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AP3

PRI reporting framework 2019

Basic information [OO 01 - 09] Asset class implementation gateway indicators [OO 10 - 12] Peering questions [OO LE 01 - HF 01]

Strategy and Governance

Investment policy [SG 01 - 04] Objectives and strategies [SG 05 - 06] Governance and human resources [SG 07 - 08] Promoting responsible investment [SG 09 - 11] Outsourcing to fiduciary managers and investment consultants [SG 12] ESG issues in asset allocation [SG 13 - 15] Asset class implementation not reported in other modules [SG 16 - 17] Innovation [SG 18] Communication [SG 19]

Indirect – Manager Selection, Appointment and Monitoring

Listed Equity and Fixed Income Strategies [SAM 01] Selection [SAM 02 - 03] Appointment [SAM 04] Monitoring [SAM 05 - 07] Outputs and outcomes [SAM 08 - 09]

Direct - Listed Equity Incorporation

ESG incorporation in actively managed listed equities [LEI 01 - 10] Implementation processes [LEI 01 - 10] (A) Implementation: Screening [LEI 04 - 06] (B) Implementation: Thematic [LEI 07] (C) Implementation: Integration of ESG factors [LEI 08 - 10] ESG incorporation in passively managed listed equities [LEI 11] Outputs and outcomes [LEI 12 - 13]

Direct - Listed Equity Active Ownership

Overview [LEA 01] Engagement [LEA 02 - 08] Outputs and outcomes [LEA 09 - 11]

Direct - Fixed Income

ESG incorporation in actively managed fixed income [FI 01 - 12] Implementation processes [FI 01 - 03] (A) Implementation: Screening [FI 04 - 06] (B) Implementation: Thematic [FI 07 - 09] (C) Implementation: Integration [FI 10 - 12] Fixed income - Engagement [FI 14 - 16] Outputs and outcomes [FI 17 - 18]

Direct - Property

Overview [PR 01] Pre-investment (selection) [PR 04 - 06] Selection, appointment and monitoring third-party property managers [PR 07] Post-investment (monitoring and active ownership) [PR 08 - 14] Overview [PR 08] Property monitoring and management [PR 09 - 10] Property developments and major renovations [PR 11] Occupier engagement [PR 12 - 13] Community engagement [PR 14] Outputs and outcomes [PR 15 - 16]

Confidence building measures

Confidence building measures [CM1 01 - 07]

Export Public Responses

You are in Direct - Listed Equity Active Ownership » (Proxy) voting and shareholder resolutions

(Proxy) voting and shareholder resolutions

LEA 12. Typical approach to (proxy) voting decisions

12.1. Indicate how you typically make your (proxy) voting decisions.

Approach

We use our own research or voting team and make voting decisions without the use of service providers.

Based on

our own voting policy

our clients' requests or policies

other, explain

We hire service provider(s) who make voting recommendations and/or provide research that we use to guide our voting decisions.

We hire service provider(s) who make voting decisions on our behalf, except for some pre-defined scenarios where we review and make voting decisions.

We hire service provider(s) who make voting decisions on our behalf.

12.2. Provide an overview of how you ensure your voting policy is adhered to, giving details of your approach when exceptions to the policy are made.

AP3 do all the voting itself and make (for the foreign companies with the assistance of an external service provider). All voting decisions are taken in-house.

12.3. Additional information.[Optional]

AP3 vote for the the major part of our Swedish equity, 70 companies 2018 and for almost 800 of our foreign holdings. For the non Swedish holdings AP3 uses a service provider and its electronic voting platform. AP3 use a service provider that make recommendations on how to vote but AP3 always makes it own decision how to vote independently of the service provider.

We support many, but not all, ESG resolutions. We file resolutions occasionally. We engage with Swedish companies' Board of Directors and nominating committees prior to AGMs to discuss our view on for ex remuneration, capital structure and directors. AP3 participate in a limited number of nominating committees. When our holdings is big enough to qualify and when we are invited to participate. The Swedish system of shareholder-appointed nominating committees is unique internationally. In most other countries, the nominating committee is a sub-committee of the board. Nominating committees are a good place to influence governance because they nominate board members. Nominating committees in Sweden are usually composed of representatives of the three to five largest shareholders. We publish an annual Stewardship Report about which focus areas we have worked with, how and why we have voted in a certain way.

LEA 13. Percentage of voting recommendations reviewed (Not Applicable)

LEA 14. Securities lending programme (Private)

LEA 15. Informing companies of the rationale of abstaining/voting against management

15.1. Indicate the proportion of votes where you or the service providers acting on your behalf have raised concerns with companies ahead of voting.

