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AP4

PRI reporting framework 2020

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投資ポリシー

SG 01. RI policy and coverage

この指標には新しい設問が追加されています。事前に入力されている回答を精査してください。

01.1. 責任投資アプローチをカバーする投資ポリシーを策定しているかどうかを明示してください。

01.2. ポリシーの構成要素/種類と対象範囲を示してください。

当てはまるものをすべて選択してください。
ポリシーの構成要素/種類
AUMの対象範囲

01.3. 投資ポリシーが以下のどの項目をカバーしているか明示して下さい:

01.4. 組織の投資原則および全体の投資戦略、受託者義務(または同等のもの)の解釈、ならびに、ESGファクターおよび実体経済の影響をどのように考慮に入れているかについて説明してください。

AP4’s mission is to contribute to the financial security for current and future pensioners in Sweden. We manage part of the national pension system’s buffer capital with the aim to maximize long term returns and to provide liquidity to the pension system to ensure payment of pensions when there is a net deficit in the system. AP4 has three essential characteristics that distinguish it and to some degree set it apart from other investors. These characteristics are 1) the ability to invest long term, 2) a large degree of freedom to formulate strategies, portfolio structures and choose investments and 3) the right size  to allow for economies of scale that enable cost efficiency without restricting investment opportunities. 

Based on the three characteristics, AP4 har formulated six investment beliefs of which one relates to sustainability:

"Integrating sustainability aspects in asset management contributes over time to better management of risks and opportunities, and thereby to returns. AP4 uses active corporate governance to secure asset values."

Our investment philosophy is further described on pages 16-17 of Annual Report 2017: http://www.ap4.se/globalassets/dokument/rapportarkiv/2017/ar-17/eng/ap4_annual_report_2017.pdf

01.5. 責任投資アプローチをカバーする組織の投資ポリシーの重要な構成要素、バリエーション、例外事項を簡潔に説明してください。[任意]

AP4 works with two focus areas in its sustainability work – Climate & Environment and Corporate Governance. These are in line with the Fund’s mission, framework and core values. They have been chosen because they have significant financial impact on AP4’s investments and affect its opportunities to generate favourable returns over time. They are also relevant and possible to implement in the portfolio. A first joint step in integrating sustainability in portfolio management consists of the values-based decisions on which assets AP4 chooses not to invest in. In this assessment AP4 makes an interpretation of the AP Funds Act’s requirement for exemplary management and the Swedish state’s core values concretised through the international conventions that Sweden has ratified and the international agreements that Sweden has backed. AP4 integrates sustainability in the investment processes based on the specific conditions that apply for the respective asset classes and how management of these asset classes is conducted. The conditions for integration of sustainability vary, depending on whether AP4 owns stocks or fixed income instruments, whether the investments are made in Sweden or globally, whether the asset management is conducted internally or by external asset managers, and whether the investments are in listed or unlisted assets.

01.6. 補足情報 [任意]

          Sustainability is a so-called investment belief for AP4. The pension system’s needs and the investment rules that govern the AP Funds create unique opportunities to act long-term in the asset management. By integrating sustainability aspects in asset management, sustainability risks can be reduced and sustainability opportunities can be taken advantage of. This enables a better risk-adjusted return over time. Ahead of 2019, new sustainability goals were added to the AP Funds Act, which stipulate that asset management shall be conducted in an exemplary way through responsible investments and responsible ownership. In the asset management activities, particular importance shall be attached to how sustainability development can be promoted without compromising on the overarching objective to generate a long-term high return. AP4 welcomes this higher level of ambition regarding sustainability and believes that an integrated sustainability perspective in investments is a precondition for successful and long-term asset management. AP4 works with two focus areas in its sustainability work – Climate & Environment and Corporate Governance. These are in line with the Fund’s mission, framework and core values. They have been chosen because they have significant financial impact on AP4’s investments and affect its opportunities to generate favourable returns over time. They are also relevant and possible to implement in the portfolio. A first joint step in integrating sustainability in portfolio management consists of the values-based decisions on which assets AP4 chooses not to invest in. In this assessment AP4 makes an interpretation of the AP Funds Act’s requirement for exemplary management and the Swedish state’s core values concretised through the international conventions that Sweden has ratified and the international agreements that Sweden has backed. AP4 integrates sustainability in the investment processes based on the specific conditions that apply for the respective asset classes and how management of these asset classes is conducted. The conditions for integration of sustainability vary, depending on whether AP4 owns stocks or fixed income instruments, whether the investments are made in Sweden or globally, whether the asset management is conducted internally or by external asset managers, and whether the investments are in listed or unlisted assets. Please see annual report page 25 for details of integration of sustainability per asset class.
        

