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APG Asset Management

PRI reporting framework 2020

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You are in Strategy and Governance » Asset class implementation not reported in other modules

Asset class implementation not reported in other modules

SG 16. ESG issues for internally managed assets not reported in framework

Describe how you address ESG issues for internally managed assets for which a specific PRI asset class module has yet to be developed or for which you are not required to report because your assets are below the minimum threshold.

Asset Class

Describe what processes are in place and the outputs or outcomes achieved

Commodities

In the internal commodities portfolio, investments are made in listed futures. The Commodities team has reached out to peers to discuss ESG integration in relation to commodity futures. The goal of the working group is to develop a framework, supported or sponsored by the UNPRI, by which ESG factors can be integrated into the commodity derivatives investment process.

16.2. Additional information [Optional].


SG 17. ESG issues for externally managed assets not reported in framework

17.1. Describe how you address ESG issues for externally managed assets for which a specific PRI asset class module has yet to be developed or for which you are not required to report because your assets are below the minimum threshold.

Asset Class

Describe what processes are in place and the outputs or outcomes achieved

Commodities

In the Commodities portfolio, investments are made directly or indirectly via funds in unlisted companies with operations in the fields of forestry, agriculture, mining, and oil and gas exploration and production. Our dedicated external manager, APG, has a set of internal ESG guidelines for natural resource investments which include asset-specific due diligence questions. It sets high demands on the ESG performance of these companies as well the supervision of that performance by the funds in which we invest. For example, there is a requirement for all the funds investing in mining and oil and gas production in emerging markets to agree contractually to adhere to working procedures in accordance with internationally accepted guidelines. Specifically, this concerns the guidance associated with the IFC Performance Standards. Each investment in this portfolio is dependent on approval by APG's GRIG Team.

Hedge funds - DDQ (Fund of Hedge Funds)

Select whether you use the PRI Hedge Fund DDQ

Fund of hedge funds

The Hedge Fund industry employs a broad range of strategies (e.g. global macro, quantitative equities, relative value, specialty finance, equities long/short etc.) and therefore APG takes a tailored approach per strategy. All Hedge Fund mandates that are granted to external managers need a mandatory signoff from APG’s GRIG team. As part of this signoff, conditions on ESG are agreed and included in the legal documentation. The exact conditions are dependent on the type and nature of the strategy and can include, for example, the implementation of an RI policy, the adoption of ESG reporting requirements, and adherence to the Exclusion Policy. The progress of the strategy with respect to ESG integration is monitored. This process is governed by the Responsible Investment Implementation Guidelines for Hedge Fund investments. 

Forestry

We invest in Forestry funds via our Commodities portfolio. In addition to all the standard ESG requirements for all APG investments in the commodities asset class, we require managers investing in timber assets to operate in accordance with a sustainable forestry certification scheme (such as the FSC or equivalent). If not in place such certification needs to be sought in order for us to invest. Sustainable forestry certification schemes usually include requirements regarding greenhouse gas emissions, harvesting methods, genetically modified organisms, maintaining soil fertility and the use of agricultural chemicals.

Farmland

We invest in Farmland via our Commodities portfolio. Therefore, each investment in this portfolio is dependent on approval by the GRIG team. The portfolio managers furthermore regularly visit investment projects in the commodities portfolio. These visits serve to ensure that, among other things, the ESG performance of the investments can be properly assessed. In addition, in the field of agriculture, we not only review and judge our investments on ESG factors, but we also make a contribution to the development of the standards for investing in agricultural land. Working together with other institutional investors we have been instrumental in drawing up the Principles for Responsible Investment in Farmland, with the aim of improving sustainability, transparency and accountability in this area. All of our farmland investments adhere to the Responsible Farmland Principles. In addition, all of our farmland managers have signed a zero-conversion policy.

Inclusive finance

We track which of our investments in the inclusive finance space are managed by PIIF signatories. Depending on the type of investment, APG may include specific ESG-related provisions in the legal documentation concerning an individual investment. We require our inclusive finance managers to provide information on the ESG performance of their portfolios on a regular basis. For this purpose, a combination of data based on certain industry standards (e.g. IFC Performance Standards) and high level portfolio company data is provided to us.

17.2. Additional information.

The basic manager selection, appointment and/or monitoring process is the same for all of the above asset classes and is described in the overview section at the beginning of this module.

APG has separate Responsible Investment Implementation Guidelines for Infrastructure, Hedge Funds, Private Equity and Commodities (which includes Forestry and Farmland). In addition, it has developed guidance on Unconventional Gas Operations for external managers. We expect Sustainable Development Investments to be reported to us from all asset classes. With the newly developed Sustainable Development Investments (SDIs) we continue to build on this expectation.


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