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APG Asset Management

PRI reporting framework 2018

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Investment policy

SG 01. RI policy and coverage

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

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.3a CC. Describe how your products or investment strategy might be affected by the transition to a lower-carbon economy.

We define climate risk as the risk that the value of an investment will be significantly, negatively influenced by climate change. We distinguish between various sorts of climate-related risks: policy and legal risks from new regulations and public policies in response to climate change; technology risks through the emergence of new, cleaner technologies; market risks from changing demand drivers from consumers; and physical impacts of climate change, particularly if the transition to a low carbon economy does not occur as needed. On the other hand, we identify investment opportunities that contribute to a low-carbon economy, such as renewable energy, energy transmission, energy efficiency and water management. 

01.3b CC. Describe how climate-related risks and opportunities are factored into your investment strategies or products.

We monitor overall exposure to climate change in the portfolio. However, we manage climate-related risks and opportunities within specific asset classes and portfolios. This is because the risks and opportunities of climate change differ per asset class, region, sector and company. Therefore, these are best managed within the asset classes and portfolios where specific sector knowledge is available, for example by:

  • Integrating climate risks into investment strategies and due diligence;
  • Investing in energy efficient Real Estate (monitored through GRESB);
  • Engaging with companies and policy makers;
  • Investing in clean alternatives (Renewable Energy, Green Bonds, High Sustainability Investments) – our clients have established a target to increase the exposure to Renewable Energy investments to €5 bln in 2020 and to High Sustainability Investments (HSI) to €58 bln in 2020 (transitioning to Sustainable Development Investments);
  • Reducing the carbon footprint of our Listed Equity portfolio – our clients have established a target to lower the carbon footprint per invested euro by 25% in 2020 compared to 2015.

Quantitative targets on Responsible Investment (see SG 01.5)

01.4. Describe your organisation’s investment principles and overall investment strategy, and how they consider ESG factors and real economy impact.

The way APG manages its clients' pension assets is about more than realizing financial gains. On behalf of our clients we implement the Responsible Investment Policy through which they can demonstrate their social responsibility and assure a long term good investment. The Responsible Investment (RI) Policy applies across all asset classes.

In 2015, our largest client, ABP has revised its Responsible Investment Policy. As a result, Responsible Investment is explicitly included as an investment belief and integrated in the investment process through Responsible Investment goals for 2016-2020 (described in more detail in SG 01.5).

Other clients have also been revising their RI policies to the same effect.

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

APG's Responsible Investment (RI) Policy applies across all asset classes and is described in more detail below:

  1. Responsible investment is an integral part of the investment process at APG. We take shareholder rights and environmental and social factors into consideration in our investment decisions. Research in the fields of sustainability and shareholder rights can lead to a decision to decline a certain investment offer, to sell the investment, or to increase or reduce the size of the investment.
  2. APG enters into dialogue with companies in order to achieve sustainability and good corporate governance.In meetings with companies we make our standards on sustainability and shareholder rights clear. To emphasize our message, we often cooperate with other investors in this area.
  3. APG expects companies to act with respect for the principles of the UN Global Compact, and we will sell the shares we hold if dialogue does not lead to improvement. Moreover, APG does not invest in products which are banned under Dutch law or international regulations.This means that we do not invest in companies that are directly involved in the production of land mines, cluster munitions and the firing systems for such munitions, or the production of chemical and biological weapons or nuclear weapons in contravention of the Nuclear Non-Proliferation Treaty. The minimum standards for companies in the fields of human rights, labour standards, the environment and corruption are specified in the UN Global Compact.
  4. APG does not invest in sovereign bonds issued by countries that are subject to an arms embargo by the UN Security Council. A UN Security Council arms embargo indicates that there is serious concern about a country's human rights situation.
  5. APG actively exercises our rights as shareholder. We vote at the shareholders' meetings of the companies in which we invest and we publish our voting behaviour.
  6. APG strongly advocates robust Dutch and international laws and regulations aimed at promoting sustainability and good corporate governance.We regularly discuss sustainability and shareholder rights with legislators and regulatory bodies. We also contribute to the development of standards aimed at improving the integrity of the financial markets over the long term.
  7. APG actively looks for attractive investments that promote sustainability.APG seeks investments that contribute to more sustainable societies by addressing environmental and/or social challenges including climate change, pollution, water scarcity, the loss of habitats and species, education, poverty and socio-demographic trends and imbalances. APG's main societal responsibility is to deliver affordable pensions to its clients and their beneficiaries, and hence these investments have to match APG's risk-return requirements.
  8. APG actively propagates our responsible investment policy in order to promote sustainability and corporate  governance. We cooperate with other asset managers and pension funds across the world in order to increase the effect of our responsible investment policy for our clients. We are active in various Dutch and international forums of cooperation and we communicate extensively about our activities.

For 2016-2020 our largest client, ABP, has set the following objectives:

  • To have €5 billion of our assets invested in renewable energy;
  • To reduce the CO2 footprint of our listed equity portfolio by at least 25%;
  • To double our investments in High Sustainability Investments (from €29 billion to €58 billion, transitioning to Sustainable Development Investments);
  • To invest €500 million in education-related properties and infrastructure;
  • To invest €500 million in communication infrastructure.

For 2016-2020 our largest client, ABP, has set the following engagement objectives:

  • Companies in the textiles and clothing sector will provide safe working conditions throughout the production chain (in line with the agreements in the Bangladesh accord);
  • Companies in the shipbuilding sector in which we invest will publish a policy for safe working conditions which will be applied throughout the chain;
  • We support the GRESB Infrastructure benchmark as the new sustainability standard (including safety, health and the environment) for investments in the field of infrastructure and at least half of our infrastructure investments will report to GRESB Infrastructure; 
  • Companies which we invest in covering the ICT, textiles and clothing and energy sectors will publish human rights policies;
  • We will engage with companies in in the cocoa production chain to eliminate child labor in the supply chain.

Another client of APG, bpfBOUW has set the following targets towards 2020:

  • To reduce the CO2 footprint of our listed equity portfolio by at least 25%;
  • To aim for €11 billion exposure to Sustainable Development Investments
  • To engage with companies in the construction, garment and shipbuilding sector on safety and labor conditions.
  • To have €500 million invested in health care related real estate.

SG 02. Publicly available RI policy or guidance documents

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

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

URL/Attachment

URL/Attachment

URL/Attachment

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

URL/Attachment

02.3. Indicate if your organisation’s investment principles, and overall investment strategy is publicly available

02.4. Additional information [Optional].


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

APG AM has adopted an internal Code of Conduct to detect and manage potential conflicts of interest, which is being monitored continuously and reviewed annually. Where a potential Conflict of Interest is apparent, APG AM can decide to refrain from engaging in a particular activity.

APG AM also has specific existing policies on Insider dealing, gifts, invitations and entertainment, and additional functions.

If for any reason pre-emptive measures have not been successful in mitigating a potential Conflict of Interest, APG AM will endeavour to make any information pertaining to such conflict available to all relevant stakeholders.

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios

04.1. Indicate if your organisation has a process for identifying and managing incidents that occur within portfolio companies.

04.2. Describe your process on managing incidents

          All companies are screened on the basis of the UN Global Compact (UNGC) principles. APG procures services from several data vendors in order to identify issues at portfolio companies in relation to the UNGC principles and other ESG areas. We also expect third party private equity managers to promptly inform us in the event an incident occurs in a portfolio company. In addition, information from brokers and NGO’s can be used to identify issues at portfolio companies. 

When issues are identified, APG can reach out to the investee company or relevant external manager for clarification and fact checking purposes or initiate a longer term engagement.
        

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