SG 01 CC. Climate risk

01.6 CC. 投資期間において特定され、組織の投資戦略・商品に組み込まれている気候関連のリスクおよび機会について記述してください。

特定された気候関連の移行リスク・物理的リスクおよび機会、ならびに投資戦略・商品にそれらがどのように組み込まれているかを説明してください。(500 語以内で自由に記載)

AP4 conducted a climate scenario analysis in 2018 which was further developed in 2019, when the analysis was integrated in the medium- term scenarios for the economic macro analysis, which is then used as a basis for decisions on overarching portfolio allocation, among other things. The starting premise for AP4’s climate scenario analysis is achievement of the Paris Agreement’s goals, which entails a comparatively rapid and proactive climate transition. This transition can take place in several different ways. AP4’s overarching scenario analysis evaluates the transition’s potential impact on supply and demand, and by extension, also on anticipated growth and inflation.

In the base scenario, the climate transition is expected to accelerate over the coming ten years through a gradual sharpening of climate policies. In part this will entail more and stricter climate laws and in part a higher and more widespread CO2 price along with new technology that promotes the transition.

In the alternative scenarios, a faster and slower climate transition is modelled as well as the degree of political and technological drivers. An important conclusion is that a slower initial transition should not be interpreted to mean that it will not take place, but rather that it will be more intense once it takes place. Fossil assets and the value chains that deliver into fossil energy production will be affected first and foremost. The transition will also entail extensive shifts in value within all sectors that are large energy consumers through production processes, in transportation, steel and metal production, agriculture and food, and construction and real estate. AP4 believes that the climate transition on the whole constitutes an asymmetric force that will have a varying impact between and within various sectors. Some existing companies within a given sector will be negatively affected while others may be part of the solution at the same time that new companies and technologies will take market shares. AP4 is therefore working actively with a combination of quantitative and fundamental analyses at the portfolio and sector levels to identify potential winners and losers.

AP4’s conclusion is that the risks of being late in the transition are assumed to outweigh the risks of being too early. The upside for resource-intensive assets is limited by the emergence of climate-friendlier alternatives – which are gradually winning support through technology, policies and reputation – at the same time that the risk in these investments is great, as assets could become stranded due to regulatory and technical risks combined with market and reputation risks. Short-term market movements, such as changes in oil prices, can hit in both directions, but over time the market is expected to move in this direction given the strong focus on sustainability.

AP4 has reported oin line with the TCFD framework since 2017. For 2017, AP4 published a separate TCFD Climate Report. For the years 2018 and 2019, the TCFD climate reporting has been integrated into the Annual Report in accordance with TCFD recommendations.

01.7 CC. 組織はそれら気候リスクの可能性および影響を評価しましたか?

これらのリスクおよび機会に関連する時間の尺度について説明してください。(500語以内)

The climate scenario analysis as presented above is done with a 5-15 year time perspective that corresponds to our macro economic modelling and portfolio construction. This work is conducted yearly and results in a benchmark portfolio set by the board (the Dynamic Normal Portfolio - DNP). Every three years, AP4 conducts an ALM analysis with a 40 year time perspective that will incorporate demopgraphic as well as long-term asset return assuptions. In this ALM analysis, which will be updated in 2020, AP4 will look to address climate change risk and opportunities from a longer time perspective where physical risks will be more relevant. These risks are deemed to be important while at the same time very difficult to assess.

