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APG Asset Management

PRI reporting framework 2020

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Governance and human resources

SG 07. RI roles and responsibilities

07.1. Indicate the internal and/or external roles used by your organisation, and indicate for each whether they have oversight and/or implementation responsibilities for responsible investment.

Roles

Select from the below internal roles

Other description (1)

          Fiduciary Management
        

07.2. For the roles for which you have RI oversight/accountability or implementation responsibilities, indicate how you execute these responsibilities.

RI is fully embedded in APG's Governance structure. In 2019 the CIO of APG Asset Management chaired the Investment Committee (IC), which also includes the MD of the Global Responsible Investment & Governance (GRIG) team, the CEO, and two other board members responsible for Fiduciary Management and Risk & Finance respectively, as well as the MD Legal, Tax and Regulatory Affairs and the MD Asset Allocation & Overlay. The IC oversees and approves various matters related to the investment framework, which includes the implementation of Responsible Investment. Certain matters can be escalated to the full APG AM Board.

Furthermore, the MD of GRIG team reports directly to the CIO. In line with the Strategic Investment Plan (STIP), all different investment teams have a plan in place on how to integrate ESG since the end of 2010. This reflects the remit of our Responsible Investment Policy which extends to all asset classes.

ESG has been formally integrated into the investment proposal approval process. The Committee on Investment Proposals (CIP, part of the IC) has full delegated authority from the Board of Directors of APG Asset Management to make required decisions to assure that all funds are solidly invested, with due observance of liquidity, return, risk diversification requirements, costs, potential reputational risks, and meet the prudent person principles, whilst ensuring that the quality and transparency of the investment process is in place.

All new alternative investments and some listed investments require a mandatory ESG sign-off. Thereby the GRIG team, which consists of eighteen people, can engage prior to making certain investments and affect change from the outset by, for example, asking companies or external managers to commit to responsible investment practices and join sector initiatives. RI policy and reporting requirements are enshrined in the contracts with our external managers and managers of direct investments.

Part of APG Asset Management is the Fiduciary Management (FM) department with the objective to provide pension fund clients with independent advice and keep oversight on the appropriate implementation of client mandates and assignments. The FM department appointed a Fiduciary Manager Responsible Investments (FMRI) who is the primary contact for clients concerning their Responsible Investment policies. This adds additional 2.5 FTE in the number of dedicated RI staff at APG.

07.3. Indicate the number of dedicated responsible investment staff your organisation has.

18 Number

07.4. Additional information. [Optional]

The GRIG team consists of seventeen people with dedicated responsibilities and diverse backgrounds. The GRIG team's responsibilities and expertise extend globally across all asset classes and the team members are located across multiple offices. In addition, the Fiduciary Management department has 2.5 FTE dedicated to Responsible Investment.


SG 07 CC. Climate-issues roles and responsibilities

07.5 CC. Indicate the roles in the organisation that have oversight, accountability and/or management responsibilities for climate-related issues.

Board members or trustees

Chief Executive Officer (CEO), Chief Investment Officer (CIO), Chief Risk Officer (CRO), Investment Committee

Portfolio managers

Dedicated responsible investment staff

External managers or service providers

Other role, specify (1)

          Fiduciary Management
        

07.6 CC. For board-level roles that have climate-related issue oversight/accountability or implementation responsibilities, indicate how these responsibilities are executed.

APG has set a comprehensive 2020 strategy as a long-term, responsible investor. It includes a set of clear targets one of which relates to the integration of climate risks and opportunities in asset allocation and portfolio management. As such, the Board of APG AM receives regular updates on the progress of our Climate Change strategy and implementation thereof.

In 2019, the Investment Committee of our asset manager APG adopted a formal Climate Risk Policy. This policy describes the instruments available to monitor and manage climate related risks and opportunities and establishes a formal governance. APG has established a Climate Steering Group which contains members from Portfolio Management (including APG’s GRIG team), Risk Management and Fiduciary Management. This steering group is tasked with keeping oversight of various initiatives to monitor and manage climate related risks and opportunities within APG, including the prioritization of research.

07.7 CC. For management-level roles that assess and manage climate-related issues, provide further information on the structure and processes involved.

The portfolio managers and sector specialists of the various investment strategies are primarily responsible for manging of climate related risks and capturing opportunities, as there the specific knowledge is available on how climate change can impact investments.

Several resources are available for management teams for monitoring climate risk and opportunities in the portfolio (the traffic light model and the dashboard).

The investment teams are supported by the oversight of the Climate Steering Group and the Investment Committee in identifying cross-cutting themes regarding climate related risks and opportunities across investment strategies.

07.8 CC. Indicate how your organisation engages external investment managers and/or service providers on the TCFD recommendations and their implementation.

Specify

          As part of the monitoring process of external managers, climate risk can be addressed for relevant external managers.
        

SG 08. RI in performance management, reward and/or personal development

08.1. Indicate if your organisation’s performance management, reward and/or personal development processes have a responsible investment element.

Board members/Board of trustees

08.1b. RI in personal development and/or training plan

08.2. Describe any activities undertaken during the reporting year to develop and maintain Board members’ skills and knowledge in relation to responsible investment.

The board members of both APG Group and APG Asset Management regularly speak out on topics of sustainability themselves. For these occasions, board members receive extensive briefings about APGs general approach to RI and specific topics covered.

New executive and supervisory board members also have received an extensive briefing about APG’s approach to RI. Finally, Sustainability is part of the leadership education programme within APG Asset Management (this covers the APG AM leadership more broadly than just the board).

Chief Executive Officer (CEO), Chief Investment Officer (CIO), Chief Operating Officer (COO), Investment Committee

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Portfolio managers

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Dedicated responsible investment staff

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Other role (1) [from SG 07]

          Fiduciary Management
        

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

08.3. Provide any additional information on your organisation’s performance management, reward and/or personal development processes in relation to responsible investment.

Responsible Investment is part of our mission, vision and investment principles. It is part of APG's culture and embedded within human capital processes, including performance management and reward policies.

Please note that APG only offers variable remuneration for staff directly involved in investment decisions. The APG Group and APG Asset Management board members do not receive variable remuneration.

For staff directly involved in investment decisions, the variable remuneration is based on qualitative and quantitative criteria that measure performance over several years. Part of these criteria include achieved returns, sustainability and SDI targets such as CO2 reduction and inclusion.

Due to the fact that many of APG’s RI policies are executed in practice by investment staff (also outside of the GRIG team), detailed resources and training opportunities are available for portfolio managers to educate them on concrete sustainability topics. Internal issue briefings about sustainability themes (detailed and broader) are available, as well as concrete and actionable engagement training resources. The GRIG team sends out a newsletter periodically to all investment staff updating them on notable events, progress or concrete developments in the world or in APG’s RI approach. Due to the fact that APG’s GRIG team sits close to the portfolio management teams, there is close collaboration and frequent interaction between those teams.


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