Responsible investing

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Responsible investing

Sustainable and socially responsible investing is of great importance to APG and the pension funds we work for. But why exactly? And what is that all about, socially responsible investing? What do we invest in? And what do we not invest in? What are the objectives that we and our pension funds have in mind? Read all about that - and more - here.

Theme
Sustainability, Long-term investment
Collection Contents
73 Publications

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Investors unite: contributing to the Sustainable Development Goals together

Published on: 14 September 2020

The SDI Asset Owner Platform is a much-needed piece in the puzzle of how investors can contribute to the Sustainable Development Goals. It allows members to determine which investments do and which of them do not advance the 17 goals, which include climate action, good health and wellbeing and affordable clean energy. This was the conclusion of experts from various continents who participated in the platform’s online launch event on 10 September.

 

“The SDI Asset Owner Platform (SDI AOP) is more than just another sustainable investing initiative,” says Claudia Kruse, who heads up APG’s Global Responsible Investment & Governance team. “Led by asset owners, it focuses specifically on the Sustainable Development Goals (SDGs), and shows how companies’ products or services contribute to them. Processing unstructured data with artificial intelligence and natural language processing technology allows for broad coverage of global capital markets portfolios. Based on audited financial metrics, the data is objective and classifications are rules-based and auditable.”

 

The SDDs matter to us as a long-term investor, says Andrew Gray, Director ESG & Stewardship at AustralianSuper and founding member of the SDI AOP, together with APG, PGGM and BCI. “We believe that companies that contribute to the goals can be well positioned for a future economy that is aligned with the SDGs, and therefore represent attractive investment opportunities.”

The SDI AOP is a wonderful example of how we can do more together than individually

The lack of quality data to define contributions to the SDGs has long been an impediment to investors. “The information offered by the SDI AOP enables us to identify investment opportunities and establish to what extent our portfolio contributes to the SDGs,” says Gray. “It also makes our engagement with companies much more concrete by bringing objective, comparable data into the conversation. In the future,  it may also help us improve our product offering to members, for example by offering them a sustainable investment option based on positive contributions of companies to the SDGs rather than – as they historically have been – on exclusion.”

 

Easy-to-use and cost-efficient data

 

The SDGs are no longer a side industry of the financial services community, but have become front and center. Asset owners have been struggling to make the SDGs part of their standard investment processes, says Ian Webster, Senior Managing Director at distribution partner Qontigo. “The SDI AOP creates a set of easy-to-use and cost-efficient data that can be incorporated into existing tools for investment decisions and reporting. In this way, the SDI AOP allows for a very wide set of use cases and continuous development in the future.”

 

The launch of the SDI AOP comes at a critical time, says Fiona Reynolds, CEO of the Principles for Responsible Investment (PRI). “The SDGs are the world’s business plan for a greener, more inclusive and sustainable future. And the SDI AOP is a much-needed piece in the puzzle of how we as investment community can advance the SDGs. It will help translate the SDGs into investment goals and make sure that investors and corporates have a standardized way of reporting. The SDI AOP is a wonderful example of how we can do more together than individually.”

 

Would you like to know more about the SDI Asset Owner Platform? Please get in touch at sdi@qontigo.com

Volgende publicatie:
APG invests in unique hotel location in the heart of London

APG invests in unique hotel location in the heart of London

Published on: 10 September 2020

The Wellington Block is located just a two-minute walk from Covent Garden, in the well-known theater and entertainment West End area of London. APG is investing in the redevelopment of this special site in joint venture with London Central Portfolio (LCP). Purchase price 84.4 million Euros.

    The Portfolio Club (“TPC”), a joint venture between APG and LCP, purchased the attractive hotel property in the heart of London from the British real estate company Capco. In total, TPC is purchasing six buildings that are connected to each other and together form the Wellington Block.
    Planning approval has recently been obtained for the Wellington Block to be redeveloped and expanded into a hotel with at least 146 rooms and a shopping and restaurant section. It is expected that the hotel will open its door to its first guests in 2023.

Unique location


In addition to the unique location, the hotel will also differ from other hotels in other ways, according to Foortse. “With this hotel concept, we are focusing on a wide public at this location: from tourist to business travelers and from a one-night stay to several weeks or even months. The rooms also have their own cooking area, in addition to the usual facilities.”

By focusing on several target groups, the hotel will be less sensitive to big fluctuations in, for example, the number of tourists or business travelers. Foortse: “Particularly in these uncertain times, these kinds of formulas have proven their relative strength.” 

 

Strong formula


Naomi Heaton, Chief Executive of TPC also believes in the formula. With the combination of beautiful architecture and a top location, she believes a broad target group is being addressed; from national to international.

In addition to the Wellington Block, TPC also has a second hotel site at another sought-after location in Central London. At the end of 2019, the APG and LCP joint venture purchased Harrington Hall in South Kensington. The 237 rooms at Harrington Hall are currently being renovated according to the same concept as Wellington Block. The expected reopening of Harrington Hall is at the end of 2021. Foortse: “We hope to expand our portfolio in London even further in the coming period.”

Volgende publicatie:
APG invests in sustainable batteries for electric cars

APG invests in sustainable batteries for electric cars

Published on: 3 September 2020

Over € 2.5 billion – that is how much the Swedish company Northvolt has collected for research and development and the construction of two gigafactories for sustainable lithium-ion batteries for electric cars. € 1.35 billion of that was recently received from a group of international financial institutions. APG also participated in that financing round – on behalf of their client ABP. Peter Carlsson, CEO of Northvolt:  “The momentum for electric cars is stronger than ever.”

 

Northvolt was founded by two former Tesla managers in 2016, in order to contribute to the transition to clean energy in Europe. With the € 1.35 billion that Northvolt recently collected – in loans – the company wants to build two gigafactories for sustainable lithium-ion batteries: one in Sweden (“Northvolt Ett”) and one in Germany (“Northvolt Zwei”).

 

BMW

Lithium-ion batteries are used in electric cars and play an important role in the transitions from fossil fuels to sustainable energy. Northvolt is the biggest manufacturer of this type of battery in Europe. Northvolt already has a deal with BMW for the batteries that Northvolt Ett will produce. The German car manufacturer will be buying as much as € 2 billion worth of batteries from 2024 on. This will make Northvolt the third biggest supplier to BMW, after the South-Korean Samsung SDI and the Chinese CATL.

The momentum for electric cars is stronger than ever, says Peter Carlsson, co-founder and CEO of Northvolt. “Our clients need large amounts of high-quality batteries with a low CO2 footprint. Europe has to build its own production facilities for this.”


Political pressure

Carlsson is referring to the increasing political pressure the German car manufacturers are under to safeguard their battery supply by attracting suppliers from the European Union too. The European Investment Bank (EIB) has already provided a €350-million loan to Northvolt Ett for this purpose. Previously, the EIB had already supported Northvolt Labs, which produced the first battery cells, which created the foundation for the gigafactory.

 

Start in 2021

Northvolt Ett will be built in Skellefteå, in northern Sweden and will run completely on renewable energy. The factory will start production in 2021 and is expected to provide 40 gigawatt hours (GWh) of energy a year. This will power approximately 15,000 electrical cars for a year. Northvolt Zwei in Germany will be built in collaboration with car manufacturer Volkswagen. This factory, which is expected to supply 20 GWh a year, will start production in 2024.

 

The investment in Northvolt fits in with two long-term trends that ABP wants to take advantage of with its sustainable and responsible investment policy: the transition to sustainable energy and responsible use of raw materials by recycling and other means.

 

 

Volgende publicatie:
Green sovereign bond investment contributes to Swedish climate ambitions

Green sovereign bond investment contributes to Swedish climate ambitions

Published on: 2 September 2020

APG has invested 25 million in the first green Swedish sovereign bond on behalf of its pension fund clients. Sweden will use the proceeds to finance measures that contribute to its ambition for a carbon neutral economy in 2045.

 

Green bonds are issued by companies and (semi-)government agencies for the funding of sustainable projects. The Swedish bond has received the ‘dark green’ label from the independent green bond rating agency Cicero. This means that the green bond meets the highest standards in terms of use of proceeds and impact transparency. The green bond’s expected return is comparable to the return of a regular (‘grey’) Swedish sovereign bond.

 

Green transportation

APG has been assigned SEK 225 million (roughly € 25 million). In total, Sweden has raised over € 1.9 billion with the issuance of its first green sovereign bond. The money will be used, among other things, to fund sustainable transport. Domestic transport accounts for one third of Sweden’s total carbon emissions. The bond’s proceeds can be used for investment in for example public transport, electrification of the automobile fleet and digital solutions for reducing the number of transport movements.  

 

Contribute to sustainability ambitions

The investment in this green bond contributes to our pension fund clients’ responsible and sustainable investment ambitions. ABP, our largest client, aims to have at least 20% of its assets invested in companies or projects that contribute to the Sustainable Development Goals (SDGs) by 2025. BpfBOUW has the goal to invest € 12 billion in the SDGs by the end of this year. The SDGs were set by the United Nations in 2015 and focus on, among other things, sustainable cities, affordable and clean energy and climate action.

 

Large green bond investor

APG is one of the world’s largest green bond investors. Previously, we participated in the issuance of green sovereign bonds by the Netherlands, France and Ireland. At the end of 2019, we had invested € 9 billion in green, sustainable and social bonds on behalf of our pension fund clients ABP, bpfBOUW, SPW and PPF APG. To encourage further development of this market, APG has published the Guidelines for Green, Social and Sustainable Bonds. This document outlines our expectations for companies, institutions and governments that consider issuing green bonds.

 

 

Volgende publicatie:
APG and Asper expands Nordic wind platform; 60 MW added

APG and Asper expands Nordic wind platform; 60 MW added

Published on: 31 August 2020

APG and Asper have started construction of a new onshore wind project in their Swedish wind platform. The 60MW Raftsjöhöjden wind farm is owned and financed by APG for Dutch pension funds ABP and PPF. It is the fifth project in the Asper platform to be backed by APG, whose Swedish portfolio now comprises 494MW, with an annual expected production of 1.6TWh. Enough electricity to power 320,000 Swedish households.

 

The wind park is located outside Östersund in central Sweden. The project was developed by Vasa Vind - a portfolio company managed by Asper - who will also manage the construction and local operations of the wind park. The project will utilize 11 GE 5.5MW – 158m turbines. GE will also provide a long-term service agreement for the project.

 

We are delighted to build up and see our Nordic platform grow further. Together with Vasa Vind and GE, we have engineered and optimised this project to make it an accretive addition to the existing APG portfolio” said Allister Sykes, Director at Asper Investment Management.

 

Dirk Hovers, Senior Portfolio Manager at APG, adds: “This is our fifth investment in Nordic wind with Asper and Vasa Vind. Nordic power is a strategic area for our infrastructure investments in renewable energy and we are looking forward to work on this and other successful projects with our partners at Asper and Vasa Vind.”

Volgende publicatie:
COVID-19: First place for APG in responsible investors ranking

APG tops COVID-19 response ranking

Published on: 26 August 2020

The Responsible Asset Allocator Initiative (RAAI) has analyzed how 25 leaders in responsible investing are responding to the COVID-19 crisis. Topping the list is APG, which scores 100% on the criteria examined.

 

The Responsible Asset Allocator Initiative (RAAI), a US initiative focused on mobilizing capital from the world’s largest institutions to responsible investing and the Sustainable Development Goals, examined the role of the 25 investors they consider to be the leaders in responsible investing. APG was awarded maximum scores on all criteria, such as supporting companies to take socially responsible actions even if that could affect short-term performance, joining forces with other investors and investing in Covid-19 solutions. PGGM also received maximum scores on all criteria.  

 

Prompt action

APG played an active role in combatting the consequences of the Covid-19 crisis right from the start. In March, APG and other institutional investors urged companies to take what steps they can to mitigate the social impact of the corona crisis, and make employee health and safety their number one priority. APG demanded, for example, that Amazon account for worker safety measures during the pandemic, following reports that sick Amazon employees were being pressured to come to work. Addressing the economic consequences as well, the investors stressed that companies should aim to prevent workers, suppliers and customers from being faced with financial problems.

 

Investing in Covid-19 response bonds

APG, on behalf of its pension fund clients ABP, bpfBOUW, SPW and PPF APG, invested in the first Covid-19 bond – issued by the Nordic Investment Bank – and many more after that. “To date we have invested over half a billion euros in Covid-19 response bonds,” says Oscar Jansen, Credit Portfolio Manager at APG Asset Management. “The proceeds of these bonds are used to support both health care and the economy. They help fund emergency health measures such as expanding test capacity, training medical personnel and procuring protective medical equipment, as well as support packages for small and medium-sized enterprises in Europe and elsewhere.”

 

The bonds offer an attractive return as well. “In most cases,” Jansen explains, “APG invests in Covid-19 bonds issued by reputable institutions with solid credit ratings (AA or AAA). The credit risk of AAA-bonds is comparable to the risk of Dutch sovereign bonds, while the interest rate is slightly higher than that of similar bonds.”

 

Guidance

To boost the issuance of Covid-19 bonds, APG has published a guidance document that outlines its criteria for bonds to be qualified as social or sustainable bonds. It has been shared with bond issuers, encouraging them to step up issuance of high-quality Covid-19 bonds. “As one of the world’s largest investors in green, social and sustainable bonds,” Jansen concludes, “we want to take our responsibility to continue supporting Covid-19 response funding in a responsible way.“

 

More about the RAAI ranking:

https://www.top1000funds.com/2020/08/asset-owners-adapt-and-respond-to-covid/

Volgende publicatie:
‘Net Zero’ framework helps APG deliver on clients’ climate ambitions

‘Net Zero’ framework helps APG deliver on clients’ climate ambitions

Published on: 11 August 2020

A group of investors, including APG, has issued the ‘Net Zero Investment Framework’. It offers practical guidance for investors to tackle climate change and achieve net zero carbon emissions by 2050.

