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AP3’s sustainability process

Offers support when making difficult decisions

As a major investor, AP3 has the opportunity to influence developments in a sustainable direction. To exert the greatest impact, sustainability work must be focused where AP3 can make the biggest difference and generate the most value for the state income pension system.

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Sustainability process

To support the difficult decisions that sometimes need to be made, AP3 has a clear process that draws on the fund’s collective access to resources, including external partnerships. The work must be result-oriented, based on clear objectives and through effective advocacy. The sustainability process consists of clear steps that support each other and involve the entire management organisation.

AP3’s working method is well anchored in the board and in our sustainability- and ownership policy. The CEO is responsible for implementing the policy and does this in close collaboration with asset management. In practice, this is expressed through a CEO instruction. The ongoing sustainability work is discussed and decided in an investment committee and in the group for sustainability and ownership governance together with the various management groups.

the sustainability process

Sustainability framework with minimum requirements

AP3’s ambition is to fulfill its mission as a responsible owner through active ownership management. This means that the fund also invests in companies and sectors with significant sustainability challenges. However, this does not mean that AP3 can or wants to be invested in all companies, especially companies whose operations are not sustainable or do not develop in a sustainable direction at all.

AP3 does not invest in all companies

A basic condition for AP3 to invest in a company is that there are ambitions to act long-term and integrate sustainability aspects into the business. To make the best use of AP3’s resources, the lowest sustainability-rated companies are therefore screened out of AP3’s investment universe. AP3s also do not invest in:

  • companies that systematically and extensively violate international conventions regarding the environment, human rights, labor law and corruption

  • companies that derive a significant part of their annual revenue from the production, processing, distribution, marketing or sale of cannabis or tobacco

  • companies involved in the manufacture of cluster bombs or anti-personnel landmines

  • companies involved in nuclear weapons programs in countries other than those listed in the Non-Proliferation Treaty, NPT

  • companies involved in the extraction of coal or coal-based energy production. See also AP-funds council’ on ethics’ position for further clarification at etikradet.se

The sustainability work is subject to goals

Setting goals that are followed up is an important part of achieving clear results and integrating sustainability work in the portfolio. The goals vary in nature depending on the focus area and may be both quantitative and qualitative.

Sustainability risks and opportunities

AP3 focuses its sustainability work where risks and opportunities are deemed material and where AP3 has opportunities to make a difference. The fund identifies which sustainability risks have the greatest impact on sustainable development and which are deemed to have the greatest impact on AP3’s investments.

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Proactive governance – locally and globally

AP3’s exercised stewardship work varies depending on what the ownership looks like. The fund conducts corporate governance based on the conviction that well-managed companies create shareholder value and contribute to sustainable societal development. Being a committed and responsible owner means exercising our voice at general meetings, having dialogues with the companies and participating with other owners and other stakeholders in various national and international initiatives and contexts that promote good corporate governance and sustainable development.

Results

The outcome of AP3's sustainability process is clearly reported with the aim of being result-oriented and able to be evaluated. As part of the mission to act as a role model in institutional asset management, AP3 together with other AP-funds develop common guidelines for how the results in the area of sustainability should be reported.

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Focus areas and targets

To ensure that sustainability efforts are focused on the areas deemed to have the greatest impact on investments, AP3 works with focus areas. Based on the Board’s positions, AP3 is currently working with the following four focus areas: Corporate governance, Climate, Human rights and Biodiversity.
Focus areas and targets
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AP3’s environmental impact

Respect for the environment is at the centre of the AP3 investment approach. The Fund’s direct environmental impact is relatively small, consisting primarily of business travel, use of energy for office heating and cooling, and waste.
AP3’s environmental impact
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Sustainability

AP3’s sustainability work is based on the Swedish state’s values, where democracy, the equal value of all people, the freedom, dignity and sustainable development of the individual are central parts.
Sustainability