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AP3

PRI reporting framework 2019

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Engagement

LEA 02. Reasoning for interaction on ESG issues

Indicate the method of engagement, giving reasons for the interaction.

Type of engagement

Reason for interaction

Individual / Internal staff engagements
Collaborative engagements
Service provider engagements

02.2. Indicate whether your organisation plays a role in the engagement process that your service provider conducts.

02.3. Indicate the role(s) you play in engagements that your service provider conducts on your behalf.

02.4. Additional information. [Optional]

The interaction is carried out by AP3 staff, especially the Sustainability team, increasingly together with our portfolio managers, and often together with other institutional owners. The dialogues with Swedish companies are handled by AP3 itself.  The fund has bigger holdings in Sweden and belong to the group of institutional owners companies have dialogues with including sustainability. With this comes the ability to have real impact and achieve change.

The main collaborative engagement vehicle is the Council on Ethics and the main service provider working with engagement, GES (Global Engagement Services)/ now Sustainalytics. Note that the engagement that the Council on Ethics does is based on the work both of the common service provider and the AP-Funds  themselves. The collaboration in the Council on Ethics aims to contribute to long term returns by exerting influence on companies and industries to pursue sustainable value creation.

See also the Annual  Report of the Council on Ethics http://etikradet.se/?lang=en

AP3 also participate in and support a number of initiatives taken by other asset owners and organsations.

During 2018 for example

  • ICGN Global Stewardship Principles
  • 2018 Global investor statement to governments on Climate Change
  • Climate Action 100+
  • Engagement on pay and renumeration in MNE

 


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 engagements.

Indicate the criteria used to identify and prioritise engagements for each type of engagement.
Type of engagement
Criteria used to identify/prioritise engagements
Individual / Internal engagements

Internal / Individual engagements

Collaborative engagements

Collaborative engagements

Service Provider engagements

Service Provider engagements

03.3. Additional information. [Optional]

Individual/internal engagements are mainly with Swedish companies where AP3 is a much bigger owner than in the absolute majority of non-Swedish holdings.

Participation in Collaborative and Service Provider engagements is done to have more impact and reach results and change. But also to leverage on the common knowledge and experience.

In sustainability related issues and corporate stewardship AP3 focus on areas where we believe we can achieve maximum impact and exert the greatest influence. AP3 generally enjoys greater scope for influencing Swedish companies compared to foreign enterprises due to the fact that our Swedish equity holdings are considerably higher in percentage terms. In collaboration with other institutional owners the ambition is to make an impact also on non-Swedish companies.

AP3 may also address both Swedish and international companies direct in letters sent to a chosen number of investee companies to make them aware of the importance of certain issues, as the climate and the approach to the SDGs.

2018 AP3 also was part of a reference group put together by The Swedish Agency for Growth Policy Analysis  in a project to address the impact of ESG and ESG ratings in the process of a greener/more sustainable  economy and financial  market.

AP3 is also active in the SISD network, Swedish investors for Sustainable Investments, initiated by SIDA.


LEA 04. Objectives for engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.
Indicate whether you define specific objectives for your organisation’s engagement activities.
Individual / Internal engagements
Collaborative engagements
Service provider engagements

04.2. Additional information. [Optional]

Specific objectives are set as well as primary method and aspired time frame.


LEA 05. Process for identifying and prioritising collaborative engagement

Indicate if you monitor and/or review engagement outcomes.
Individual / Internal engagements
Collaborative engagements
Service provider engagements
Indicate if you do any of the following to monitor and review the progress of engagement activities.
Individual / Internal staff engagements
Collaborative engagements
Service provider engagements

05.3. Additional information [Optional]

AP3s ambition is to have a proactive approach to sustainability. The Fund works to ensure that the management in investee companies identify and manage social and environmental risks so as to create shareholder value. Enterprises are urged to abide by the principles of the UN Global Compact and other guidelines for specific industries, such as the ICMM guidelines for mining and extractive companies. Primary approach is dialogue with companies as the belief is that this is the best way to exert influence and reach change. As a long-term investor, the fund is aware that change can take time and therefore monitor how companies respond to views and requirements until objectives are achieved. Through dialogue the fund aims to ensure that companies have knowledge and insight about the risks in their business, risk management systems and codes of conduct in place.

AP3's engagement activities are prioritized based on e.g.. the risks seen in Swedish companies or important corporate governance issues. The Fund maintain sustainability dialogues with companies with extensive production or procurement in countries with undemocratic regimes, about weak human rights, labour protection, child labour or environmental laws, emissions of CO2, and/or corruption risk, weak governance structures and routines.

There is a continuous monitoring/follow-up of the investee companies, what information/transparency there is around the issue and what information can be acquired from other relevant sources. Tracking is key in both creating pressure for change and as incentive.


LEA 06. Role in engagement process

06.1. Indicate whether your organisation has an escalation strategy when engagements are unsuccessful.

06.2. Indicate the escalation strategies used at your organisation following unsuccessful engagements.

06.3. Additional information. [Optional]

An esclated engagment process is followed and monitored as all other engagement processes.

An ongoing dialogue does not always benefit from becoming public. Part of a dialogue is mutual trust and confidence and sometimes some patience.


LEA 07. Share insights from engagements with internal/external managers

07.1. Indicate whether insights gained from your organisation's engagements are shared with investment decision-makers.

Type of engagement

Insights shared

Individual / Internal staff engagements

Collaborative engagements

Service provider engagements

07.2. Indicate the practices used to ensure information and insights collected through engagements are shared with investment decision-makers.

07.3. Indicate whether insights gained from your organisation’s engagements are shared with your clients/beneficiaries.

Type of engagement

Insights shared

Individual/Internal staff engagements

Collaborative engagements

Service provider engagements

07.4. Additional information. [Optional]

Sharing with  investment decision-makers is done in the internal Advisory Group on Sustainability (see earlier comments) and also underway as things happens of course. The participants are informed and discuss what measures has been taken or should be taken.  If the decision is an exclusion, always decided by the Board of AP3, then of course all managers, internal as well as exterrnal  are informed and changes are made in the portfolios (we also encourage the Funds we invest in to take measures on a volontary basis).

The sharing of insights gained from engagement with beneficiaries is done in the AP3 reporting.


LEA 08. Tracking number of engagements

08.1. Indicate if you track the number of your engagement activities.

Type of engagement
Tracking engagements

Individual / Internal staff engagements

Collaborative engagements

Service provider engagements

08.2. Additional information. [OPTIONAL]

Done by AP3 and the Council on Ethics and GES/Sustainalytics.


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