian lessees and operators. In 2015, BSD Consulting, a global sustainability consultant, reviewed all TCGA’s agricultural activities in Brazil with a focus on the activities’ regulatory compliance regarding working conditions, health and safety at work, the environment and integrity. TCGA’s ESG committee, in which AP2 is included, worked together with TCGA’s manager in the implementation of the audits. The purpose of the audits was to assess compliance with laws and regulations in Brazil, with PRI’s guidelines for responsible investment in farmland and/or commitment in relation to  sustainability certification. The auditors showed that a majority of TCGA’s lessees have a good management system, but in all farmlands there were non-compliances and/or observations. In order to support the lessees, TCGA’s manager has changed the visiting process so that it includes a more comprehensive review of the lessee’s activities as well as a visit to their head offices, which is made even if it is not on land owned by TCGA. The manager has also created a detailed code of conduct for the lessees, which is shared and discussed in person with each lessee. A steering and supervisory review process in order to comply with the code of conduct is under development. TCGA’s manager has also used what came to light during reviews to improve the control procedures for new acquisitions. As part of the ongoing audit, the manager intends to carry out the next third party audit in 2018 for selected farmland activities in TCGA and for all agricultural activities in TCGA II. For more information, see AP2’s 2016 Sustainability Report and www.tiaa.org/public/assetmanagement/strategies/ alternatives/agriculture


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