 

The Net Zero Investment Framework (NZIF) enables investors to align their portfolios with the Paris climate goals. In practical terms, this means that the investment strategy is made consistent with achieving a global target of net zero carbon emissions by 2050. The framework has been developed by over 70 investors through the Institutional Investor Group on Climate Change (IIGCC). APG was co-chair of this initiative.

 

Commitment to Paris climate goals

‘APG and its pension fund clients are committed to contribute to the goal of the Paris agreement to keep global warming well below 2 degrees,’ says Lucian Peppelenbos, Senior Responsible Investment & Governance Specialist at APG Asset Management. ‘ABP, our largest client, has committed itself earlier this year to a net-zero portfolio by 2050. This framework helps us deliver on those commitments.’

The framework defines principles and thresholds for targets on decarbonizing investment portfolios and investing in climate solutions, such as renewable energy, low-carbon buildings, and energy-efficient technologies. It also recommends tools and methodologies for this purpose. This is done for overall strategy and asset allocation, as well as on asset class level for listed equity, corporate bonds, sovereign bonds and real estate.

 

Clients’ targets

APG and its clients already have climate-related targets for 2025, such as investing in renewables (ABP: €15 billion) and reducing the carbon footprint in listed equities (-40%). The framework helps us by combining these targets in a systemic framework that is comparable across the entire investment industry. APG is among the five investors that will be putting the framework to the test. Peppelenbos: ‘As a leading long-term responsible investor, we want to trial it, understand its implications and determine how we can apply it.’   

 

The initial framework has now been published for public consultation. IIGCC is seeking feedback from investors and other stakeholders to strengthen the framework and ensure that all relevant approaches have been considered. Once the framework is finalized, the intention is for investors to adopt it on an ‘implement or explain’ basis.

Volgende publicatie:
Peter Branner on responsible investment in times of Corona

Peter Branner on responsible investment in times of Corona

Published on: 29 July 2020

“Sustainability and digital transformation are becoming more important than ever”

The corona crisis initially hit the investment portfolios of APG hard in March and it also came with many opportunities for active investors like APG. Peter Branner, Chief Investment Officer APG Asset Management, looks back on an eventful first half of the year 2020.

 

A rollercoaster: that could be the way to describe the first period of 2020 for the investors. A good return of 17.3 percent was achieved in 2019. After that peak, the financial markets significantly dropped this spring, but then recovered remarkably in the second quarter. With steering and counter-steering, looking ahead and thinking in scenarios, Chief Investment Officer Peter Branner tried to meet the challenges in the best possible interest of pension fund clients.

 

The corona crisis led to a dramatic fall in share prices on the stock markets: panic?

“There was indeed panic in the financial markets but not for us. As a long-term investor we took a few deep breaths after which we calmly took on the challenges presented to us. Our response to the crisis was a three-stage rocket. The first priority was to take care of sufficient funds available to pay the pensions and respect our other financial obligations. Every day, I closely monitored our liquidity position, the hedging levels, the VIX (indicator of equity market volatility), oil prices and the USD as these numbers gives a good sense of the market situation. And I still do. We witnessed major movements in the dollar rate and immediately to action where needed. The oil price dropped as well and we even saw a negative oil price arising in the beginning of April: people buying barrels of oil actually received money because of a dramatic drop in consumption. We had foreseen this development and adjusted our futures contracts in time.”  

 

What was part two of the rocket?

“Being active investors, we constantly adjust our portfolios also and precisely in a crisis that makes sense. We consequently had a higher turnover in our equity and credit pools where pension fund client are given access to active portfolio management at APG. The industries that would be affected negatively quickly manifested themselves during the lockdown, such as energy companies and travel operators. That is the reason why we reduced our exposure to cruise companies. On the other hand, we purchased shares of companies benefiting from the crisis, such as DIY companies, providers of home entertainment, online retailers, and holiday resorts. We thoroughly assessed all companies included in our investment portfolios: will they be affected by the crisis only temporarily or permanently? And how vulnerable are these companies, for example because they purchase their goods far away? We are now mainly focusing on companies that will survive the crisis just as strong or even stronger as they were before.”

       

Does this mean the crisis also offers opportunities?

“Definitely. We purchased shares and credit instruments in companies that decreased in value due to the crisis, but we expect are strong enough to survive, such as specific automotive manufacturers. Some companies became inexpensive to an extent we repurchased the shares, such as cruise companies. Even if these companies are in for a difficult period ahead our portfolio managers found the reduced prices extraordinary attractive. In Asia, we mainly invested in IT and Internet companies. A global supplier of restaurants had also been on our wish list for quite some time. Those shares were always too expensive, but as the catering business collapsed, we were now able to purchase those shares all of a sudden. Several of these examples shows the benefit of being a long term investor avoiding behavioral bias.”

 

What truly made you awake at night?

“That brings me to the third stage of the rocket: in addition to shares, APG also invests in private companies, real estate and infrastructure. Those investment decisions require a long period of preparation. Compare it to how you privately should take time to decide on major purchases, such as a car or a house. Moreover, you first want to see it for yourself: be able to kick the tires or check the window frames for wood rot. But the crisis made it impossible for us to check out those companies and building projects ourselves. The pipeline for investments is still filled pretty well, but how long will it take for that to run dry? That concerns me. We need new supply in order to also realize returns in the future. Or find new ways to do the due diligence.

 

Secondly I am obviously worried for our people. It’s been a while since many have had a normal day in the office. I spend a lot of time in digital coffee breaks with old and new colleagues to support them. I am very proud of the organization but we need to keep up the spirit.”

 

APG is a responsible investor. How was that expressed during the crisis?

“First of all, we purchased Covid 19 bonds for an amount of over half a billion euros on behalf of our pension fund client: that money is used to support care institutions and SMEs suffering the consequences of the crisis. Those bonds also produce returns by the way. We further looked at each company to see whether our support as a shareholder was necessary and desired, for example with some additional capital or by refraining from the payment of dividend. We also held companies accountable for their approach of the crisis. Such as Amazon, because of the corona infections in their warehouses. We always communicate with companies about the way in which they are being managed, their social policies and the way they handle the environment. The crisis intensified those conversations even more. Being a responsible investor requires credible hands-on activity.”

 

APG invests the assets of pension funds, such as ABP and BpfBouw. How often did you interact with one another in the past couple of months?

“On a daily basis where needed and by means of a call every week where agreed. Prior to the crisis that frequency was more like once every two weeks or every month. As an administrative organization, the pension funds provide us with a mandate: what we can and cannot invest in, the level of risk we are allowed to take and the allocation across the different investment categories, such as shares, bonds and real estate. Fluctuations can easily arise due to price falls and other market movements. Moreover, as an investor you want to be more active in purchasing and selling equities during a crisis. Those are the matters you discuss together. In general, we were able to work with those mandates really well. The big picture is clear: together we strive for a balanced portfolio and limited risks in order to achieve solid investments result in the long term.”

 

What does the balance look like after this semester?

“This differs per market and investment category. In the Western developed markets, we see a modest recovery after the initial struggle, and we are happy with that. For our real estate portfolio, on the other hand, this was not a good half year: performance is lagging behind market but there are also some more technical reasons with the benchmark that we need to explain carefully to clients. I am less worried about the longer term performance but even our five year numbers require specific and precise communication. Emerging economies are struggling, which is worrying for both humanitarian and investment reasons. By the way, China is emerging stronger from the crisis: that country came faster out of the lockdown and is also undergoing a digital transformation that is much more advanced than one might expect. This will help China enormously in the years to come.”

 

Should participants be concerned about the consequences of the crisis for their pension?

“Unfortunately, we probably cannot show the same investment result this year as in previous years. However, stock markets have shown remarkable recovery and resilience since mid-March due to the strong liquidity support from central banks and forceful financial stimuli from governments. In addition, we have a long-term investment horizon, so we can spread lower returns over time. There are many reasons for participants to be concerned about the corona crisis, the future pension system, purchase power and the risk of social unrest. Many of these risks are there for the longer term and as long-term investors we can only do our best to assure participants that we take our responsibility very serious.”

 

How do you perceive the future?

“Economic recovery is only possible once the virus is gone or a vaccine is available. As an investor, we apply different scenarios, ranging from favorable to worst case: The Good, the Bad and the Ugly. We already try to look beyond the crisis. If people continue to work from home more often, what will be the consequences for office spaces, the activity on highways and railways? We have noticed an acceleration of the digital transformation and the awareness of sustainability. Those two megatrends will become even more leading in our investment policy. The corona crisis has changed the world forever. And we change with it.”

Volgende publicatie:
'I don't doubt for a second what I'm asking of companies'

'I don't doubt for a second what I'm asking of companies'

Published on: 10 July 2020

With a background in student activism and investment banking, Yoo-Kyung (YK) Park is driven to change corporate Asia for the better. She’s been at it for eleven years, and is by no means less committed. Are there differences between Asia and other continents when it comes to engaging with companies about their behavior? ‘There is a big difference between the various countries in Asia. There are developed countries, such as Japan, Singapore and Hong Kong, and developing countries, which include China, India and South Korea. What they all have in common, though, is that their ESG standards are still under development.’

An interview with Yoo-Kyung Park, Head of Responsible Investment & Governance Asia-Pacific at APG

 

‘Some practices that we take for granted in Europe, are not so common in Asia. In Europe, for example, if you want to engage with a company, you can talk to senior management or even board members and you tend to get the information you need. To get this type of access in Asia, you need to invest a lot of time and effort to build trust. Only after several years will board members open to you. I have been engaging with Samsung Electronics on various corporate governance issues for eleven years. Although the company has made positive changes, I am still not done talking to them.’

 

How receptive are Asian companies to what you ask of them?
‘It depends on what you’re asking. If you want a company to improve its reporting, you can talk to the Investor Relations department, and there’s a good chance they will respond to your request. But if you want a company to change its corporate culture, or deal with bribery and corruption, it’s not that straightforward, especially if our holding in the company is relatively small. In such cases it’s not easy to get access. So you have to be resourceful and come up with other ways to gain influence. I then seek cooperation with other parties, such as politicians, diplomates, NGOs, or the media.’

 

How do you find a way to deal with more sensitive topics, such as human rights?
‘That also depends on the country. In Japan, you can talk about human rights, but in China you need to come up with less direct ways to address this. You have to make the topic about, for example, employees’ health & safety, or working conditions for migrant workers. You need to make it specific. And you always link it to the impact it can have on a company’s business. When I talked to Korean shipbuilders about fatal accidents in their operations, and did not get a satisfactory response, I alerted their clients, the large ship buyers, to this issue. They were concerned about safe working conditions and called on the shipbuilders to improve them. Several oil companies have now paid more attention to the safety standard for Korean shipbuilders.’

 

I want change. I don’t just want to keep talking for the sake of talking.

Is the fact that you are a woman an impediment in some countries?
‘It was and still is. There are some very conservative countries. For example, when I organize a meeting with executives or policy makers in countries like Japan and South Korea, all the others in the room are men. I am not expected to ask questions in such an environment. I find that I have to push harder and make a bigger effort to get my message across. But I don’t mind. It’s my message that’s important.’

 

You have been in this job for over a decade. What keeps you going?
‘I want change. I don’t just want to keep talking for the sake of talking. I see hope for Asia. The culture and mindset of board members are changing and we have managed to make concrete changes for the better. What gives me courage is that I know I always have the backing of APG and its pension fund clients. I know that they are genuinely committed to change. As a result, I have zero doubt in what I ask from companies.’

On behalf of APG as a global pension investor, Yoo-Kyung Park engages with companies on environmental, social and governance issues to push for improvement. You can read more about this in our Responsible Investment Report for 2019.

 

 

Volgende publicatie:
APG co-launches platform for investments in Sustainable Development

APG co-launches platform for investments in Sustainable Development

Published on: 6 July 2020

APG and other global investors have established the Sustainable Development Investments Asset Owner Platform (SDI AOP). Applying pioneering technology, the platform enables investors to assess companies on their contribution to the Sustainable Development Goals (SDGs). These goals, set by the United Nations in 2015, aim for a better, more prosperous world by addressing global issues such as clean water, good healthcare, and protecting the environment.

 

APG and PGGM, which announced their cooperation to set up the SDI Asset Owner Platform in September 2019, have recently been joined by AustralianSuper and British Colombia Investment Management Corporation (BCI). Collectively, the launching partners have over US$ 1 trillion in assets under management.

 

Solving data challenges


Investments in companies whose products or services contribute to the realization of the SDGs are called Sustainable Development Investments (SDIs). An increasing number of global investors aim to understand the contribution they make, through their investments, to the Sustainable Development Goals. But a lack of quality data to identify contributions to the SDGs has been an impediment for them. The SDI Asset Owner Platform’s measurement framework helps investors to imbed the SDGs into their investment processes and allows them to shift more capital to the SDIs. It also enables them to report to their clients and external stakeholders transparently and consistently.

 

Global standard


“Launching this standard with asset owners from three continents shows our commitment to contribute to the SDGs”, says Claudia Kruse, Managing Director and heading up APG’s Global Responsible Investment & Governance team. “This is part of our commitment to our clients on whose behalf we invest in order to provide affordable pension in a sustainable world.”

