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APG Asset Management

PRI reporting framework 2018

Export Public Responses

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Process for engagements run internally

LEA 03. Process for identifying and prioritising engagement activities

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

03.1. Indicate whether your organisation has a formal process for identifying and prioritising engagement activities carried out by internal staff.

03.2. Describe the criteria used to identify and prioritise engagement activities carried out by internal staff.

03.3. Additional information. [Optional]

Given the size of APG's equity portfolio universe, we need to consider optimal use of engagement resources, balancing the prospect of achieving successful engagement results from an investment (value creation) and RI policy perspective with other considerations such as market impact and clients' wishes. This requires us to be selective.

The nature of the concern and the gravity of the particular issue:

  • High priority concerns include: violations of the UN Global Compact principles, labour standards controversies, environmental harm, board and committee composition, audit concerns, remuneration concerns.
  • Concerns based on the results of an in-house assessment of companies’ policies and practices (inclusion policy).
  • Isolated incidents versus repeated patterns: A one-off incident (for example an oil spill or labour unrest) does not necessarily require engagement. We examine the way management responds to such incidents, and the effectiveness of management systems and other fundamental considerations such as the corporate culture surrounding safety to ensure such an incident won’t happen again in the future.
  • Engagements based on concerns related to priority topics and themes in certain sectors on specific client request.

Investment impact:

  • Business impact - the likelihood the ESG issue identified may or could materialize into a significant business detriment;
  • Investment relevance - likelihood the ESG issue could impact the share price in the short, medium or long term;
  • Portfolio relevance - a combination of our stake and the company's value in our portfolio;
  • The degree of leverage we believe we have (outlook for success);
    • size of our stake (% of equity);
    • relationship with the company;
    • track record with the company;
    • wider investor interest in the topic.

LEA 04. Objectives for engagement activities

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

04.1. Indicate if you define specific objectives for your engagement activities.

04.2. Indicate if you monitor the actions that companies take during and following your engagements activities carried out by internal staff.

04.3. Indicate if you do any of the following to monitor and evaluate the progress of your engagement activities carried out by internal staff.

04.4. Additional information. [Optional]

We have developed an in-house centralized knowledge management system (KMS) database in which we track our engagement with companies as well as other relevant research, financial and ESG information. Both the investment teams and the GRIG team have access to this database which ensures sharing of information. We also screen portfolios with respect to the UN Global Compact.

For each engagement we document the company's name, the engagement issues, our objectives, and whether they have been met or if progress has been made. We also document the engagement intensity-level, whether we are working collaboratively with other investors, the steps taken in terms of dialogues, meetings and written exchanges, and the steps to be taken in future. The KMS  is a very successful engagement monitoring tool that is used on a daily basis by GRIG and investment teams.

Engagements with companies on the basis of UN Global Compact violations which could lead to exclusion require sign-off from a board-level committee. Progress of these engagement trajectories is evaluated regularly by this committee.