100%

99-75%

74-50%

49-25%

24-1%

Neither we nor our service provider(s) raise concerns with companies ahead of voting

15.2. Indicate the reasons for raising your concerns with these companies ahead of voting.

Vote(s) for selected markets

Vote(s) for selected sectors

Vote(s) relating to certain ESG issues

Vote(s) on companies exposed to controversy on specific ESG issues

Vote(s) for significant shareholdings

On request by clients

Other

15.3. Additional information. [Optional]

It is rather unusual that companies are informed ahead of voting.

LEA 16. Informing companies of the rationale of abstaining/voting against management

16.1. Indicate the proportion of votes participated in within the reporting year in which, you and/or the service provider(s) acting on your behalf, have communicated to companies the rationale for abstaining or voting against management recommendations.

100%

99-75%

74-50%

49-25%

24-1%

We do not communicate the rationale to companies

Not applicable because we and/or our service providers do not abstain or vote against management recommendations

16.2. Indicate the reasons your organisation would communicate to companies, the rationale for abstaining or voting against management recommendations.

Votes for selected markets

Votes for selected sectors

Votes relating to certain ESG issues

Votes on companies exposed to controversy on specific ESG issues

Votes for significant shareholdings

On request by clients

Other

16.3. In cases where your organisation does communicate the rationale for the abstention or the vote against management recommendations, indicate whether this rationale is made public.

Yes

16.4. Additional information. [Optional]

LEA 17. Percentage of (proxy) votes cast

17.1. For listed equities where you and/or your service provider have the mandate to issue (proxy) voting instructions, indicate the percentage of votes cast during the reporting year.

We do track or collect this information

Votes cast (to the nearest 1%)

50 %

Specify the basis on which this percentage is calculated

of the total number of ballot items on which you could have issued instructions

of the total number of company meetings at which you could have voted

of the total value of your listed equity holdings on which you could have voted

We do not track or collect this information

17.2. Explain your reason(s) for not voting on certain holdings

Shares were blocked

Notice, ballots or materials not received in time

Missed deadline

Geographical restrictions (non-home market)

Cost

Conflicts of interest

Holdings deemed too small

Administrative impediments (e.g., power of attorney requirements, ineligibility due to participation in share placement)

Client request

Other

17.3. Additional information. [Optional]

AP3 cast its votes itself for Swedish holdings.

For non Swedish holdings voting instructions are issued.

Note that AP3 has a very borad portfolio with around 3000 holdings. Tha majority of the non Swedish holdings are very small.

LEA 18. Proportion of ballot items that were for/against/abstentions

18.1. Indicate if you track the voting instructions that you and/or your service provider on your behalf have issued.

Yes, we track this information

18.2. Of the voting instructions that you and/or third parties on your behalf issued, indicate the proportion of ballot items that were:

Voting instructions	Breakdown as percentage of votes cast
For (supporting) management recommendations	73 %
Against (opposing) management recommendations	22 %
Abstentions	5 %

100%

No, we do not track this information

18.3. In cases where your organisation voted against management recommendations, indicate the percentage of companies you have engaged.

18.4. Additional information. [Optional]

It is important to reconnect with the companies to explain AP3s standpoint in various corporate governance issues. This is, part of the successfully used dialogue process within the AP Funds Council on Ethics.

AP3 contacted a group of about 50 foreign investees to provide feedback on our reasons for voting against certain AGM resolutions.

several core governance issues.
- AP3 has opposed proposals that mean that the board of directors consists only of men
- AP3 has voted against the same individual holding the positions of chair and CEO simultaneously
- AP3 voted against mandates for share offerings that were too extensive and against share-based incentive schemes that lacked clear and measurable performance criteria and would lead to unacceptable levels of dilution.

The companies concerned replied either in writing or verbally and our hope is that this dialogue will develop over time and lead to a greater understanding of our position on company managements and boards.

With regard to the Swedish companies there are ongoing dialogues where AP3 makes clear and explain its standpoint in different issues

see AP3 Stewardship Report 2018

https://www.ap3.se/wp-content/uploads/2018/10/%c3%84garstyrningsrapport-2018.pdf

LEA 19. Proportion of ballot items that were for/against/abstentions

19.1. Indicate whether your organisation has a formal escalation strategy following unsuccessful voting.

Yes

19.3. Additional information. [Optional]

LEA 20. Shareholder resolutions (Private)

LEA 21. Examples of (proxy) voting activities (Private)

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