The SDI Asset Owner Platform provides a common definition, taxonomy, and data source for investments in the SDGs.

Powered by Artificial Intelligence technology, data science company Entis generates SDI classifications for 8,000 companies to date. The SDI definition and taxonomy are public and equally applicable to private market investments. The SDI classifications will be available through Qontigo.

 

Commitment to the SDGs


APG co-launces this initiative on behalf of its pension fund clients. Our two largest clients have set ambitious targets for investing in the SDGs; Dutch civil service pension fund ABP aims to invest 20% of assets under management in the SDGs by 2025 whereas Dutch builders pension fund bpfBOUW targets to have €12 billion in SDIs by the end of 2020.

 

“Together we are leading the way in sustainable investing”, says Claudia. “The SDI AOP welcomes investors across the globe to subscribe, creating a critical mass of investors who together define the meaning of investing in the SDGs.”

 

View the press release

Volgende publicatie:
Claudia Kruse in conversation with Jort Kelder

Volgende publicatie:
APG invests over half a billion in Covid-19 bonds

APG invests over half a billion in Covid-19 bonds

Published on: 20 May 2020

To combat the Covid-19 pandemic and its socio-economic impact, APG on behalf of its pension fund clients has now invested well over €500 million in Covid-19 response bonds. The proceeds of these bonds are used, among other things, to fund emergency health measures and support packages for small and medium-sized enterprises in affected countries.

 

APG – on behalf of ABP, bpfBOUW, SPW and PPF APG – recently participated in the issue of Covid-19 bonds by UNEDIC (€50 million), BPI France (€28 million), Instituto de Credito Official (€25 million) and Bank of America (€32 million). The proceeds of these bonds are earmarked for financing a range of measures, including expansion of healthcare services, support to small and medium-sized enterprises (SME’s), as well as a temporary increase in social security expenditures.

 

Rapid growth

In euro terms, APG since late March has invested €554 million in Covid-19 response bonds. In late March, the Nordic Investment Bank issued the first bond specifically intended to combat the Covid-19 pandemic and its impact. Since then, many sovereigns, supranational organizations and agencies – as well as a limited number of corporates - have followed. In just a few months, the Covid-19 bond market has reached an estimated €60 billion. The market is likely to keep growing, as governments and companies rush to issue debt to help ease the effects of the pandemic. 

 

In most cases, APG invests in Covid-19 bonds issued by reputable institutions rated AA or AAA. The credit risk associated with AAA-bonds is comparable to the risk of Dutch sovereign bonds, while the coupon rate is slightly higher compared to similar bonds.

 

Responsible investor

It is good that institutions issue special Covid-19 bonds, says Oscar Jansen, Credit specialist at APG Asset Management. “The societal and economic impact of the pandemic is huge and a lot of money is needed to fight the crisis. As a responsible investor, we want to play an active role in this.”

 

APG is one of the world’s largest green bond investors. These are bonds issued by companies or (semi-) governments to finance green, social or sustainable projects. By the end of 2019, we had invested over €9 billion in green, sustainable and social bonds. These investments also contribute to our clients’ ambitions in the area of sustainable investment, in particular the aims of ABP (20% of AUM in the Sustainable Development Goals by 2025) and bpfBOUW (€12 billion by the end of 2020).

Volgende publicatie:
APG urges Amazon to be transparent on employee health and safety measures

APG urges Amazon to be transparent on employee health and safety measures

Published on: 15 May 2020

APG, together with the New York City Comptroller and the New York City pension funds, calls on Amazon to report on the progress of initiatives to keep its employees safe in times of COVID-19. Whereas Amazon recently announced a multi-billion dollar spending package to protect its workers, the latter remain fearful about coming to work.

 

Reportedly over 50 Amazon facilities have confirmed cases of COVID-19, as hundreds of Amazon workers around the globe participate in protests, strikes, and petitions calling on the company to do more.

 

The New York City Comptroller (the city’s Chief Fiscal and Auditing Officer), the New York City Pension Funds, and APG, on behalf of its pension fund clients, sent a joint letter to Amazon, urging the company’s independent directors to be transparent about employee health and safety initiatives amid the COVID-19 pandemic. The letter requests that the Chair of the Committee responsible for overseeing employee health and safety, report on the progress of these initiatives and investments at the annual shareholder meeting on May 27, 2020.

 

Amazon recently disclosed its plans to spend approximately $4 billion (around € 3.7 billion) in the second quarter of 2020 on corona virus-related expenses, “including investments in personal protective equipment, enhanced cleaning of [its] facilities, less efficient process paths that better allow for effective social distancing, higher wages for hourly teams, and hundreds of millions to develop [its] own COVID-19 testing capabilities.” However, media reports indicate that many Amazon employees remain fearful about coming to work and concerned for their own safety as well as that of their families, coworkers and customers.

 

“Keeping people safe and healthy should be the first priority of any company and the pandemic requires business leaders to take swift, effective measures to do just that,” says Anna Pot, Head of Responsible Investments Americas for APG. “While we welcome Amazon’s announcement to invest in protecting their sizeable front-line workforce from the spread of COVID-19, we want assurance that these investments actually lead to better outcomes for their employees – that they are safer and healthier as a result.”

 

The NYC Comptroller, the NYC Funds, and APG raise concerns about the potential disconnect between management’s reported employee initiatives and media reports on widespread health and safety concerns among Amazon employees, including reports that the company has retaliated against some employees and is pressuring sick employees to come to work. As of February 28, 2020, the New York City Pension Funds and APG have €3.9 billion invested in Amazon on a combined basis.

 

“Rather than reporting on inputs such as the number of masks provided or employees tested,” says Anna Pot, ”we are interested in the outcomes of these investments, such as trends in reported cases of corona virus among employees, days lost due to COVID-related illness, complaints filed, impact on productivity and employee morale and workplace culture.”

 

To read the full letter from The NYC Comptroller, NYC Funds, and APG, click here.

Volgende publicatie:
Guidelines for making real estate more sustainable beneficial for pensioners

Guidelines for making real estate more sustainable beneficial for pensioners

Published on: 11 May 2020

In the Carbon Risk Real Estate Monitor (CRREM) project, APG, PGGM and other investors have taken another step forward in the development of a global method that measures whether a building meets the objectives of the Paris Climate Accord. It is now clear for just about every type of property in a large number of countries how much carbon per square meter they are allowed to emit annually until 2050 in order to stay within those targets.

 

These so-called 'pathways', or carbon reduction roadmaps, also show how much energy can be used in a building to stay within the Paris targets. That is valuable information for real estate investors and owners, says Mathieu Elshout, Senior Director Private Real Estate Europe at PGGM. “Through our private real estate portfolio, we have invested in approximately 4,000 properties worldwide. Now we can measure exactly how much our buildings are allowed to emit in the timeframe to 2050 in order to stay below the curve of the targets of the Climate Accord. That way you also know when investments are needed in insulation and new installations, for instance."

 

Guideline


The new system is a useful planning and risk management tool, agrees Derk Welling, Senior Responsible Investment and Governance specialist at APG. “It takes time and money to make real estate sustainable. The reduction pathways provide a guideline for this.”

 

There is also a possibility that there will be stricter regulations for real estate. Worldwide, real estate is responsible for approximately 30% of total carbon emissions and 40% of energy consumption. Mathieu: “Europe is now working on a Green Deal. It is not inconceivable that there will be a carbon emission ceiling for the real estate sector. This also makes a system possible where real estate owners are given tradable rights to emit a certain amount of carbon. Those who emit less than they have rights for are therefore able to sell rights. Conversely, polluters have to buy additional rights."

 

Regulations


With the help of the pathways, investors can identify in advance what regulations are likely to arrive. By taking these reduction pathways into account in our investments from now on, we can better manage the risks of future regulations and ultimately deliver more value to the pension fund members. Mathieu and Derk are convinced of this. Mathieu: “Just take the purchase of real estate. Whether or not the climate targets are met will increasingly determine the risk profile of property."

 

In short, Derk and Mathieu firmly believe in the positive effects of these carbon reduction pathways. The next important step is for other major investors and property owners to embrace the initiative. Derk: “The pathways are in place. We are now asking market parties to actively provide feedback on this. We hope that this will enable us to develop a certification that is embraced by the majority of the market. Clarity in the market is needed to make a real impact in making real estate more sustainable."

 

Volgende publicatie:
Shell raises climate ambitions

Shell raises climate ambitions

Published on: 16 April 2020

Investor cooperation in Climate Action 100+ pays off

Shell wants its product chains to be climate neutral by 2050. The oil and gas company announced this today. The plans build on Shell's agreements with Climate Action 100+ in 2018. On behalf of its pension fund clients, APG is part of this investor initiative.

 

Climate neutral means that, on a net basis, Shell does not want to emit greenhouse gases by 2050 or earlier. This applies to both Shell's own direct emissions, and the indirect emissions of Shell’s suppliers and customers.

 

As part of this ambition, Shell accelerates its efforts to reduce the net carbon footprint of its products, such as gasoline or kerosene. Whereas the company initially aimed for a 50% cut for 2050 and 20% for 2035, it now targets 65% and 30% respectively. As for customers, such as airlines and transport companies, Shell wants to focus more and more on companies that capture, store or compensate CO2 in their own chain , for example by expanding natural ecosystems. This will make the total chain climate neutral by 2050.

 

With these plans, Shell is taking further steps to contribute to the achievement of the Paris climate goals, says Corien Wortmann, chairwoman of the board of ABP pension fund. "We appreciate the fact that Shell regularly evaluates and now raises its ambitions. It is good to see what responsible investors can achieve if they join forces in an initiative such as Climate Action 100+."

 

After the earlier announcements in 2017 and 2018, Shell's example has been followed by other oil and gas companies. "We hope that this announcement will again have a domino effect. As a responsible investor and critical shareholder of Shell and other oil and gas companies, we will continue to monitor this closely."

 

With its new ambitions, Shell heeds the call in a recent report by the United Nations Intergovernmental Panel on Climate Change (IPCC) to limit the global temperature rise to 1.5 rather than 2 degrees Celsius.

Volgende publicatie:
Large-scale onshore wind power project in Sweden starts operations

Large-scale onshore wind power project in Sweden starts operations

Published on: 15 April 2020

APG, Asper Investment Management and Vasa Vind announce the start of operations of the 288MW, €300 million Åskälen project in Jamtland, Sweden. It is one of the largest onshore wind power projects in Europe and provides 1TWh of renewable energy per year, enough for over 175,000 Swedish homes.

 

This wind farm, which was announced in 2017, comprises of 80 Vestas V136 3.6MW turbines, with estimated carbon savings of 250,000 tonnes per annum. The project benefits from exceptionally strong local support, thanks to very active engagement by Vasa Vind, both at the municipality and county levels.

 

Vasa Vind, a portfolio company of funds managed by Asper, developed the project, managed its construction and will be in charge of its ongoing operational management. Asper, a London-based infrastructure manager focused on greenfield sustainable infrastructure platforms, also provides strategic asset management support to APG. Dutch pension funds ABP and PPF APG, whose assets are managed by APG, own 100% of the project and provided financing of c €300 million for its construction.

 

“Asper’s mission is to support entrepreneurial companies and investors at the forefront of the energy transition: we are delighted to have supported APG in boosting their renewable energy asset portfolio with this outstanding project. We are also proud of having helped Vasa Vind grow into a full-fledged player in the Swedish market, spanning across development, construction and operations management” said Allister Sykes, Director, Asper Investment Management.

 

Dirk Hovers, Senior Portfolio Manager Infrastructure at APG said: "As a long term responsible investor, we are always looking for investments that help to realize stable and sustainable returns for ABP and other pension fund clients we work for.  We are very happy with the start of operations of this project and our partnership with Vasa Vind and Asper. Scandinavian power is a strategic area for our infrastructure investments in renewable energy and we are looking forward to work on this and other successful projects with these partners."

Volgende publicatie:
"Sustainable business makes companies perform better"

‘Sustainable business makes companies perform better’

Published on: 6 April 2020

APG strives for maximum sustainability within its investment portfolio. "Its size, more than 500 billion in pension capital, enables us to push companies in the right direction," says responsible investment specialist Lucian Peppelenbos in an interview with Milieu Magazine.

 

APG manages the assets of a number of large Dutch pension funds and their participants, including bpfBOUW and ABP. The latter is the largest pension fund whose policy APG also implements. The money, altogether approximately €544 billion, is invested in such a way that the pensions of the 4.7 million participants can be paid now and later. The asset manager now invests approximately 70 billion euros of this money on the basis of the United Nations Sustainable Development Goals. These are global goals for sustainable development that focus on ending extreme poverty, inequality, injustice and climate change.


Peppelenbos: "We consciously invest in opportunities to achieve a cleaner world. Because that's what our clients, the pension funds and their participants want.” More and more investors are doing the same on the world stage. "Polluting companies will find it harder to tap into funds in the long run."

 

Read the entire interview here. (in Dutch)

Volgende publicatie:
APG aims to improve ‘carbon sink’ function of natural ecosystems

APG aims to improve ‘carbon sink’ function of natural ecosystems

Published on: 30 March 2020

A growing number of airlines, energy providers and other carbon-intensive companies pledge to reduce CO2 emissions to net-zero by 2050 or earlier. But how does that work? In addition to decarbonizing their businesses, companies increasingly invest in enhancing the ‘carbon sink’ function of natural ecosystems. While not new, the larger scale and professionalism of such Nature-based solutions (NbS) potentially makes them more attractive for investors like APG, says Jos Lemmens.

