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AP3

PRI reporting framework 2019

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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

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

AP3´s core principles of engagement, action and change mirror those of the Swedish government; democracy, the equal worth of all individuals, the right to human freedom and dignity, and sustainable development.

AP3 believes that companies which are well run offer higher returns and lower risk to investors over time. It is important to be a responsible investor that treats environmental and social governance as an integral part of the investment strategy. AP3 has a holistic view on sustainability,a sustainability-oriented philosophy runs through the entire organisation.

AP3 is a universal owner, with a portfolio of around 3000 companies end 2018. This means that the fund is exposed to the world capital markets and external factors beyond immediate control. These factors may imply risks or opportunities for the fund´s asset management and ablitity to meet its targets.

Active engagement and dialogue are the main alternatives. The aim is always to drive positive change through active engagement. Portfolio exclusion is seen as a last resort. The fund does both positive and negative screening/selection.

AP3 overall sustainability strategy have three parts:

1.Diversification of economic risk via a diversified portfolio

2.Limitation of risk via engagement and dialogue

3.Screening to explore risks and opportunities.(limited exclusions) 

 

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]

see above.

The type of investment has an impact of the actions that can be taken. External mandates are often Funds and AP3 has not the right or possibility to decide on the holdings. In those cases we initiate a dialogue to create an understanding of our view and also to understand the managers approach.

 

01.6. Additional information [Optional].

          
        
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SG 01 CC. Climate risk (Private)


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

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

URL/Attachment

URL/Attachment

URL/Attachment

02.3. Additional information [Optional].

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.
 

Process
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.

4. Dialogue 
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)

 

 

http://www.ap3.se/wp-content/uploads/2017/11/AP3GlobalVoting_2016-2017-1.pdf

http:http://www.ap3.se/en/sustainability/viktiga-overenskommelser/

https://www.ap3.se/wp-content/uploads/2018/10/Ägarstyrningsrapport-2018.pdf

http://etikradet.se/rapporter/?lang=en

Also see the Annual Report for 2018, 

http://www.ap3.se

 

 


SG 03. Conflicts of interest

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

03.3. Additional information. [Optional]

There is no specific policy written with regard to potential conflicts of interest. However in the Steward Policy the following writing is included

"In certain circumstances, the Fund's stewardship role may conflict with its role as an asset manager, for instance where there is a risk that AP3 may become privy to insider information. This may limit the Fund's ability to trade a specific share, and strict procedures are in place to deal with such eventualities."

The legislation mandates AP3 to take environmental and ethical considerations into account in the investment operations, without compromising the overriding objective to achieve high return at a low risk.

Most investments, also ESG investments have both positive and potentially negative effects, depending among other things on the time horizon included in the analysis. The investment horizon  and evaluation of investments is a general dilemma.

 


SG 04. Identifying incidents occurring within portfolios (Private)


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