01.8 CC. 組織はTCFDを公式に支持しますか?

01.9 CC. 重大な気候関連リスクおよび機会を特定・管理する組織全体の戦略がありますか?

説明してください。

Climate & Environment is a focus area for AP4’s asset management. For a long-term investor such as AP4, climate change is one of the largest systemic risks. Reducing climate impact is a prerequisite for stable economic development and thereby for our opportunities to perform our mission over time. AP4 works actively on reducing climate risk in the portfolio. AP4 makes sustainability investments that contribute to and benefit from the ongoing climate transition, by reducing climate risk exposure across the portfolio, by engaging our portfolio companies in an active dialogue to promote transparent reporting, and by setting goals in line with the Paris Agreement, and by transparent reporting of climate-related risks and opportunities. AP4 therefore supports TCFD and has reported in accordance with the TCFD since the framework was established in 2017.

AP4 conducted its first climate scenario analysis in 2018, and summarized results of the analysis were presented in the 2018 Annual Report. Work with the climate scenario analysis was further developed in 2019, and the analysis was integrated in the medium-term scenarios for the economic macro analysis, which is then used as a basis for decisions on overarching portfolio allocation, among other things. Based on the climate scenario analysis, AP4 has identified a number of themes that are essential for the climate transition. These are considered to be investable and have impact on the portfolio today. Among these themes are the energy shift including mobility, resource efficiency and renewable energy.AP4 searches for, evaluates and makes thematic, proactive investments in specific sustainability areas. Examples of such investments are green bonds, alternative investment funds with a pronounced sustainability focus, and directly owned companies with a distinct sustainability focus as part of their business strategies, such as in real estate and infrastructure.

1.10 CC. TCFD開示を発表するために組織が使用する文書/通信を示してください。


SG 02. Publicly available RI policy or guidance documents

この指標には新しい設問が追加されています。事前に入力されている回答を精査してください。

02.1. 一般に入手できる組織の投資ポリシー文書を記載してください。その文書のURLを記入し、該当文書を添付してください。

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02.2. 一般に入手できる組織の投資ポリシー文書を記載してください。その文書のURLを記入し、該当文書を添付してください。

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02.3. 補足情報 [任意]

On 1 January 2019 new rules went into effect for the AP Funds concerning sustainable asset management. The new rules convey a higher level of ambition regarding sustainability, whereby the wording of the AP Funds Act was changed to stipulate that asset management shall be conducted in an exemplary manner through responsible investments and responsible ownership. Based on internal assessments or recommendations from the Council on Ethics of the AP Funds, AP4’s CEO decides on which assets AP4 will not invest in. AP4 does not invest in:

Nuclear weapons
Nuclear weapons are weapons of mass destruction, and their use would bear a heavy toll on civilians. Corresponding biological and chemical weapons are addressed and banned by UN conventions. Nuclear weapons are covered by the Non-Proliferation Treaty, which permits five states to have nuclear weapons. However, under the treaty these states have committed themselves to reducing and, over the long term, eliminating their own nuclear weapons. Currently, modernisations and upgrades are being made to nuclear weapons programmes. AP4 is of the opinion that these modernisations and upgrades go against the spirit of the Non-Proliferation Treaty. AP4 therefore decided in 2018 to not invest in companies involved in this area.

Tobacco and cannabis
In 2016 AP4 decided to not invest in tobacco companies, based on the determination that mounting regulations would negatively impact tobacco companies’ future stock market valuations. In addition, AP4 believes that an exemplary interpretation of the WHO Framework Convention on Tobacco Control, which seeks to steadily and sharply reduce tobacco consumption, supports AP4’s decision to not have ownership in tobacco companies. The Council on Ethics of the AP Funds has recommended that the AP Funds exclude companies active in cannabis as a pleasure drug or for religious purposes based on the UN’s conventions on narcotic preparations. Companies that produce cannabis for medical or scientific purposes are not covered by the exclusion. This decision was made in 2018. 

Thermal coal and oil sand
AP4 does not invest in companies for which thermal coal or oil sand account for more than 20% of sales. Thermal coal and oil sand are fossil energy sources with high CO2 intensity per energy unit, and AP4 believes that these must be phased out in a global transition to a low-fossil society in line with the UN’s Climate Convention and the Paris Agreement. AP4 therefore divested its holdings in these companies in 2018. On top of this, AP4 applies low-carbon strategies for global equities, entailing the AP4 is reducing its exposure to the companies in each sector that have high CO2 intensity or fossil fuel reserves.