 

Nestlé, ThyssenKrupp, Volkswagen, Repsol and BP: these are just some examples of the many companies that have recently announced their ambition to reduce their net carbon emissions to zero by 2050 at the latest. Although details vary, these companies’ approaches have one thing in common; they rely partly on increasing ‘negative emissions’ by boosting the ability of natural ecosystems to sequester greenhouse gasses (GHGs).

 

Nature-based solutions (NbS) – as these initiatives are called – have been around for some time, says Jos Lemmens, Senior Portfolio Manager of the Natural Resources Fund at APG Asset Management, co-managing a portfolio of productive timberland and farmland assets. “Often these have been associated with carbon credits markets, but there are other ways in which contributions to sequester GHSs can be made. For instance by integrating nature-based solutions in the acquisition and maintenance of farmland and productive timberland. We know that natural ecosystems are excellent carbon sinks. They have the potential to sequester 30% of global CO2 emissions. In order to fully realize that potential, natural ecosystems need to be preserved, improved and expanded.”

 

APG, on behalf of its pension fund clients, invests in forests and agricultural land. When properly managed, these assets can sequester more carbon in the trees and soil, increasing the intrinsic value of the natural resource. In this way, the interests of stakeholders – investors, operators and local communities - can be aligned.

 

Tipping point

Prior to the corona crisis, Jos addressed a high-level conference co-organized by APG, where researchers, investors, companies and policymakers explored ways to make nature-based solutions (NbS) scalable and investable. “The market seems be at a tipping point”, says Jos. “Initiatives are still small-scale. But with large companies entering this market, existing developers can benefit from the financing, marketing and risk management capabilities that these new players bring along.”

 

One of the takeaways of the conference was that tackling climate change requires betting on many horses. Duncan van Bergen, VP Nature-based Solutions at Shell, for instance, explained that Shell is not only taking steps to reduce the carbon intensity of its products, but is now also investing $ 300 million a year in NbS. Many companies have announced plans to plant trees or (re)develop wetlands, in addition to their carbon reduction schemes. It is now generally accepted that keeping the rise of global temperatures well below 2 degrees requires large ‘negative emissions’.

 

Building an investment case

Scaling up NbS projects in terms of size and professionalism potentially makes them attractive for large investors like APG, says Jos. “It is not a matter of simply planting some trees but of using NbS to build up a sound investment case. In the long run, profitability can only be sustained if the land - our investment’s capital base - is well managed and shielded against degeneration. Investments in natural resources need to be sustainable to be commercially viable in the long term, and vice versa.”

The conference demonstrated the need for all involved – including companies, offerors of NbS, and investors – to pool their strengths to further develop this market. “When it comes to investing in natural resources, sustainability is not peripheral but the core of what we are doing. As a large investor, we have the opportunity to have an impact, even if only a little, with each of the many euros that we invest.”

Volgende publicatie:
Top position for APG in global sustainability ranking

Top position for APG in global sustainability ranking

Published on: 9 March 2020

APG is one of the global leaders in responsible investment. That is the assessment of ShareAction/AODP, which today announced its sustainability ranking. APG was awarded an A rating and ranked fourth in the world's 75 largest asset managers. ShareAction/AODP (Asset Owners Disclosure Project) is a social organization that assesses institutional investors on the approach they take to responsible investment. The focus is placed on climate change, human rights and biodiversity.

 

The A rating was this year’s highest assessment. In the previous ranking - the Global Climate Index 2017 - the world's 50 largest asset managers were assessed only on the extent to which they took account of the consequences and risks of global warming in their investment policies. At that time, APG was the only asset manager with the highest rating (AAA). With this year’s addition of human rights and biodiversity, no AAA or AA assessments were awarded. This is because no asset manager qualifies as a leader in all areas.

 

ShareAction/AODP's survey is in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), a global standard for how companies and investors can best report on climate change. ShareAction/AODP now also applies this standard to human rights and biodiversity. An A rating means that an asset manager is a leader when it comes to managing risks, opportunities and impacts in various (not all) areas of responsible investment.

 

“We're delighted with this recognition as a leader in responsible investment," says APG climate specialist Lucian Peppelenbos. APG regards the assessment as an incentive to continue to work with its clients on its responsible investment policy.” APG's largest client, ABP, recently announced its new sustainable and responsible investment policy. This focuses on three transitions: climate change and energy transition; resource scarcity and the approach to natural resources; and digitization. Respect for human rights and good corporate governance are important preconditions for this.

Volgende publicatie:
APG strengthens its position in Norwegian hydropower

APG strengthens its position in Norwegian hydropower

Published on: 18 February 2020

APG has increased its investment in the hydropower company Småkraft by €250 million for pension fund ABP. This investment follows two previous investments in the Norwegian company. This brings APG’s invested capital in this enterprise to a total of €550 million.

 

The extra capital enables Småkraft to expand its portfolio of hydropower plants in Norway and enables the construction of ten new, small-scale hydropower plants until 2022. Due to these new plants, the production of renewable energy will increase by 130 GWh a year. Ultimately, Småkraft will generate sustainable energy for 570,000 households.

 

Aquila Capital

 

A partner in this transaction is investment company Aquila Capital. It tracks Småkraft’s financial and operational policy on a daily basis and provides support where needed, says Viktor Filipan, portfolio manager of infrastructure at APG.

With 110 operational plants, the Norwegian company is the biggest operator of small hydropower plants in Europe, with a current production of nearly 1.2 TWh a year. And Småkraft is also a market leader on the technical level, Filipan concludes. “In terms of efficiency, these plants are top of the line.”

 

Right time

 

According to Filipan, the Norwegian hydropower producer also has an attractive risk/ reward profile. “We got into this at the right time and by now we have created a strong position in this market. With this platform, we distinguish ourselves from other big European investors.”

 

In addition, hydropower has several advantages as a form of sustainable energy generation: a long lifespan of dozens of years, low technical risks and predictability of energy production.  Filipan: “From the perspective of the infrastructure team, we are monitoring the possibilities of investing in large-scale hydropower plants. The storage capacity for this will be increasingly important in the future, to reduce the peak load of the electricity network. What we mean by that is that with the help of dams, you can save the water temporarily until the supply of wind and solar energy has gone down again.”

 

High demands

 

This investment is a good match with ABP’s new sustainable and responsible investment policy. One of the objectives in that policy is to expand investments in sustainable energy to €15 billion. Filipan: Aside from sustainable ambitions, it is important to us to set the bar high for all companies we invest in. This company meets our high demands.”

Volgende publicatie:
"We want to create a sustainable domino effect in aviation"

"We want to create a sustainable domino effect in aviation"

Published on: 10 February 2020

Airline companies must have decreased their net CO2 emissions to 0 by 2050. This strict requirement is set by a group of 122 big institutional investors in the sector, including APG, which invests over 3.4 billion Euros in the aviation industry by order to ABP, bpfBOUW, SPW and PPF APG. With a jointly managed capital of 6.4 trillion Euros, the investors expect they will be able to make a difference in realizing this goal. What is APG’s contribution going to be? We asked Lucian Peppelenbos, Team Manager GRIG and HansWerner Hitge, senior portfolio manager of Developed Markets Equities.

 

What are the main reasons for this appeal to the sector?

Lucian: “This agreement to stimulate the aviation sector to become sustainable together is part of a bigger collaboration: Climate Action 100 plus. This consists of over 400 investors worldwide, which challenge the biggest emitters of CO2 regarding climate. It also includes airline companies. We believe the momentum is there to bring awareness regarding aviation. The aviation sector in the United Kingdome recently set itself the goal to decrease CO2 emission down to 0 by 2050. That’s in line with our own objective, so that’s nothing new.”

 

Why should the sector worry about that? The aviation sector is not even included in the Paris climate agreement.

Lucian: “That doesn’t mean that the sector hasn’t been given any objectives. Branch organization IATA has expressed the ambition to cut the CO2 emission in half, as compared to 2005. A good step, but we think the bar can be set quite a bit higher.”

 

How is the sector going to achieve those objectives?

HansWerner: “There is still a lot of profit to be had with better efficiency: for example, by using the capacity of an airplane optimally. In addition, technological development can also make an important contribution. The technology to make organic fuel already exists. It’s just pretty expensive at this point.”

 

What about electric flying?

HansWerner: “I don’t see that happening anytime soon. On a small scale you see a few electric airplanes. But to get a 140-tonne machine off the ground with electrical power is a step too far. We have to be realistic about that: flying with zero emissions is in the distant future.”

 

Then how will it be possible to achieve 0 emissions by 2050?

Lucian: “We’re talking about the net-emissions here. A portion of the emissions will have to be compensated by, for example, planting new trees. The sector must strive to make this compensation portion as small as possible.”

 

How will you stimulate the sector to become more sustainable?

HansWerner: “In many cases, that is not even necessary. Take the British aviation sector, for example. The sector is realizing more and more that becoming more sustainable in many cases also means saving costs. More economical engines also have a considerable effect on the fuel consumption.” Lucian: “Of course, where necessary, we will also be having discussions with companies, independently, but also in collaboration with other investors, if the situation requires it.”

Lucian: “We’re hoping that showing good examples will create a domino effect. Last year, a tool was brought to the market for the aviation sector, which can be used to easily compare sustainable performances to each other, for example. What is striking is that there are big differences: that means there is still a lot of room for improvement.” 

Volgende publicatie:
Bar for sustainable investments at ABP is raised again

Bar for sustainable investments at ABP is raised again

Published on: 3 February 2020

ABP has presented its policy today in which the bar for sustainable and responsible investments is raised once again. The CO2 emissions in its equity portfolio, for example, have to be reduced by 40% and the investments in sustainable energy will be increasing significantly. What are the consequences of these ambitious goals for the companies and sectors in which ABP invests and what will change for the employees of APG Asset Management? We ask Peter Branner, CIO of APG Asset Management.

 

The sustainable goals ABP set itself until 2020 have all been achieved. What can you tell us about the results?
“Yes, ABP has amply met all goals set for 2020. In our role as executor we have contributed to this realization. ABP’s goal for listed shares was to reduce its CO2 footprint by 25 percent. The expected result is a reduction of 30 percent. The target for SDI’s was set at 58 billion Euro. A result of 64 billion was realized. The ambition for investments in sustainable energy was 5 billion Euro. The result turned out to be 6.4 billion Euro. We are proud to have contributed to these achievements.”

 

Was it a challenge for you to realize these goals?
“If you compare ABP’s goals with those of our competitors, ABP is in the forefront. The goals for 2020 were pretty ambitious for us.”

 

How was APG able to contribute to this success?
“ABP has given us clear goals to work on, which is very pleasant. Teamwork is an extremely important factor. These sustainable goals were embraced by the entire organization: from top to bottom. Our sustainability experts of the GRIG team (Global Responsible Investment and Governance) have played a major role in these accomplishments.”

 

The bar in the field of sustainability has been raised to yet another level in the new policy of ABP. What will APG do to also achieve those goals?
“We will mostly continue on the path we started earlier. However, the new goals are again quite a challenge for us. The policy also includes new themes on which we have to gain more knowledge. The theme of digitalization, for example, is fairly new. We truly believe that digitalization can contribute significantly in all sectors to more efficiency, cost reduction and sustainability.”

 

Can you give an example?
“Robotization is a trend in the construction industry. Increasingly more parts are made by robots. That ensures a faster construction process, less energy consumption and more efficient use of materials. It is important for this transition to a new way of working to be fair for the employees, for instance by paying attention to retraining of staff.”

 

What does this mean for the investment strategy of APG?
“We will focus more on the sustainable leaders. In many cases, these leaders are also leading the way in terms of digitalization. The digitalization agenda of individual companies will become increasingly important to us. If there’s no or hardly any planning in this field, it gives rise for us, as an investor, to doubt the future viability of a company.”

 

In addition to sustainability, a good return is also very important. Are there enough sustainable and profitable investment opportunities in the future?
“Time will tell. It is becoming more difficult for companies to meet our requirements. Some companies may possibly disappear from our portfolio. ABP has given APG the assignment to realize its sustainable ambitions without making any concessions regarding return and risk.”

 

How will you get these companies to follow your

lead?
“By using our influence as a shareholder to have companies implement improvements. In addition, the criteria of the inclusion policy will be tightened. We have recently concluded a number of “signature deals” we also want to confront other companies with as an inspiring example in the field of sustainability. Alpha Trains is such company. That ensures a major contribution to the reduction of CO2 emissions of the European train transport. And, obviously, we also just look at the hard figures.”

 

What is the effect of this policy on employees of APG?
“Digital skills are becoming increasingly important. Portfolio managers must be able to translate the trend of digitalization into interesting investment opportunities. We will select new employees more on that type of skills and we train existing staff in this field. In terms of investments, we will also make a huge switch towards digitalization. Our division for data analysis, Entis, helps us identify SDGs (Sustainable Development Goals). This is also something we hope to inspire other companies with.”

Volgende publicatie:
"Also dare to be an activist as an investor when it comes to sustainability"

'Also dare to be an activist as an investor when it comes to sustainability'

Published on: 24 January 2020

Include climate risks and climate performances in your investment portfolio. That’s the urgent appeal Thom Wetzer makes to APG and the present pension fund directors during the annual APG event “With a view to tomorrow”.

