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.

AP4 shall:

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 just under 31 % of AP4’s global equity investments. The goal is to further increase the share of investments that lower climate risk in the asset portfolio.

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 only shows part of the exposure to climate risk in the asset portfolio.

3. Measure and disclose AP4’s carbon footprint

The carbon footprint of listed shares shows certain aspects of the exposure to climate risk. AP4’s yearly carbon footprint for holdings of listed shares is presented in a table on page 51 in the Annual Report for 2017 and at www.ap4.se.

4. Scenario analysis of climate-related risks and opportunities for AP4’s assets

This work was initiated during the year and is continuing in 2018.

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. At year-end AP4 owned green bonds with a market value of SEK 4.1 billion (4.9).

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 gave
presentations at the UN in New York and in connection with COP-23 in Bonn, among other venues.

Goals of corporate governance

AP4 adheres to the following principles in its corporate governance:

1. Participate on nomination committees

AP4 participated on 30 nomination committees ahead of companies’ 2017 Annual General Meetings and is participating on 32 nomination committees ahead of the 2018 AGM season.

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 2017 AGMs on which AP4 participated, 15 newly elected board members were women, corresponding to 52 %.

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 funda-mental importance. During 2018 AP4 participated at 81 Swedish AGMs.

5. Excersise voting rights at international AGMs

AP4 gives priority to the largest companies in the respective markets, companies that the Council on Ethics of the AP Funds works with, and companies through which AP4 is supporting an international initiative. AP4 voted at a total of 821 AGMs of foreign companies during the 2018 AGM season.

6. Support initiatives for the adoption of 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.