Cluster munitions and mines
The Mine Ban Treaty and the Convention on Cluster Munitions stipulate that states that have signed and ratified these treaties shall cease to produce, conduct trade in and use anti-personnel mines and cluster bombs. The Council on Ethics of the AP Funds has recommended that the four AP Funds divest companies that manufacture anti-personnel mines or cluster bombs, and AP4 therefore has not had ownership in any such companies since 2008.

Company-specific exclusions
AP4 has been collaborating with AP1-AP3 through the Council on Ethics of the AP Funds since 2007. In the event of confirmed violations of international conventions, the Council on Ethics may choose to engage individual companies in a dialogue to bring about a change. If such a dialogue proves to be unfruitful, the Council on Ethics recommends that the AP Funds exclude such companies from their investment portfolios. AP4 has chosen to exclude companies based on recommendations from the Council on Ethics due to violations of conventions on health and safety, negative environmental impact, labour law, corruption and operations in occupied areas.


SG 03. Conflicts of interest

03.1. 組織として、投資プロセスにおける潜在的な利益相反を管理するポリシーを策定しているかどうかについて明示して下さい。

03.2. 投資プロセスにおける潜在的な利益相反を管理するポリシーについて説明してください。

AP4 has ethical policies and guidelines that adress potential conflicts of interest between AP4 and its employees.

03.3. 補足情報 [任意]


SG 04. Identifying incidents occurring within portfolios

04.1. 組織では、投資先企業において発生するインシデントの特定と管理を行うプロセスを設定しているかどうか明示して下さい。

04.2. インシデントを管理するプロセスを説明して下さい

The AP Funds work together in the Council on Ethics in reactive and pro-active dialogues and projecets with companies to address and prevent incidents.

The Council on Ethics’ aim is to influence companies to address environmental and social issues through active dialogue with management, often together with other investors. Improved sustainability in companies’ business will give better returns in the long-term. The Council’s experience to date shows that dialogue is an effective tool that produces results. Part of the AP Funds assets are invested globally in diversified equity portfolios comprising of up to 3 500 companies. To focus dialogues, both reactive and proactive, on the companies where they will have the greatest benefit, the Council applies a systematic working process. This process also helps ensure an even spread across various sectors, geographies and sustainability issues.

The Council on Ethics’ working process manages a steady flow of dialogues, which evolves in different directions over time.

Review of the AP Funds’ holdings: The Council’s working process includes approximately 3 500 companies. Among the sources are media, investors, interest groups, stakeholders, trade organisations, public authorities, judiciary, UN bodies and many other sources to monitor corporate incidents. Some incidents are inevitably overlooked. The Council incorporates all information that it receives about such incidents into its systematic working process.

In depth examination: Within each of its four focus areas – climate, environment, human rights and business ethics - the Council reviews and analyses companies, industries, problem areas and investor initiatives. Between 100 and 300 company incidents each year are examined more closely for possible implication in violation of international conventions. The Council, other investors and various service providers are all involved in the examination.

Choosing companies and setting objectives: The choice of proactive focus areas as well as dialogues does not represent a statement that one is more important than another but is simply a deliberate strategy to earmark the resources of the Council in ways that are most likely to yield the greatest benefits. The Council carries on direct dialogues with 40–60 selected companies whose
violations of international conventions are palpable and well documented. The Council also collaborate with various investors and service providers to dialogue with companies in response to alleged
violations.

How a dialogue proceeds: In-depth corporate analyses and possible comparisons with minimum requirements and best practice for the industry in question. Collaboration with other investors, submission of proposals and voting at general meetings, and other forms of pressure.

Objective achieved: The dialogue is concluded.

Objective not achieved: Dialogue is continued if deemd constructive. A dialogue, where a violation of a convention is verified, should, should last a maximum of four years unless the dialogue is constructive or achieves its objectives. If not, the Council recommends the AP Funds to exclude the company. Each AP Fund makes its own exclusion decision. Companies that the Council has recommended the AP Funds to exclude. The Council investigates annually whether the situation has changed, and the company has begun to comply with international conventions. For more information www.etikradet.se.


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