One of APG's investment beliefs is that the risk-return profile can be improved by factoring in non-financial elements in the investment process. To APG Asset Management Responsible Investment is a way to improve the investment portfolio's risk-return profile while simultaneously contributing to sustainable development. In order to enable this APG focuses on companies' financial performance as well as the way in which companies deal with the theme of sustainability and how the Executives of the companies deal with their shareholders. The best way to achieve this goal is to incorporate ESG as an integral part of our investment processes.
For corporates in capital markets, a so-called Inclusion Policy has been developed to enable us to meaningfully and systematically identify companies that are considered to be leading or lagging on ESG. In order to assess a company’s ESG performance APG developed its own framework whereby we review practices and policies related to the UNGC themes. Companies’ performance is assed in comparison with their peers, while still requiring them to meet industry specific normative ESG expectations. Where companies are considered lagging behind, we can only invest if we believe that they can be influenced through engagement to improve. The phased implementation of this policy has started in 2017. Every investment choice has to explicitly balance risk, return, costs and ESG so that our portfolio becomes more responsible and sustainable.
In addition to the Inclusion Policy, APG has a carbon reduction target for the equity portfolios and an investment target for Sustainable Development Investments (SDIs). APG has also continued to apply its corporate governance framework in our engagement and voting activities.
In addition to a strong focus on integration, APG has minimum standards and an exclusion policy built into its investment processes. On behalf of our clients we exclude companies that are involved in the production, sales and/or distribution of anti-personnel landmines, cluster munitions, chemical and biological weapons, and nuclear weapons made in violation of the Nuclear Non-Proliferation Treaty. APG also expects companies to operate in line with the UN Global Compact principles and, in its Responsible Investment Policy, APG also states that it may exclude companies that fail to act in accordance with the principles of the UN Global Compact and show no signs of changing their practices. The exclusion policy was last evaluated in 2015 and on a semi-annual basis we determine the latest exclusion list of companies. Per January 2018 we exclude 19 companies that are directly, or through ownership, involved in production of anti-personnel landmines, cluster munitions or nuclear weapons in violation of the NPT, we exclude 3 companies that we consider to be in violation of the UN Global Compact principles.