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AP4

PRI reporting framework 2020

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Objectives and strategies

SG 05. RI goals and objectives

05.1. Indicate if and how frequently your organisation sets and reviews objectives for its responsible investment activities.

05.2. Additional information. [Optional]

AP4 sets targets and report on those in tha annual reports. Focus areas are Climate & Environment and Corporate Governance.


SG 06. Main goals/objectives this year

06.1. List the main responsible investment objectives that your organisation set for the reporting year.

Responsible investment processes

Key performance indicator

          The Fund have internal and external training sessions with regards to ESG in the form of a seminar series.
        

Progress achieved

The investment professionals have attended various training sessions related to investment and ESG. The Fund also have internal courses for all employees at the Fund in these areas. Seminars during 2019 were: 

An update on climate change research (Jan-19)
Impact investing within hedge funds (Mar-19)
Global voting (Apr-19)
Climate change and economic control models (Oct-19)
Climate scenario analysis (Dec-19)

Key performance indicator

          Conduct workshops to address human rights risks and the Ruggie Principles together with Shift
        

Progress achieved

Have been conducted

Key performance indicator

          Inform all employees about the Fund's work and progress on ESG issues.
        

Progress achieved

The information is a part of the weekly information meetings and there are also speciell information presentations and seminars regarding ESG.

 

Key performance indicator

          Actively contribute to ESG work together with our investors internationally, through for example CimateAction100+
Dialogues - reactive and pro-active - through the Council on Ethics
        

Progress achieved

AP4 is participating in dialogues with three companies, Daimler, Engie and Volkswagen. Daimler and Volkswagen are two of the companies in the initiative that have set targets to be climate-neutral by 2039 and 2050, respectively.

The AP Funds' Concil on Ethics publish every year a public report about its work (reactive as well as pro-active).

Key performance indicator

          AP4 has a structured process in place to identify, assess and implement sustainability theme investments and for evaluation ESG in investment processes.
        

Progress achieved

Increased low-carbon strategies’ impact on the portfolio, which reduced CO2 intensity by 28% in 2019, to where it is now 48% lower than for a broad global equity index. During 2019 AP4 further developed its low-carbon strategies for global equities. In addition to the portfolio companies’ own direct CO2 emissions, the strategies now also take into account direct emissions from the companies’ subcontractors. By also taking into account subcontractors’ CO2 emissions, the analysis of climate risk in the value chain has been broadened. This is expected to lead to better company selection in the low-carbon strategies. Based on the thematic analysis, AP4 developed broader equity strategies with focus on resource efficiency related to water use and waste. Based on the thematic analysis, developed and implemented an equity strategy in line with the transition from internal combustion engines to electric vehicles. Integrated sustainability criteria and reduced exposure to CO2 emissions in external equity mandates in emerging markets.

          Contribute to the climate transition to a sustainable society
        

Key performance indicator

          Lowered the portfolio’s CO2 emissions by 34% since 2013. Carbon dioxide intensity approximately 48% lower than for a broad global equities index.
        

Progress achieved

Lowered the portfolio’s CO2 emissions by 34% since 2013. Carbon dioxide intensity approximately 48% lower than for a broad global equities index.

other description (2)

          Advocate for greater diversity among board members, especially in terms of gender balance
        

Key performance indicator

          At least one woman should be included as a final candidate in nominations for new board members, ensure 40% women on boards by 2020.
        

Progress achieved

On the nomination committees for 2019 AGMs on which AP4 participated, final candidates of both genders existed in 76% of the cases, and 44% of newly elected directors were women.

Financial performance of investments

Key performance indicator

          AP4 has a structured process in place to identify, assess and implement sustainability theme investments that should contribute to a higher risk-adjusted performance.
        

Progress achieved

Increased low-carbon strategies’ impact on the portfolio, which reduced CO2 intensity by 28% in 2019, to where it is now 48% lower than for a broad global equity index. During 2019 AP4 further developed its low-carbon strategies for global equities. In addition to the portfolio companies’ own direct CO2 emissions, the strategies now also take into account direct emissions from the companies’ subcontractors. By also taking into account subcontractors’ CO2 emissions, the analysis of climate risk in the value chain has been broadened. This is expected to lead to better company selection in the low-carbon strategies. Based on the thematic analysis, AP4 developed broader equity strategies with focus on resource efficiency related to water use and waste. Based on the thematic analysis, developed and implemented an equity strategy in line with the transition from internal combustion engines to electric vehicles. Integrated sustainability criteria and reduced exposure to CO2 emissions in external equity mandates in emerging markets. Started reporting on the realtive performace of sustainability factors in the annual report of 2019, please see page 24.

ESG characteristics of investments

Key performance indicator

          Please see above
        

Progress achieved

AP4 does not invest in nuclear arms companies, tobacco or canabis companies, we underweigh carbon intensive companies (e.g. thermal coal and oil sand), we do not invest in cluster weapons and we make specific divestments based on violations of international conventions.

Key performance indicator

          AP4 supports the Paris Agreement and the more ambitious Swedish environmental objective to reach net GHG emissions of near zero by 2045.
        

Progress achieved

Since AP4 began measuring CO2 emissions for the listed equity portfolio in 2013, the portfolio’s CO2 emissions have decreased by 34%. Carbon dioxide intensity (CO2 emissions in relation to the portfolio companies’ sales) has decreased by 39% since measurements began in 2015. AP4’s carbon dioxide intensity is today approximately 48% lower than for a broad global equity index.

Other activities

Key performance indicator

          Assess on an annual basis RI organisations and specific initiatives.
        

Progress achieved

Paticipiate in initiatives that are in line with the fund's investment philosophy, for example TCFD, Climate Action 100+, TPI, and publicly support different ownership codes etc.

Initiatives during 2019 were among others work with the Investor Mining and Tailings Safety Initiative by the Council on Ethics of the AP Funds, PRI Cobolt Statement, CA100+ two out of three successful dialogues, Christchurch initaitive led by NZ Super, TCFD support letter to 80 Swedish corporates together with the Council on Ethics of the AP Funds, letter to 47 US companies regarding climate lobbying together with a large  group of international investors, supported the Women's Empowerment Principles, Investor Agenda letter to EU, letter to the SEC regarding proxy voting proposal.

Key performance indicator

          As part of due diligence of external managers require ESG policy documentation and promoting managers to support PRI and others.
        

Progress achieved

This is a requirement before we fund an external manager.

06.2. Additional information.


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