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PRI reporting framework 2019

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Pre-investment (selection)

PR 04. Incorporating ESG issues when selecting investments

04.1. Indicate if your organisation typically incorporates ESG issues when selecting property investments.

04.2. Provide a description of your organisation's approach to incorporating ESG issues in property investment selection.

Property have many common risks (e.g. energy use, waste management)  but also specific risks depending for example on typ of property, geographical position.  The approach/process will have to cover both aspects. Resilience is a key word.

What are the ESG related risks and issues (general and specific) in the property company in question?

Approach requirements

  • A  process and analysis to make clear, understand and evaluate these risks ?
  • A process and analysis to make clear, understand and evaluate how the company handles these risks? what policies are there, How are they implemented? Status? How do they measure and report?

The outcome of this analysis and evaluation is incorporated in the investment decision.

04.3. Indicate which E, S and/or G issues are typically considered by your organisation in the property investment selection process, and list up to three examples per issue.

Environmental example 1, description

          The energy use per square meter, with  more efficienbt energy use and enbergy from renewable sources the CO2 emissions will decrease

Environmental example 2, description

          The use and reuse of materials when renovating etc, increased circularity.

Environmental example 3, description

          Targets for  lowering CO2 emissions, what preparedness is there if a flooding would occur, how likely is it?

Social example 1, description [OPTIONAL]

          Reduction of chemical substances in the materials used, improved opportunities for reuse and also wellbeing.

Social example 2, description [OPTIONAL]

          Buildings and indoor climate that promote peoples/staff/tenants wellbeing.

Social example 3, description [OPTIONAL]

          Green leases benefitting both parties.

Governance example 1, description

          Composition of the board, experience and knowledge.

Governance example 2, description

          Secure that anti corruption policies are used and followed and that if there is a breach measures will be taken and reported upon.

Governance example 3, description

          Secure ESG policies are also adhered to among suppliers, controll and reporting.

04.4. Additional information. [Optional]

During 2018 AP3 has not done any new property investments but the above is examples of what would be manadatory in a selection process.

PR 05. Types of ESG information considered in investment selection (Private)

PR 06. ESG issues impact in selection process

06.1. Indicate if ESG issues impacted your property investment selection process during the reporting year.

06.2. Indicate how ESG issues impacted your property investment deal structuring processes during the reporting year.

06.3. Additional information.

As per December 31 2018 AP3 had direct holdings in 5 Swedish real estate companies. AP3 is represented on the Board of all of these companies. The staff responsible for sustainability engage in dialogues with the companies regarding sustainability issues. Vasakronan, the largest in terms of value of our holdings, has a special focus on green buildings, green lease agreements and an overall sustainable approach to the business. Vasakronan issues green bonds and revised their Green Bond framework during 2018 to become a Green Finance Framework to make possible the use of other debt instruments to finance  eligible green assets

The 2018 GRESB results reveal that Vasakronan is one of the most sustainable property companies in the world and the company has also been recognized as the European leader in its sector. Vasakronan is ranked ninth in the world, when looking at all property companies. However, among companies with a primary focus on office space, Vasakronan holds first place in Europe and, accordingly, is also ranked number one in Sweden.

The other 4, Hemsö, Trophi, Regio and Trenum (JV with Balder) all address sustainability in their business and acknowledge the value of a continuous work on environmental issues but also social issues.  Hemsö has issued a green bond with a small social component. Hemsö also issue Sustainability Bond and has a specific framework for these bonds.