The professor Law and Finance at the Oxford University presented a narrative with two chapters last Thursday in Oegstgeest: the optimistic part revolved around apparent small actions that may lead to large movements. An until then unknown student Gretha Thunberg who decides not to go to school one Friday in protest against the climate policy and who gradually succeeds in mobilizing millions of people. According to Wetzer, it is also possible to put such snowball effect in motion when it comes to investments. The more investors invest in, for example, solar panels, the cheaper they will become and the more often these will be purchased.

 

Disastrous

However, Wetzer started his presentation with the pessimistic chapter. If we continue on an equal footing, the average temperature on earth will rise with 4.1 to 4.8 degrees. That would be disastrous, he concluded. “If the temperature rises 3 degrees, millions would be forced to migrate to other areas. The bad news is that climate change also has a lot to do with snowball effects, yet in a negative sense. “Take the melting glaciers as an example. Less sunlight is reflected due to the disappearance of glacial ice. That leads to the earth’s surface heating up. And that, in turn, leads to glaciers melting faster.”

The physical consequences of that climate change already have a major effect on the production and trade. The forest fires in Australia is a striking example. The Panama Canal is a different example. Due to the increasing drought in that area, vessels cannot pass the canal or only with a less heavy load. That has an enormous negative impact on the normal course of trade and, therefore, on investments.

 

Value portfolio

Investors are well advised to already include those types of risks in their portfolio, says Wetzer. In addition to these physical risks, there are plenty of other climate-related risks that may impose major effects on the value of a portfolio. “The sharply declining demand for coal has a huge effect on the value of companies. In the past 10 years, coal-fired plants in the United States have fallen in value with 99 percent. According to experts, oil companies have to anticipate a future oil price of 20 to 35 USD per barrel. That while they need a barrel price of 60 to 80 USD in order to be profitable.”

In contrast to these major climate risks, Wetzer foresees equally large climate opportunities. Such as Tesla, a company dominating the market of electric vehicles. And Volkswagen that, in response, invests billions in order to grow rapidly in the field of electric transport.

 

Climate opportunities

However, both climate risks and climate opportunities are often not included when it comes to choosing certain investments, concludes the professor. Why is that? “Many investors don’t look further ahead than 10 to 15 years. They therefore overlook many climate risks as those will occur later on. In addition, we only had limited information about climate risks and the possible financial consequences.”

Fortunately, that provision of information is improving rapidly, Wetzer notices. A group of large companies, including APG, has developed the so-called Taskforce of Climate Related Financial Disclosures. A standard used to assign a certain value to risks. Banks and regulatory authorities are also in need of more information on climate risks. In addition, advancing insights also ensure more clarity on possibly promising technologies. 

Investors no longer have any reason to ignore climate risks and climate opportunities, says Wetzer. He is happy to provide investors with some tips. Have a good look at your current portfolio. Is it still balanced? Are the climate risks not weighing too heavily?

 

APG

According to Wetzer, APG is one of the frontrunners in the field of sustainable investing. “A strong asset of APG, in my opinion, is the scenario analysis. That scenario also takes into account the consequences of possible future scenarios. Another strong feature of APG is the actual assessment it makes for companies in terms of their sustainable activities. “A company such as Shell is doing well on that part. By entering into a dialog as an investor regarding the non-sustainable activities, the oil giant is now making important steps in the field of sustainability.”

Be sure to engage in a conversation as an investor, but do not shy away from the role of activist if that doesn’t work, is Wetzer’s advice. “Threatening legal action or the sale of shares also is a powerful tool to set companies in motion.”

Volgende publicatie:
Equity consortium agrees to acquire stakes in New York’s Astoria Energy facilities

Equity consortium agrees to acquire stakes in New York’s Astoria Energy facilities

Published on: 17 January 2020

New York City, January 17, 2020 A consortium of equity investors including APG, MEAG (Munich Re’s asset manager acting for investors from within Munich Re Group), and Clal Insurance Company, alongside other US institutional investors have agreed to acquire 100% of Astoria Energy I and a 55% interest in Astoria Energy II. Located in Queens, New York, the facilities total 1.2 GW of combined-cycle generation. The plants are expected to provide reliable and required power as New York transforms its energy sector in the decades to come.

 

The assets are two of the most efficient natural gas plants in New York City. Astoria I provides merchant energy and capacity into the New York power market, while Astoria Energy II operates under a long-term tolling agreement with the New York Power Authority through mid-2031. The transaction is subject to regulatory approval and is expected to close in the first half of 2020.

 

Steven Hason, Head of Americas Real Estate & Infrastructure at APG said, "As a pension investor, we are continuously looking for attractive infrastructure investments that help us realize stable and long-term returns for our pension clients. This transaction represents an opportunity to invest in facilities that provide reliable baseload electricity to New York City and will provide system stability through New York’s energy transition. We look forward to working with our partners who share our long-term investment goals with regard to this critical infrastructure asset."

 

Holger Kerzel, Member of the Board of Management at MEAG, stated, "We are keen to invest in the United States, given the large US share of Munich Re’s insurance portfolio. Electricity supply for New York City is an attractive investment opportunity for Munich Re, given the moderate risks and stable and sustainable returns. The high level of long-term income stability will cover the liabilities in the insurance business of our clients. We are pleased to have teamed up with professional partners in this investment project to form a successful long-term relationship."

Yossi Dory, Clal’s Chief Investment Officer, said, "We are proud to invest alongside reputable investors such as APG and MEAG in long-term, high-quality assets with a proven track record and excellent performance. The Astoria projects, which are the backbone of the New York City electric power system, will create long-term, sustainable returns for our pension, provident, and insurance members."

 

Holland & Knight and Sidley Austin LLP acted as legal counsel to the equity consortium.

Volgende publicatie:
APG contributes to low carbon European train transport

APG contributes to low carbon European train transport

Published on: 20 December 2019

APG, on behalf of its pension fund clients, has acquired an indirect 41.1% interest in Alpha Trains, the leading passenger train and locomotive leasing company in Continental Europe. Alpha Trains provides rolling stock to train and locomotive operators under leases, which provides train operators with the flexibility to respond dynamically and commercially to opportunities presented in the rail transport market, independent of long-term investment considerations. The majority of the fleet is electric, making a significant contribution to the decarbonisation of Europe’s transport sector.

 

Peter Branner, CIO of APG, about this investement: “As a long-term responsible pension investor, we are continuously looking for attractive investments that help us realise stable returns for ABP and the other pension fund clients we work for, while at the same time contributing to a sustainable world. The investment in Alpha Trains Group perfectly fits our investment strategy: Alpha Trains’ fleet of mostly electric trains and locomotives promotes sustainable, low carbon mass transport within Europe while also offering access to a long-term business model with strong growth and resilient cash flows.”

 

About Alpha Trains

The Alpha Trains portfolio consists of more than 800 passenger trains and locomotives on lease across Continental Europe (including Germany, France, Italy, Spain and Benelux) where it is the market leader amongst the privately-owned rolling stock lessors.
Alpha Trains participates in the annual GRESB survey – a leading Environmental, Social and Governance (ESG) benchmark for infrastructure investments across the world – and has been ranked first among their peers in the global diversified infrastructure funds and rolling stock asset class categories, respectively.

 

See press release

Volgende publicatie:
APG expands hotel investments with City ID and Harrington Hall

APG expands hotel investments with City ID and Harrington Hall

Published on: 16 December 2019

APG has expanded its hotel portfolio with the investment in the Dutch hotel chain City ID and the Harrington Hall hotel in London's South Kensington. City ID is one of the leading players in the field of aparthotels (merging apartments and hotels). Aparthotels have all the advantages of a hotel (cleaning - service - meal service) but consist of apartments instead of rooms.

 

The locations of City ID distinguish themselves in different parts from the more traditional hotels. They offer an ideal solution for guests looking for longer-term accommodation, says Robert-Jan Foortse, head of European Property Investments at APG. “In our opinion, there is a considerable market opportunity to roll out this concept to the major European cities. We look forward to getting started with the City ID team. ”

Amsterdam

City ID currently has three hotels in Amsterdam. For the past two years, City ID has opened the Twenty Eight hotels on Stadionplein and Boat & Co in Houthaven. Unique interiors, attention to design, a wide range of services; with those characteristics, the hotel scores one of the highest customer ratings in the city.

Alexander Goad, CEO of City ID, sees APG as an important partner to realize that growth. “APG is a leading strategic investor in Europe. The company has a great track record when it comes to putting innovative hotel chains on the international map. ”

Harrington Hall

In addition to the investment in City ID, APG has taken over London's Harrington Hall Hotel in a joint venture with real estate investor London Central Portfolio (LCP). It is  a redevelopment into an all-suite hotel in the upper middle class. The hotel focuses on budget-conscious business guests and tourists.

With the shares in City ID and Harrington Hall, APG is steadily expanding its investments in the hotel sector. Other interests of APG in the European hotel sector are Archer Hotels, CitizenM and The Student Hotel. According to Robert Jan, these are investments with an attractive long-term return compared to the risk involved. He anticipates that the sector will receive a further boost in the coming years due to the expected growth in tourism and business travel.

Volgende publicatie:
APG paves the way on responsible investment in fixed income

APG paves the way on responsible investment in fixed income

Published on: 16 December 2019

Historically, sustainable and responsible investment in fixed income has been much less developed than in equity. But in recent years investors have been making headway in this respect. APG - on behalf of its pension fund clients - paves the way: we aim to improve issuers’ ESG performance and to further develop the market.

Equities still receive the lion’s share of attention from the responsible and sustainable investment community. Compared to other assets, equity includes a large body of ESG (Environmental, Social and Governance) research, numerous benchmarks and indices, and clear connections to corporate engagement. But change is under way, says Tim Slüttter, Head of European Credits at APG Asset Management. “Investors are discovering that fixed income is well suited to both benefit from and provide finance for ESG-related efforts. APG wants to be at the forefront of this development and pave the way for further market development.” 

 

Making headway

In the past few years, APG has made headway in integrating ESG into the investment process. Since fixed income accounts for about one third of assets under management, strengthening ESG performance in this asset class contributes greatly to the responsible investment ambitions of our pension fund clients. It also reduces ESG-related risks in the portfolios and improves ESG in the broader fixed income market. 

APG’s approach towards ESG in fixed income is not that different from investing in equity. “When making investment decisions, we always consider return, risk, costs and ESG, regardless of asset class,” explains Herman Slooijer, Managing Director Fixed Income. “But it is precisely the consistent integration of ESG across asset classes – what we call inclusion – that is particular to our approach.”

 

Bondholder engagement

Still, responsible and sustainable investing in fixed income differs in some important respects from equity investment. “Bondholders obviously cannot exercise voting rights,” says Slütter. “So you’d think that fixed income investors can exert less influence over companies. However, we see that companies that are receptive to the views of their shareholders also listen carefully to their bond holders. This is especially true for companies that regularly need money for growth or refinancing.” 

 

Under the radar

Another difference is that although the universe of possible investments in equity and fixed income is similar, it is not exactly the same. “As bondholders we are also in dialogue with smaller non-listed companies”, says Slütter. These are companies that remain under the radar in the equity space. “Many such companies are not used to having to disclose financial data - let alone ESG information - on a regular basis to a larger group of investors. We have reached out to over several hundred such companies. With most of these we now have a productive exchange of information on issues such as environmental risks, supply chain oversight and workers safety.“

 

Driving the green bond market

A fairly recent innovation in the fixed income space are sustainable, green and social bonds. At the end of 2018, APG had € 6.9 billion invested in bonds of which the proceeds are earmarked for specific environmental or social projects. This makes us one of the largest investors in the worldwide green bond market. “Over the years, we have established a productive dialogue with issuers and potential issuers, as well as banking syndicates, regulators and certifiers,” says Slooijer. “We use our network, experience and knowledge to further develop the green bond market.”

Clearly communicating or expectations can help alleviate issuers concerns about the market’s response to a potential green bond program and thereby serve as a market stimulus. Therefore, APG earlier this year published its Guidelines for Green, Social and Sustainable Bonds.

 

Global approach

“In the US, we also see rising awareness from both companies and investors, albeit from a lower base, with companies increasingly integrating ESG in their risk frameworks and strategies,” says Ann-Marie Griffith, Managing Director Credits US. “We have been building our presence and are now reaping the fruits of our efforts.” In the US market, APG has been particularly active in fostering (corporate) green bond issuance, which still lags far behind the European market. This involvement resulted, among other things, in the recent issuance of the first-ever US bond related to the UN Sustainable Development Goals.

 

The road ahead

Going forward, Herman Slooijer identifies three ambitions for APG when it comes to ESG in fixed income. “First, to continue our work on improving disclosure and performance of issuers. Second, to further develop the green bond market, and make sure we better understand and measure real world impact . And third, to create an approach for ESG integration in government bonds. ESG-awareness has greatly increased over the past years. The next step is to capitalize on that.” 

Volgende publicatie:
Global investors harmonize carbon accounting methods

Global investors harmonize carbon accounting methods

Published on: 12 December 2019

A growing number of financial institutions are making the CO2-impact of their investments and loans visible. They are thus taking an important step towards aligning their portfolios with the Paris climate goals.

 

Worldwide, 57 financials have now adopted the PCAF carbon accounting methodology, of which APG is one of the founding members.  

 

PCAF’s latest report, presented at the Madrid Climate Summit, shows the progress that has been made with its carbon accounting methodology. At present, 57 financials with total assets of 3.5 trillion USD in assets have adopted the Partnership for Carbon Accounting Financials’ guidelines and methods. It is strong indication that the initiative – which started out in 2015 as a cooperation of 12 Dutch financial institutions – has evolved into a worldwide collaboration. 

