Goals of Climate & Environment
Integrating climate and environmental aspects in the asset management has high priority. AP4 has the following goals for this work.
1. Contribute to the climate transition to a sustainable society
AP4 supports the Paris Agreement and the more ambitious Swedish environmental objective to reach net GHG emissions of near zero by 2045. AP4’s portfolio and investments are to support these goals.
2. Make investments that reduce climate risk in the portfolio
The share of investments that reduce climate risk in the portfolio increased during the year to 35% (32%) of AP4’s global equity investments. This was achieved by AP4’s application of low-carbon strategies in the equity portfolio, whereby AP4, for each sector, reduces exposure to companies with high CO2 emissions or fossil fuel reserves.
3. Make proactive investments that contribute to and benefit from the climate shift
AP4 shall continuously analyse sustainability trends and seek out proactive investments in sustainability trends that contribute to the transition to a sustainable society and that also benefit from this transition.
4. Identify indicators and, based on these, evaluate possible asset management strategies
AP4 is working continuously to identify complementary indicators for Climate & Environment, both quantitative and qualitative, that can be used in its 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.
5. Advocate for a climate transition
AP4 influences companies in its role as owner, cooperates with other investors in an effort to broaden knowledge about how the climate issue can be addressed in the asset management operations, and engages political decision-makers in a dialogue aimed at creating conditions for a climate shift. AP4 has reduced the carbon footprint of its portfolio through portfolio changes. To achieve the climate goals, the companies must also reduce CO2 emissions in their own operations. AP4’s work as an owner and its cooperation with other investors internationally to influence companies in this regard are reported on pages 36–43.
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.