AP3s policy on screening/analysis and exclusions, engagement and voting and also the overall principles for integration of sustainability in the investment processes are partly internal documents. The principles for exclusion, exclusion is a last resort, can be read about in the Annual Reports of the Ethical Council of the AP Funds
In short the process is as follows:
Information comes from a number of different sources (both non-Swedish and Swedish companies).
To monitor the occurrence of incidents, the AP Funds and Council use a large number of sources, including the media, trade association and UN bodies. Nevertheless, there is always the risk that individual incidents will be overlooked. Any information that comes to the attention of the Council about such an incident or violation is incorporated into its systematic process. The Council on Ethics pursues both preventive/proactive and reactive dialogues.
1. Review of the Corporate holdings of the AP-Funds twice a year. GES now Sustainalytics on behalf of the Council/the AP-Funds
The Council on Ethics receives systematic business intelligence covering approximately 4,000 companies. Among the sources are media, other investors, trade associations, UN bodies and nongovernmental organizations.
2. In-depth examination by The Council on Ethics
Review and overall analysis of companies, industries, problem areas and investor initiatives.
Around 100–200 companies every year are reviewed further for suspected implications following violation of international conventions.
3. Choice of companies and dialogue objectives
The Council chooses companies and preventive/proactive projects. The choice of focus areas should not be interpreted as a signal of importance but rather a way to use the resources of the Council on Ethics to gain the most benefit.
The Council has direct dialogues with companies whose violations of international conventions are evident and well documented. In addition the Council collaborates with service providers to dialogue with companies in response to alleged violations of international conventions.
The dialogue includes in depth corporate analyses and possible comparisons with minimum requirements and best practice for the industry in question. in order to raise additional pressure there are collaboration with other investors, submittal of proposals and voting at AGMs
5a. The objective of the dialogue has been achieved, The dialogue conclude. monitoring for the following 5 years.
5b. The objective of the dialogue has not been achieved, continued dialogue. If there are no success/results after four years, the Council recommends the Boards of the AP-Funds to divest . Each Fund makes its own decision.
The Council will review once a year to see whether the situation has changed and the company is operating in compliance with internationale conventions.
Regarding voting, AP3 do disclose how the fund has voted in different companies.
Time horizon, ESG incorporation approaches etc. are made public in our reporting, Annual reports and Sustainability reports available at our website. www.ap3.se
The Sustainability team is part of Portfolio strategy together with Asset Allocation and Quant.
The ESG incorporation approaches
- Active ownership, engagement, dialogue and voting
- Active selection both positive and negative (limited scope as divestments seldom solves the real problem)
Also see the Annual Report for 2018,