 

No exact science

In his contribution to the report, APG’s chair Gerard van Olphen underlines the importance of harmonized CO2 disclosure guidelines and methods. “Laudable carbon reduction intentions are meaningless without solid, trustworthy carbon accounting. With the consequences of climate change becoming increasingly visible around us, responsible investing intentions in cadence with robust carbon accounting is needed more than ever.” 

 

In 2015, APG’s pension fund clients adopted the target to reduce the carbon footprint of the listed equity portfolio with 25% in 2020 (compared to 2015). “Currently, we have achieved a reduction of 29%, so well on track to meet our clients’ target”, says Joost Slabbekoorn, responsible investment specialist at APG. “But measuring emissions is not an exact science. We want it to be more than a paper exercise, and therefore the assumptions underlying the calculation must be transparent and verifiable. This is essential to establish trust and, ultimately, to make a meaningful contribution to reduced CO2- emissions.” 

 

Commitment of the Dutch financial sector

APG believes that the financial sector can play a vital role in the transition to a low-carbon economy and the realization of the Paris climate goals. To underline this, Van Olphen recently chaired the Financing Task Force which focused on the contribution of the financial sector to the Dutch Climate Agreement. The commitment of the financial sector requires parties, among other things, to disclose the carbon footprint of relevant loans and investments (2020) and to announce plans of action and reduction targets for 2030 (no later than 2022).  

 

The commitment of the Dutch financial sector does not prescribe a specific method for reporting, explains Slabbekoorn. “PCAF brings the experience with measuring carbon footprints of different parties together. In this way we learn from each other and will move faster in our aim to contribute to the Paris climate goals. Also, harmonization in terms of reporting is needed for the Dutch financial sector to be able to collectively report on its contribution to reduced emissions.”  

 

The road ahead

APG’s largest client, pension fund ABP, is currently in the process of defining a new responsible investment policy for the period 2020-25. “A carbon footprint target is likely to feature again as part of the new policy”, says Slabbekoorn. “Also, as part of the Dutch Climate Agreement, we will also devise ways to measure the carbon footprint of other asset classes beyond listed equity.” 

Volgende publicatie:
APG buys majority stake in German North Sea mega wind farm

APG buys majority stake in German North Sea mega wind farm

Published on: 10 December 2019

APG today announced the acquisition of a 64% stake in Merkur Offshore, a large wind farm in the German North Sea. The acquisition is made on behalf of its pension fund client ABP. The recently completed wind farm, with a capacity of 396 MW, is fully operational and provides enough renewable energy for the equivalent of 500,000 Dutch households. The project will save c.18 million tonnes of CO2 equivalent over its project life.

 

The remaining 36% of the wind farm will be acquired in partnership with funds managed by InfraRed Capital Partners Limited, a leading international investment manager focused on infrastructure and real estate. Financial details of the investment are not disclosed.

The Merkur Offshore wind farm consists of 66 General Electric (“GE”) Haliade-150 offshore wind turbines, with a capacity of 6MW each, spanning an area of ​​approximately 47 km². The wind farm is located 45 kilometers off the north German coast, making it invisible from land.

 

Patrick Kanters, Managing Director Global Real Assets at APG: “As a pension investor, we are continuously looking for attractive, responsible infrastructure investments worldwide that help us realize stable and long-term returns for ABP and other pension fund clients we work for. Our investment in this large wind farm Merkur Offshore, on behalf of ABP, fits the core of our strategy. Not only do we expect solid returns, it also marks a major step in the growth of our renewable infrastructure portfolio, providing sustainable energy to hundred thousands of households. We look forward working together alongside InfraRed in the years to come.”

 

This acquisition represents APG’s second investment in the offshore wind sector, following its previous investment in Walney 1 in the UK, and builds on its already substantial renewable energy portfolio across Europe, which now totals in excess of 2GW.

APG makes this investment on behalf of ABP and ppf APG.

 

Read the ABP (NL) press release here. The APG (EN) press release can be found here.

 

Watch a short film about the construction of Merkur Offshore below.

Volgende publicatie:
APG to acquire share in car park owner and operator

APG to acquire share in car park owner and operator

Published on: 23 October 2019

APG / ABP today announces that it is taking a 39% interest in Interparking, one of the largest providers of parking solutions in Europe.

 

Why does APG invest in Interparking?

“This investment is an excellent opportunity to gain access to a high-quality European portfolio of parking locations with an attractive long-term return for ABP and their participants. Moreover, we see potential for further growth in the future.”

“The investment fits in a larger development that we see in the field of "Smart Cities & Smart Mobility". Parking solution providers will play an important role in the "Smart City ecosystem". A Smart City is an ecosystem in the field of infrastructure, services and digital solutions that increase the quality of life, economic growth and sustainability.”

 

How can this investment be reconciled with our sustainable and responsible investment policy?

“That link can be easily made. Interparking contributes to fewer traffic jams in cities and fewer parked and driving cars on the street. This also leads to fewer emissions in cities. Interparking also undertakes various activities to promote sustainability. The company works in a CO2-neutral manner in all countries where it is active, including through the placement of solar panels on its locations. In addition, Interparking installs charging stations to meet the growing demand for charging electric cars.”

 

Parking rates in garages can sometimes be very high. How does Interparking handle this?

“This is of course an important theme for consumers. Part of Interparking's strategy is that they do not strive for price maximization. The parking fees that are applied are often lower than those of direct competitors. The reason for this is that Interparking believes in a long-term relationship with consumers and municipalities. So that the company remains relevant in the future. Interparking also applies lower rates for environmentally friendly cars and there are discounts for students and parking in the evenings and weekends.”

 

Can we expect more from this type of infrastructure investment in the coming years?

“Our pension fund clients want us to invest more in infrastructure. Thus, we are constantly looking for other possible attractive investments in this investment category. As with our other investments, we always look at the right mix of return, risk, costs and esg factors. We expect to add various investments in infrastructure to our portfolio in the coming years.”

 

Read here ABP press release

Read here APG press release

Volgende publicatie:
APG drives sustainable development goals with collective investments

APG drives sustainable development goals with collective investments

Published on: 17 October 2019

APG wants to ensure, like 29 other large international companies and investors, that hundreds of billions of euros can be invested in the sustainable development goals of the United Nations.

 

The cooperation program is first set out to continue for two years. The collective will collaborate with the United Nations during that time to provide recommendations that should promote those long-term investments in SDGs.
The 17 SDGs together form a blueprint for a better and more sustainable world, such as clean energy, climate actions and the fight against poverty. Much more money is needed to finance these goals than can be contributed by governments; meaning companies and investors have to contribute as well. The collective has set the objective of significantly increasing the investments of the private sector in sustainable development goals.

Large companies
The group of investors present themselves as Global Investors for Sustainable Developments (GISD) and further consists of large companies active in the world of finance, such as GPIF, CDPQ, PIMCO, CalPERS and also Bank of America, Citigroup, ICBC, Infosys, Investec, Santander and UBS.
António Guterres, Secretary-General of the United Nations, emphasizes the importance of the GISD in a statement. The growing gap between the rich and the poor, disasters, conflicts, global warming; Guterres is happy to notice CEOs feeling a strong sense of urgency to address these subjects quickly. “This cooperation transcends national borders and sectoral boundaries. Collaboration even takes place at competitive level, and with good reason”, says the Secretary-General. Investing in the SDGs, according to him, is very sensible, both ethically and commercially.

 

Duty
Ronald Wuijster, board member of APG, considers it a necessity for the financial sector to collaborate in order to create solutions for a sustainable future. “APG manages the pensions of millions of hard-working people in the Netherlands. It is our duty to see them enjoying their pension in a stable, eco-friendly and equitable world.”

The pension provider, together with PGGM, recently announced the establishment of the SDI Asset Owner Platform. The goal of this initiative is to bring together like-minded long-term investors in order for them to be able to invest in the SDGs based on the same definition, classification (taxonomy) and data.
This initiative also fits in seamlessly with the objectives of the clients of our pension fund: ABP (goal: 58 billion euro) and bpfBOUW (goal: 12 billion euro) want to have considerably more investments in the sustainable development goals (SDIs).

Volgende publicatie:
Pension fund ABP again the most sustainable fund in the Netherlands

Pension fund ABP again the most sustainable fund in the Netherlands

Published on: 10 October 2019

APG's largest client ABP leads the ranking of sustainable Dutch pension funds. Just like last year. The Association of Investors for Sustainable Development (Vereniging van Beleggers voor Duurzame Ontwikkeling, VBDO) announced this today, on Sustainability Day, at the presentation of the VBDO Benchmark for Sustainable Investing.

 

The association presented the list at the annual Congress of the Dutch Pension Federation. ABP scored 4.6 out of 5 points. APG's other asset management clients also achieved good results. BpbBOUW went from a third place last year to a nice second place this year. SPW kept its fifth place.

 

Every year, VBDO examines the performance of the responsible investment policy of Dutch pension funds. The benchmark assesses the 50 largest pension funds in the Netherlands, together accounting for 92% of the assets under management with a total value of more than € 1,230 billion.

 

Each fund received a list with a total of 50 questions, divided into four categories: governance, policy, implementation and accountability. VBDO indicated that they had raised the bar somewhat this year, because they see more and more development in the field of responsible investing.

 

Interested? Download the full VBDO report here.

Volgende publicatie:
Cooperation with investors in CO2 reduction is bearing fruit

Cooperation with investors in CO2 reduction is bearing fruit

Published on: 3 October 2019

Together with other major investors, APG achieves results when it comes to reducing the CO2 emissions of the companies in which it invests. Companies are emerging in almost all sectors that play a leading role in the transition to a low-carbon economy. At the same time, the sustainability strategy of the vast majority of companies is not yet in line with the Paris climate goals.

 

This is evident from the first progress report from Climate Action 100+, a group of more than 370 large investors to which APG is also affiliated on behalf of its pension fund clients. This initiative, founded in 2017, aims to jointly put pressure on 161 companies that are responsible for the majority of the  CO2 emissions worldwide. The participating investors together have $ 32 trillion under management, about a third of all the money invested globally by institutional investors.

 

Encouraging results

Climate Action 100+ requires companies to provide insight into the climate risks for the company and to take measures to reduce greenhouse gas emissions. Companies must formulate long-term ambitions in line with the Paris agreements (limiting global warming to well below 1.5 ° C) and translate them into concrete, measurable objectives. Some examples of results achieved by Climate Action 100+:

  • Shell has formulated long-term goals for reducing CO2 emissions, and will link the remuneration of top management to concrete goals in the short and medium term.
  • Heidelberg-Cement and Maersk, the largest shipping company in the world, have announced that they will be fully climate neutral in 2050.
  • Rio Tinto mining group has ceased its activities in coal.
  • Volkswagen has formulated long-term climate ambitions and will have 70 electric models on the market in 2028.

Within Climate Action 100+, APG is part of the so-called core group of investors who mainly focus on the major oil and gas companies. In addition, APG coordinates the dialogue with companies in the food sector and we are in charge of discussions with Unilever and Nestlé. The latter company recently announced that it wants to be completely CO2 neutral by 2050.

 

Still insufficient

According to Climate Action 100+, the first results are "encouraging." At the same time, the report states that only 9% of the companies involved are currently doing enough to align CO2 emissions with the Paris climate targets. “Although there are leaders in every sector who adjust their strategy and have the ambition to work climate-neutral, many still have to follow. The task ahead of us remains immense," according to the report.

"The progress we have made with a number of leading companies through Climate Action 100+ shows that we as institutional investors make a difference," says climate specialist Lucian Peppelenbos. “But more companies will have to take steps. Where necessary, we will continue to increase the pressure together with other investors."

Volgende publicatie:
Out of the trenches

Out of the trenches

Published on: 23 September 2019

"Shouldn't we, after all, have a fundamental discussion about whether the risk-free interest rate is really the only measure that can achieve balanced risk sharing between the elderly and young people, in a collective pension contract?". This is what Peter Gortzak, head of APG policy, questions this week in his column for ESB. His contribution focuses on the interest rate term structure (risk-free rate) that pension funds are required to use to calculate their funding ratios. Now that the interest rate is extremely low, the financial position of funds is under great pressure. "These are special times," said Gortzak. "Shouldn't we come out of the ever-deepening trenches?" 

Read the full text here: (Dutch only)

 


 

Schuif de dogma’s terzijde

Peter Gortzak Hoofd beleid bij APG

Het zijn bijzondere tijden. De inkt van het pensioenakkoord was nog niet droog of het gesteggel tussen akkoord-sluitende partijen ving aan over die uitwerking. Dat was voorzien.

Men heeft daarom ook een hele kerstboom opgetuigd om de uitwerking ter hand te nemen met als piek het zogenaamde escalatieniveau waar knopen zullen moeten worden doorgehakt waar werkgroepen, commissies, voorbereidingscommissie en de stuurgroep niet uitkomen.

Als je je oor te luisteren legt spreken collega’s van een lege verzameling: alle voorwaarden willen realiseren in één contract is onmogelijk.

Andere collega’s spreken van uitroken: een vooropgezet doel om vanuit het huidig ftk, al dan niet via een alternatief collectief contract, uit te komen op een variant van de verbeterde premieregeling.

Een harde noot die gekraakt moet worden is wat nou eigenlijk belangrijker is; de doelstellingen of de piketpalen in het akkoord. Is er ruimte om de gestelde doelen voor het SER-contract op een net iets andere manier te realiseren?

