London based CoreRatings has been awarded the mandate to provide SRI research on AP3’s equity holdings as the public pension fund decides to introduce a socially responsible engagement overlay to its investment policies.
AP3 is the Third Swedish Pension Fund (AP3) and is one of the four independent buffer funds in the Swedish public pension system, managing SEK 126.6 billion of public pension capital. According to the new laws governing the AP-funds, the funds “must take environmental and ethical considerations into account without relinquishing the overall goal of a high return on capital”.
According to AP3’s corporate governance policy the Fund must ensure that companies both have an overall strategy for managing environmental and ethical issues, and show transparency in its environmental and ethical reporting.
CoreRatings is a ratings agency providing independent reports on the investment risks arising from companies’ performance in key areas of their operations such as corporate governance, the environmental impact of their own operations, manufacturing processes, products and packaging, their employment practices and their impact on the societies in which they operate.
CoreRatings will also support AP3’s efforts to engage with companies – to clarify a company’s position on a particular issue or try to bring about change in policy, management systems, levels of disclosure or performance.
Tomas Nicolin, CEO of AP3, states that “AP3 will seek to implement our SRI-policy by the means of active engagement with the companies that we own shares in. Rather than adopting a policy of negative screening, where certain companies or sectors are excluded from the portfolio based on SRI-critiera, we believe in using our shareholder influence to make a difference. We chose ‘voice’ rather than ‘exit’.”