Goals of Climate & Environment
Integrating sustainability aspects associated with the climate and environment in asset management has high priority. AP4 has a number of overarching goals for this work.
1. Increase the share of investments that lower climate risk in the asset portfolio
During the year, the share of investments that lower climate risk in the asset portfolio increased to 32% of AP4’s global equity investments. In addition, during 2018 AP4 sold companies with significant operations in thermal coal and oil sand.
2. Map out quantitative and qualitative indicators for Climate & Environment in AP4’s assets
Work continuously to map out complementary indicators for Climate & Environment — both quantitative and qualitative — which can be used in asset management. More indicators for climate risk are necessary as a complement to measuring carbon footprint, which shows only part of the exposure to climate risk in the asset portfolio.
3. Measure and disclose AP4’s carbon footprint
Reporting the carbon footprint of listed equities is one way of illustrating climate risk. AP4’s yearly carbon footprint for holdings of listed shares is presented in a table in the Annual Report.
4. Scenario analysis of climate-related risks and opportunities for AP4’s assets
Work in this area continued in 2018 and culminated in an analysis of current research findings and a study of thematic investment areas in sustainability. A climate scenario analysis report is provided in the Annual Report
5. Help make the green bond asset class attractive and grow
AP4 shall contribute capital in new issues and create a liquid secondary market for green bonds when they meet AP4’s criteria for sustainability and profitability. During 2018 AP4 invested in a new fund focusing on green bonds issued by banks in emerging markets. At year-end AP4 owned green bonds with a market value of SEK 2.6 billion (4.2).
6. Spread knowledge about sustainability
The asset management organisation allocates time to share its knowledge and experience about low-carbon strategies and green bonds with other institutional investors. During the year AP4 participated at a number of conferences focusing on climate change. Among other things, AP4’s CEO participated in the G20 Summit’s Investor Forum during the year.
Goals of corporate governance
AP4 adheres to the following principles in its corporate governance:
1. Participate on nomination committees
AP4 participated on 32 nomination committees in 2018, and in January 2019 was participating on 33 nomination committees ahead of the 2019 AGM season. The Swedish ownership model creates a good balance between shareholders and company managements and is regarded as an international model.
2. Interview all or certain board members in connection with board evaluations
In a nomination committee’s evaluation of a board, AP4 advocates that the nomination committee conducts its own interviews to gain a deeper understanding of how well the board is working. This is an important complement to any written, self-assessments that the board may have commissioned or to an external board evaluation.
3. Advocate for greater diversity among board members, especially in terms of gender balance
On the nomination committees that AP4 participates on, at least one woman should be on the short list of nominations for new board members, and the nomination committee shall strive to ensure that the Swedish Corporate Governance Code’s recommendations on the proportion of women are met.
On the nomination committees for 2018 AGMs on which AP4 participated, 13 newly elected board members were women, or 39.4%.
4. Exercise voting rights at Swedish AGMs
AP4 gives priority to companies in which it has major holdings, has a large share of votes, and/or to issues of fundamental importance. During 2018 AP4 participated at the AGMs
of 90 Swedish companies, of which eight by proxy.
5. Exercise voting rights at AGMs of foreign companies
AP4 gives priority to the largest companies is the respective markets – companies that the Council on Ethics works with and companies through which AP4 is supporting an international initiative. AP4 voted at a total of 1,061 AGMs of foreign companies during the 2018 AGM season.
6. Support initiatives for the adoption of corporate governance and stewardship codes internationally
AP4 is eager to provide constructive views and recommendations in connection with the adoption or updating of governance and stewardship codes.