Uiteindelijk zal de discussie niet worden beslecht in de stuurgroep maar op het escalatieniveau: minister en voorzitters van sociale partners.

Wat niet voorzien was, waren de recente ontwikkelingen. Die zijn zo bijzonder dat je in enkele weken van je geloof kunt vallen en dat zelfs de beste jongens en meisjes van hun klas in verlegenheid worden gebracht. Ik heb het natuurlijk over de rente.

De rente is idioter gedaald dan tot voor kort voor mogelijk werd gehouden. De vraag is inmiddels gerechtvaardigd of het uitgangspunt van de rentetermijnstructuur, nog steeds kan worden gehuldigd.  Zelfs de meest verstokte aanhangers van een risicovrije rente, in een overigens door iedereen erkend niet meer bestaand model van zekerheid, zullen zich toch achter de oren moeten krabben of de consequenties ook door hen zo zijn bedoeld.

Inmiddels, mede met de door de parametercommissie vastgestelde nieuwe grenzen, én de fors verder gedaald rente, zitten vrijwel alle fondsen in een schuitje waar niemand ze in verwacht had. Is het niet vanwege een kortingsdreiging dan is het wel de dramatisch gedaald premiedekkingsgraad die noopt tot rigoureuze maatregelen.

Pleit ik dan voor nooit korten? U kent mij beter. Maar déze situatie vergt nadere overweging.  

Dat de rente langer laag blijft geloof ik direct. Maar dat we met een negatief rendement moeten rekenen snap ik niet. Als je het pensioen in Nederland voor een belangrijk deel stoelt op kapitaaldekking dan ga je toch uit van een bepaald te halen rendement, hoe bescheiden ook, en niet van 40 jaar negatief. Om dan tegen een deelnemer te zeggen, u legt 100 euro in om over 40 jaar 98 euro te ontvangen, terwijl er, zeker gemiddeld, wel degelijk rendement kan worden bijgeschreven, is gek.

De vraag is dan gerechtvaardigd of wij wel door moeten gaan met een (deels) op kapitaaldekking gebaseerd stelsel. Ik pleit niet voor opheffing daarvan. Integendeel. De kracht van ons stelsel zit m juist in de combinatie van een op omslagbasis én kapitaaldekking gebaseerd pensioen.

Maar ook als je voor een minder rigoureuze oplossing kiest: de route naar de verbeterde premieregeling lost niet alle zaken op. Ook in dat systeem heb je de rente nodig om te bepalen tegen welke prijs een opgebouwd kapitaal wordt omgezet in een uitkering.

Zelf zou ik het  jammer vinden als we het door de SER voorgestelde contract met de uitgebreidere risicodeling overboord gooien, alleen omdat de marktrente nu zo idioot laag is. Bovendien zal het schragen van de verplichtstelling, een wens die alle partijen zeggen te hebben, zonder dit contract niet eenvoudig blijken te zijn. Zeker niet als transparantie en duidelijkheid voor de deelnemer tot de doelstellingen horen.

Moeten we eigenlijk toch niet gewoon een fundamentele discussie hebben over de vraag of de risicovrije rente werkelijk de enige maatstaf is waarmee in een collectief pensioencontract een evenwichtige risicodeling tussen ouderen en jongeren kan worden bereikt.

Zouden we niet eens uit de steeds dieper wordende loopgraven moeten komen, de dogma’s terzijde moeten schuiven, erkennen dat de bijzondere situatie vergt en mogelijk maakt zonder gezichtsverlies van wie dan ook serieus te overleggen of de huidige systematiek niet voor een andere zou moeten worden ingeruild?

Volgende publicatie:
'Global SDI Asset Owner Platform is leading the way on sustainable investing’

'Global SDI Asset Owner Platform is leading the way on sustainable investing’

Published on: 11 September 2019

What is the SDI Asset Owner Platform?
“The SDI Asset Owner Platform allows asset owners to connect around a shared objective of understanding to what extent their portfolio investments contribute to the UN Sustainable Development Goals (SDGs). These goals, set by the United Nations in 2015, aim for a better, livable world. For example by building more sustainable cities and generating more clean energy. The SDI Asset Owner Platform provides a common definition, taxonomy and data source for investments into the SDGs, offering insights that can be used by investors to analyze, select and engage with their worldwide investments.”

 

Why is this important?
“An increasing number of global asset owners and institutional investors aim to understand the contribution they make, through their investments, to the SDGs. Now, APG and its likeminded partner PGGM have joined forces with the goal of creating a critical mass of asset owners who together define what it means to be investing in the SDGs. These insights can be integrated into the investment process, and also allow investors to shift more capital to SDIs. Speaking a common language improves engagement with companies and eventually should drive more meaningful disclosures by companies, too. As asset owners report on the same basis on their investments into the SDGs, their disclosures become comparable and provide stakeholders with more transparency.”

 

What powers this platform?
“In 2018 APG took over the data analytics team from Deloitte and established the company Entis. The team had successfully applied its technical infrastructure and smart algorithms to identify investments that contribute to solutions to the important global challenges. In 2018, APG then asked Entis to apply this specifically to the UN Sustainable Development Goals, in line with the SDI taxonomy published jointly with PGGM in 2017. The taxonomy is supported and used by several other investors like CBUS. In less than a year, by the end of 2018, the Entis team analyzed an investment universe of some 10,000 global listed companies and identified the SDIs among them. Using artificial intelligence and big data allows investors to assess very large numbers of investments on their contribution to the SDGs and integrate this information into their investment process.

 

How does the SDI Asset Owner Platform relate to the responsible investment goals of APG and its clients?
“Our largest client ABP, the € 430 billion Dutch civil servants pension fund, in 2015 set the target to double its investments in the SDGs to € 58 billion by 2020. Another client, Dutch builders pension fund bpfBOUW, also set a target of € 12 billion. It is therefore crucial that we can identify Sustainable Development Investments. They always have to meet our clients’ financial risk and return requirements from the outset ”

 

How does the SDI classification assess an investments contribution to the SDGs?
“The SDI classification measures how much of the business relates to products and services that contribute to SDGs. It is based on relevant financial or operational metrics, for example revenue and capital spending, as well as contextual information. Looking ahead, we have the ambition to develop metrics that give insight not only into how much we invest into companies that contribute to the SDGs and to which ones, but also into the outcomes those companoes have achieved. An Example is the number of people provided with access to financial services.” 

 

How does the SDI Asset Owner Platform link with other external reference frameworks?
“The SDI taxonomy considers established standards an important source and reference and will make use of them where  suitable. Importantly, the SDI Asset Owner Platform is global in nature and hence takes a global view across all SDGs.”

 

What is to happen next?
“With APG and PGGM joining forces to establish the SDI Asset Owner Platform, the SDI framework is gaining traction and leading the way as to how institutional investors can contribute to the  UN Sustainable Development Goals. Together we will offer this pioneering approach to likeminded institutional investors across the globe, and welcome them to join the SDI Asset Owner Platform.” We feel strongly supported by other asset owners, such as for example  Australia’s leading building and construction pension fund who has adopted the SDI framework and the Universities Superannuation Scheme from the UK who will work with the SDI AOP in assessing its exposure to and support for the SDGs”.

Read the press release here.

Volgende publicatie:
“You can work for millionaires or you can work for millions of people”

“You can work for millionaires or you can work for millions of people”

Published on: 6 September 2019

CIO Peter Branner was interviewed recently by IPE and talked about future growth, responsible investing and his vision on long-term.

 

In the interview, Peter talked about where APG can find future growth for pension fund clients and its beneficiaries: “I think it’s fair to say that the return expectations in Europe are of course very much linked to the fact that we have negative yields, and every asset class is, somewhat, feeling the gravity of that fact. So, for sure it will be a challenge in liquid asset classes for the foreseeable future. And for demographic reasons, Europe will not be the place where you see global growth, for sure.”

However, Peter does sees attractive possibilities in Europe, for example sustainable investments in green technology, where he says Europe is at the forefront in areas like wind turbines: “We will continue to invest in infrastructure in Europe, an area where I think Europe is in high demand. And even with the gravity to negative yields there is still quite a good yield on those deals. I think that it makes perfect sense in Europe to focus on that area, whereas, if you look at the liquid markets, maybe our eyes are more focused on going further east towards Asia. I think it’s fair to say that more of the deals we see in infrastructure and real estate will come from Asia. That’s why we are also beefing up our presence in Hong Kong.”

 

Responsible investing
With clients like ABP under intense scrutiny, ESG is a key consideration, particularly in the sensitive area of exclusions. Here, APG is driven by what its clients want in terms of ESG criteria, but in line with other pension and asset managers it has taken its own stance in recent years and has integrated ESG in portfolio management.

In terms of ESG, as Peter puts it, “the whole investment organisation is basically doing it”. He explains: “Maybe I’m talking the obvious here, but I think it’s so important that sustainability is embedded in the investment process. Because if you don’t do it, it becomes an overlay and it doesn’t necessarily benefit our ultimate clients. Whereas if it is integrated in the investment process, some of these sustainability themes work to the benefit of the companies that we invest in, and we think that they will become long-term winners by doing it. That will be to the natural benefit of our investors and our pension holders.”

 

Long-term
Peter also has a clear vision on the APG investment organisation: “My role is to help the organisation to be able to be long-term investors. I really think that a professional investment organisation is dependent on two things: hiring a lot of investment talent, and then keeping it together for a long time. It sounds simple, but what is talent changes over time. Really, to attract and keep talent on board is top of my agenda. To make that happen, you need to create a certain level of civility and trust in an organisation. What we can call psychological safety, for employees to feel that they can act within this long-term.”

The use of technology can be beneficial for APG’s pension fund clients, says Peter: “I think technology and digitalisation will play a big role in all parts of the investment process, and the whole value chain of what we offer here. They all have to have a certain element of skill in this area. It’s like languages. They all need to speak English; now they also need to talk a little bit of digitalisation. Or at least to be able to set requirements for how they see their data being digitalised fully. I think that has happened across the company. Then you have an extremely powerful proprietary data warehouse that you can use to benefit clients in the investment process.”

 

Read the full interview by Liam Kennedy on the website of IPE.

Volgende publicatie:
APG achieves important progress toward sustainable goals

APG achieves important progress toward sustainable goals

Published on: 16 July 2019

In 2018, APG has made significant progress in realizing our pension fund clients’ stated ambitions in the areas of sustainability and responsible investment.

 

These results were announced in the Responsible Investment Report 2018, published today.

Nearly € 70 billion in sustainable development investments
By the end of 2018, APG had invested € 69.2 billion (2017: € 55.3 billion) in companies that contribute to the UN Sustainable Development Goals (around 15% of assets under management). The two largest pension fund clients, ABP and bpfBOUW, have specific targets for these Sustainable Development Investments (SDIs) in 2020. APG, together with PGGM, has developed a framework for determining which companies with their products and services contribute to sustainable development.

 

Important progress in inclusion
In 2018, APG has also taken significant steps forward with the ‘inclusion policy’. This means that all 10,000 companies APG can invest in through shares or bonds are assessed in terms of risk, return, costs, and how responsibly they operate. By the end of the year, APG had assessed 7,700 companies (2017: 600) on the basis of these criteria. Our clients have indicated that, from 2020 onwards, they only want to invest in companies that meet all criteria, or that can reasonably be expected to improve as a result of investor engagement.

 

At the forefront of assessing climate impact
Also in 2018, APG received international recognition for its leading position in identifying climate risks and their possible impact on our investment portfolio. In research by the Asset Owners Disclosure Project (AODP), APG is the only asset manager in the world with the highest (AAA) rating when it comes to taking into account the effects of global warming on investments. In 2018, APG carried out additional analysis to determine how fast the global energy transition is progressing and what impact climate change may have on the portfolio, and hence on the pensions of our clients’ beneficiaries.

 

Carbon reduction and renewable energy
The carbon footprint of APG’s equity investments decreased by 28% in 2018 (against the reference year 2014). All our pension fund clients have the stated ambition to reduce carbon emissions in the equity portfolio by 25%. APG’s investments in renewable energy amount to about € 3.25 billion (11% of total investments in the energy sector). With more than 300 other major investors, APG cooperates in Climate Action 100+ to put pressure on 161 companies that are responsible for the most carbon emissions worldwide. 

 

Why we want to invest responsibly
APG wants to enable the pension fund clients to provide their beneficiaries with a good pension in a livable world. By looking at more than just financial factors, APG believes it can make better long-term investment decisions and, at the same time, contribute to a sustainable future.

Volgende publicatie:
APG commits up to €370 million to Australian real estate debt

APG commits up to €370 million to Australian real estate debt

Published on: 1 July 2019

APG has made its first foray into real estate debt within Asia Pacific via dedicated Australian commercial real estate debt manager, MaxCap Group (“MaxCap”).

 

APG has successfully pursued real estate debt strategies in Europe and US for over five years and expects to deploy further capital into such strategies across the Asia Pacific region.

 

In a statement announcing the transaction Graeme Torre, Managing Director and Head of Private Real Estate, Asia Pacific, said:

“As a pension investor, we are continuously looking for attractive investments worldwide that help us realize stable and long-term returns for our pension fund clients. We see the structural shift in the Australian banking sector market dynamics contributing to a convergence of equity and debt returns. A real estate debt strategy therefore offers us the opportunity to access this asset class with an appealing risk /return proposition. We believe that MaxCap, with its on-the-ground knowledge, reputation for responsiveness and proven track record, will be a strong long-term partner for APG.”

