Sustainability creates high returns over time

Sustainability affects us and our world. To include sustainability when assessing investments is essential for successful long-term management. AP4 has two focus areas - Sustainability and Corporate Governance.

The following pages provide a summary of elements of AP4's sustainability efforts. A more detailed presentation is available in AP4's Sustainability and Corporate Governance Report 2015/2016 and at www.ap4.se. 

For many years AP4 has focused on the integration of sustainability in the daily management of the assets – this work is constantly evolving and can always be improved.

Sustainability and Corporate Governance in focus

AP4’s two focus areas are Sustainability and Corporate Governance. These two areas have a financial impact on AP4’s investments and are essential for the potential to generate high returns and contribute to safeguarding pensions.

Ownership initiatives in collaboration

AP4 participates in global partnerships and ownership initiatives across a range of areas to support multiple global sustainability goals.

Initiatives include, among others: urging companies to refrain from negative climate lobbying; calls on stock exchanges globally to apply the guidelines for sustainability reporting; support of initiatives requiring oil companies to work to reduce the negative environmental impact of their activities; and initiatives relating to, among others, human rights.

AP Funds’ Ethical Council

The First - Fourth AP Funds cooperate through the joint Ethical Council to influence companies to make sustainability improvements. The ongoing work includes: preventive and reactive dialogues with foreign companies – approximately 250-300 dialogues yearly; sector projects; international collaborations; and initiatives.

The dialogues encompass companies’ management of difficult operational issues such as corruption, human rights, labour rights, health and safety, pollution and biodiversity. In addition, the Ethical Council leads projects in areas such as cocoa, palm oil, and anti-corruption. Every year the Ethical Council publishes an annual report.

General goals - sustainability

AP4 should:

1. Increase the proportion of low-carbon strategies to reduce climate risk in the assets

Since 2012, AP4 has established a global low-carbon strategies platform to reduce climate risk in the assets. AP4 currently has, as part of the Global Equity portfolio, three internally and three externally managed low-carbon strategies. These portfolios account for 24 percent of AP4's global equity investments.

The goal is to further reduce the climate risk in the assets through increased investment volumes, together with new and effective strategies that strengthen companies' incentives to reduce their carbon footprint.

2. Measure and disclose AP4's carbon footprint in the listed equity holdings

AP4’s carbon footprint for the listed share holdings, from 2012 and onwards, are published
in the report on page 46 and on www.ap4.se. 

3.  Identify how to best measure the carbon footprint of other asset classes

AP4 and the other AP funds have a joint cooperation project to identify how other asset classes can be best measured. The work is ongoing.

4. Contribute with more capital to green projects by:

  • be active in the issue of green bonds.
  • participate in the market of green bonds and make them more attractive to own, which stimulates the asset class to grow.

During the period, AP4 has participated in 16 (13) issues of green bonds at an investment value of SEK 3.2 (4.0) billion. AP4 has also been active on the secondary market.

5. Provide knowledge concerning low-carbon strategies and green bonds

The management sets aside time to share their knowledge and experience to other institutional investors about low-carbon strategies and green bonds. During the period, AP4 has on request held some 50 presentations at conferences and other meetings.