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APG Asset Management

PRI reporting framework 2020

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Engagement

LEA 02. Reasoning for interaction on ESG issues

Indicate the method of engagement, giving reasons for the interaction.

Type of engagement

Reason for interaction

Individual / Internal staff engagements
Collaborative engagements
Service provider engagements

02.4. Additional information. [Optional]

In addition to engagement with portfolio companies, we engage external service providers to improve their services and corporate practice. We do so by pro-actively contributing feedback on the quality of the services, data and policies of our service providers.


LEA 03. Process for identifying and prioritising engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.

03.1. Indicate whether your organisation has a formal process for identifying and prioritising engagements.

Indicate the criteria used to identify and prioritise engagements for each type of engagement.
Type of engagement
Criteria used to identify/prioritise engagements
Individual / Internal staff engagements

Individual / Internal staff engagements

Collaborative engagements

Collaborative engagements

specify

          Relative degree of alignment for pay and effective tax rate for tax engagements.
        

03.3. Additional information. [Optional]

Given the size of APG's equity portfolio universe, we need to consider optimal use of engagement resources, balancing the prospect of achieving successful engagement results from an investment (value creation) and RI policy perspective with other considerations such as market impact and clients' wishes. This requires us to be selective.

The nature of the concern and the gravity of the particular issue:

  • High priority concerns include: violations of the UN Global Compact principles, labour standards controversies, environmental harm, board and committee composition, audit concerns, remuneration concerns.
  • Concerns based on the results of an in-house assessment of companies' policies and practices (inclusion policy).
  • Isolated incidents versus repeated patterns: A one-off incident (for example an oil spill or labour unrest) does not necessarily require engagement. We examine the way management responds to such incidents, and the effectiveness of management systems and other fundamental considerations such as the corporate culture surrounding safety to ensure such an incident won't happen again in the future.
  • Engagements based on concerns related to priority topics and themes in certain sectors on specific client request.

 

Investment impact:

  • Business impact - the likelihood the ESG issue identified may or could materialize into a significant business detriment;
  • Investment relevance - likelihood the ESG issue could impact the share price in the short, medium or long term;
  • Portfolio relevance - a combination of our stake and the company's value in our portfolio;
  • The degree of leverage we believe we have (outlook for success);
  • Size of our stake (% of equity);
  • Relationship with the company;
  • Track record with the company;
  • Wider investor interest in the topic.


The assessment of whether or not to start or join a collaborative engagement is mostly defined on the basis of:

  • whether there are like-minded investors with whom we can collaborate,
  • whether the engagement is in line with our priorities,
  • whether the engagement targets form part of our portfolios, and
  • whether we perceive a group engagement to be the most effective approach in a given situation.

 


LEA 04. Objectives for engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.
Indicate whether you define specific objectives for your organisation’s engagement activities.
Individual / Internal staff engagements
Collaborative engagements

04.2. Additional information. [Optional]

We have developed an in-house centralized knowledge management system (KMS) database in which we track our engagement with companies as well as other relevant research, financial and ESG information. Both the investment teams and the Global Responsible Investment and Governance (GRIG) team have access to this database which ensures sharing of information. We also screen portfolios with respect to the UN Global Compact.
 For each engagement we document the company's name, the engagement issues, our objectives, and whether they have been met or if progress has been made. We also document the engagement intensity-level, whether we are working collaboratively with other investors, the steps taken in terms of dialogues, meetings and written exchanges, and the steps to be taken in future. The KMS is a very successful engagement monitoring tool that is used on a daily basis by GRIG and investment teams.

Engagements with companies on the basis of UN Global Compact violations which could lead to exclusion require sign-off from a board-level committee. Progress of these engagement trajectories is evaluated regularly by this committee.

 


LEA 05. Process for identifying and prioritising collaborative engagement

Indicate whether you monitor and/or review engagement outcomes.
Individual / Internal staff engagements
Collaborative engagements
Indicate whether you do any of the following to monitor and/or review the progress of engagement activities.
Individual / Internal staff engagements
Collaborative engagements

05.3. Additional information. [Optional]


LEA 06. Role in engagement process

06.1. Indicate whether your organisation has an escalation strategy when engagements are unsuccessful.

06.2. Indicate the escalation strategies used at your organisation following unsuccessful engagements.

06.3. Additional information. [Optional]


LEA 07. Share insights from engagements with internal/external managers

07.1. Indicate whether insights gained from your organisation`s engagements are shared with investment decision-makers.

Type of engagement

Insights shared

Individual / Internal staff engagements

Collaborative engagements

07.2. Indicate the practices used to ensure that information and insights gained through engagements are shared with investment decision-makers.

07.3. Indicate whether insights gained from your organisation’s engagements are shared with your clients/beneficiaries.

Type of engagement

Insights shared

Individual/Internal staff engagements

Collaborative engagements

07.4. Additional information. [Optional]


LEA 08. Tracking number of engagements

08.1. Indicate whether you track the number of your engagement activities.

Type of engagement
Tracking engagements
Individual/Internal staff engagements​

Collaborative engagements

08.2. Additional information. [Optional]

We have developed an in-house centralized knowledge management system (KMS) database in which we track our engagement with companies as well as other relevant research, financial and ESG information. Both the investment teams and the GRIG team have access to this database which ensures sharing of information. We also screen portfolios with respect to the UN Global Compact.

For each engagement we document the company's name, the engagement issues, our objectives, and whether they have been met or if progress has been made. We also document the engagement intensity-level, whether we are working collaboratively with other investors, the steps taken in terms of dialogues, meetings and written exchanges, and the steps to be taken in future. The KMS is a very successful engagement monitoring tool that is used on a daily basis by GRIG and investment teams.

Engagements with companies on the basis of UN Global Compact violations which could lead to exclusion require sign-off from a board-level committee. Progress of these engagement trajectories is evaluated regularly by this committee.


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