 

Wayne Lasky, co-founder and Managing Director of MaxCap group stated “We are delighted to partner with APG on this scalable and sustainable strategy. CRE debt as an institutional asset class in Australia is in an early cycle and we’re looking forward to a long-term relationship with APG to deliver strong risk adjusted returns for its clients and their members.”

 

The investment was done on behalf of ABP, SPW and PPF APG.

 

Read the press release here.

Volgende publicatie:
Ronald Wuijster in FT: “People assume there are no savings left”

Ronald Wuijster in FT: “People assume there are no savings left”

Published on: 20 June 2019

Head of asset management at APG, Ronald Wuijster was profiled in The Financial Times this week, to discuss his asset management work, as well as the many recent pension reform developments in the Netherlands.

 

The Dutch government agreed this month to delay changes to the retirement age, but cuts to payouts by occupational pension funds still loom. The proposed reforms will shift more risk and responsibility on to individual savers. The FT aimed to find out more about these reforms, from the viewpoint of APG, Europe’s largest pension fund manager.

 

“People assume there are no savings left”
Even though the Dutch pension system ranks as the world’s strongest, trust in the Dutch pension system has sunk. Nearly two-thirds of Dutch people are not confident they will be able to retire when desired or maintain their standard of living in retirement, according to a survey by State Street in 2018. Young people in particular feel unfairly treated as their contribution rates have increased but they fear the system will run out of money before their retirement arrives. Wuijster: “There has been so much bad press that people assume there are no savings left at all for pensions. In fact, there are substantial sums of money that have been saved that can be used for pensions.”

 

“Too much risk buffering”
“I feel there is too much risk buffering in the system. That is my personal opinion,” says Wuijster. Dutch pension funds are required to use a highly conservative discount rate to calculate liabilities, which means that most have seen no improvement in their funding position. Occupational pension funds must also maintain sizeable solvency buffers — additional funding — to ensure they can meet payouts. 

 

Making people more conscious about pension
The article highlights the personal pension pot and the ‘clear overview and insight’ service as examples of how APG works to make people more conscious about their pension. “The reality is that 75 per cent of the pension must be earned from investments. The contributions from employers and workers amount to 25 per cent. Savers don’t realize about discounting or the time power of money,” explains Wuijster in the FT profile. It also mentions the Groeifabriek and initiatives such as Kandoor, with which APG is working on innovation for ‘the day after tomorrow’.

 

Achieving a good return in a sustainable way
Over the past decade, APG has delivered net annualized returns (after fees) of about 10 per cent for its largest client ABP, the pension fund for government and educational employees. “We have had 10 years of great performance and we expect returns will be lower over the next decade,” the asset management head cautions in the article.

APG has also already reached its 2020 target for decarbonizing its portfolio and is thinking about fresh objectives in the environmental, social and governance field. Wuijster talks about APG’s second major goal: to contribute to a sustainable world as an investor: “We try to engage with energy companies and to make them aware of the challenges of climate change, but we don’t say no to fossil fuels today. We need to be realistic and look to influence the change.”

Volgende publicatie:
“We are in it for the long term”

“We are in it for the long term”

Published on: 24 May 2019

Interview Ronald Wuijster with Management Scope

 

At APG we ensure that millions of Dutch people have a so called ‘income for later’. “We do this by obtaining a good return, that’s our main aim. Leading on from this we also have a second goal: to contribute as investors to a sustainable world.”, says Wuijster. “We consciously invest in leaders in the area of sustainability and in companies with the potential to become leaders in the future. If you just invest in companies that already have fantastic performances in terms of sustainability, you don’t improve the world.”

 

Attractive employer

This way of working makes APG an attractive employer for investors:
“Many employees find satisfaction in contributing to the pensions of millions of people and exerting influence on companies and governments to make them behave in a socially responsible manner. Our employees can work at these goals with substantial assets behind them, they can enter new markets and look for new investment possibilities with good returns worldwide.”

 

More comprehensive investment process

Regularly, people talk on the possible dilemma of returns versus sustainability. Wuijster says: ‘In practice we’re seldom faced with that dilemma, because we look at our investments from an overall point of view. The portfolio managers themselves take various perspectives into account in their considerations, including sustainability factors. If you look only at economic factors or cash flow, you get a good, but one-sided picture of company performance. Portfolio managers were quick to see that a broader perspective actually strengthened the investment decision. So it made our investment process more comprehensive.”

 

Long term

In the interview, Wuijster underlines the long term focus of APG to maximize pension value for pension funds and participants: “We still see too many shareholders and directors with a horizon of just three months. As long-term investors we believe you have to look much further ahead. We also see this too as part of our purpose: to contribute to shifting companies’ and governments’ short-term horizon.”

 

Wuijster concludes: “At APG we don’t invest on impulse. People sometimes think that our trading floor is powered by testosterone. In this I must disappoint them: it’s certainly not the case. We're in it for the long term.”

 

Read the full interview here (in Dutch)

Volgende publicatie:
APG and Whitehelm Capital invest in Californian fiber network

APG and Whitehelm Capital invest in Californian fiber network

Published on: 8 April 2019

APG and Whitehelm Capital, on behalf of the Smart City Infrastructure Fund, have agreed to partner with SiFi Networks America to invest over $75 million in the deployment of Smart-City ready digital infrastructure in the City of Fullerton, California. The investment will enable the roll-out of the largest privately funded open access fiber network by SiFi in North America.

Arjan Reinders, Head of Infrastructure Europe at APG said “as a long term responsible investor, we are very excited to announce the partnership with SiFi to support investments that promote the development of sustainable societies across select urban areas in the United States.”

 

The project that will be carried out in the City of Fullerton meets the investment objective of the Smart City Infrastructure Fund to improve quality of life and upgrade a city’s physical infrastructure by way of increased digitization.

 

Fullerton has a population of approximately 135,000, with some 50,000 homes and 5,000 businesses. The fiber network will cover the entire municipality area. It is expected that between 33% to 50% of broadband customers (residential and commercial) will migrate to the new network over time. The network will also be used by the municipality to deliver city-wide services, such as wi-fi, public sensors, traffic control signals, CCTV operations, streetlighting control systems, and catch basin flood sensors.

 

Arjan: “We expect attractive long term revenues from this investment in Smart City infrastructure, due to the chosen commercial strategy. We also see potential for additional growth.”

 

The Smart City Infrastructure Fund – the first of its kind globally – was established by APG and Whitehelm Capital in November 2018 to provide long-term funding for Smart City infrastructure projects enabling cities and communities to become more inclusive, safe, resilient and sustainable. The Fund was launched with in initial commitment of €250 million from APG.

 

“We are seeing a strong pipeline of similar projects worldwide, where APG and the Smart City Infrastructure Fund intend to play a critical role in bridging the funding gap to deliver innovative Smart City solutions for city governments. Today’s announcement fits the long term goals of ABP and other pension fund clients we work for.”

The investment was done on behalf of ABP and PPF APG.

(Press release)

Volgende publicatie:
APG expands its investments in hotels: fresh capital to CitizenM

APG expands its investments in hotels: fresh capital to CitizenM

Published on: 27 March 2019

Today it was announced that APG has committed fresh capital to CitizenM to facilitate the further growth program of this highly successful hotel company. At the same time, it was announced that GIC, Singapore’s sovereign wealth fund, has acquired a stake of 25% in CitizenM, valuing the company at approximately €2 billion. In addition, GIC and founder Rattan Chadha (through KRC Capital) have also committed further equity to accelerate the growth of the company. In total, CitizenM will have €750 million of additional equity available to invest.

 

Strong investment case

APG invests in hotels for its pension fund clients because they demonstrate an attractive risk/return profile.  “Hotels benefit from various megatrends. Think for instance of the increase in global tourism, in part driven by an emerging middle class around the world’ says Robert-Jan Foortse, head of European Property Investments. He also mentions the growing importance for people to have experiences. ‘Modern travelers are looking for experiences and tend to put less value on material things. Travel is an important experience in their lives. Nowadays, modern travelers, including millennials, have different expectations when they are looking for accommodation.’

The investments in hotels have performed very well over the past years. Growing tourism and increase in business travel have led to higher occupancy numbers, and increasing room rates. As a result, the value of the hotels which are mostly located in central city locations has increased, leading to double digit returns from these investments. which equates to roughly 5% of the total real estate portfolio of €42 billion.


Next to the aforementioned CitizenM and Archer Hotel Capital, APG also has an investment in a Dutch-based company called The Student Hotel. Furthermore, APG holds private investments in hotels and hotel chains in Brazil and India, as well as investments in various publicly-listed hotel companies around the world. In total, APG’s hotel investments amount to approximately €2 billion.

 

CitizenM

CitizenM was started 11 years ago and continues to grow rapidly. APG has invested in the company from its inception. CitizenM offers “affordable luxury for the people” and currently has 15 hotels in operation in cities like Amsterdam Rotterdam, London, Paris, Copenhagen, New York, and Taipei. In addition, the company has 25 hotels under development in top global cities, amongst others including Boston, Seattle, San Francisco, Los Angeles, Washington, Miami, Shanghai and Kuala Lumpur.

 

Archer Hotel

Recently, it was also announced that APG, through Archer Hotel Capital, had increased its investment in a number of leading European hotels. Since 2006, APG had been invested with Host Hotels & Resorts and GIC in a company that owns eleven hotels in key European cities with an asset value in excess of €2 billion. Together with GIC, APG has now acquired the interest that was owned by Host Hotels. For that purpose, Archer Hotel Capital was created to own the eleven hotels are now part of this newly-created joint venture.

 

The hotels are located in Western European cities like London, Barcelona, Brussels, Paris and Berlin. Archer Hotels also has two hotels in the Netherlands, the Hilton at Schiphol and the Renaissance Hotel in Amsterdam.

Volgende publicatie:
‘We discovered 1320 new Teslas’

‘We discovered 1320 new Teslas’

Published on: 25 March 2019

Entis and APG reach one-year mark

 

In less than twelve months’ time, smart algorithms scanned 10,000 companies for their contribution to a better world. Gerben de Zwart, Director of Quantitative Investment, looks back on the first year of Entis: the team that uses artificial intelligence to generate higher return and boost sustainable investment.

 

A good pension in a sustainable world. To achieve that goal for ABP and the other pension fund clients and their participants, APG uses both traditional investment methods and innovative technologies like artificial intelligence. These smart algorithms can identify sustainable companies as well as pick up on hidden clues to help investors assess opportunities for return and risks earlier and more accurately. To speed up the pace of innovation, APG acquired Deloitte’s data analysis team last year: thirteen women and men who apply artificial intelligence and big data to sustainable investment. The team continued as a separate APG business unit known as Entis. ‘This is the Ferrari of investment innovations,’ says Gerben de Zwart, whose quantitative investment team works closely with Entis. He tells us just how quickly things have accelerated in a single year.

 

What has been achieved in the past year? 
‘In just one year, Entis categorized 10,000 listed companies around the world in an SDI classification system: how sustainable are their products, and can they be considered a Sustainable Development Investment (SDI) on this basis? We used the United Nation’s seventeen sustainable development goals as a starting point for this evaluation. As a responsible long-term investor, we want to know whether companies are working on SDGs and if so, how seriously they take them. To find out, Entis scanned all annual reports, websites, and Chamber of Commerce registration details of these 10,000 companies using artificial intelligence and machine learning.’

 

Was it a lot of work? 
‘It was an enormous job. But if we had had to do this manually, this task would have taken much longer or been impossible altogether. Take the theme ‘affordable and sustainable energy:’ smart algorithms were able to analyze all sources for key words like ‘solar panels,’ ‘carbon emissions,’ and ‘climate change’ at lightning speed. This information was then compared to sales and revenue figures. This allows you to determine the extent to which the revenue from a company’s products and services contributes to the SDGs, to a better and more sustainable world. A business may claim that its activities are green, but sometimes their actions do not back this up. A combination of these algorithms and human supervision can see through such so-called greenwashing. Entis’ SDI classification system helps us as investors to identify front runners when it comes to sustainability. We were looking for a new Tesla, and we ended up finding no less than 1320 of them! This information is unique and cannot be found anywhere else in the world.  This is confirmed by conversations we have had with fellow pension funds: not just in the Netherlands, but also in Japan, Scandinavia, and Australia.’

 

Any other highlights?
‘Artificial intelligence can also be used to get a more accurate estimate of risk and return. Entis built an infrastructure to scan text and language use in annual reports and other mandatory business reporting. We processed over 400,000 documents in all. For example: by looking for similar products you can cluster companies in a different way, across traditional sector lines. This helps you map out companies’ real competitors. A company like Facebook, for example, competes with both IT companies and media companies, and car manufacturers are facing competition from unexpected places too, like Google’s self-driving car. This insight helps investors assess the performance of companies in this new competitive field as well as the risks more accurately.’

 

What other applications are there? 
‘Another example is scanning annual reports for textual changes compared to the previous year, for example in the risk paragraph. This typically indicates issues and future share price drops, according to Lazy Prices, a report by Harvard researchers analyzing the annual reports of American listed companies. However, most investors only respond to this type of hidden signs months after the fact. So investors who do keep an eye out for these negative - and sometimes positive - clues can gain an advantage. In the past year, Entis used intelligent algorithms and machine learning to scan the annual reports of over a thousand American companies for textual changes. A third project focused on mapping the diversity of company boards. A study from Tilburg University showed that companies with a high level of diversity on the board achieve a 0.4 percent higher return per month than companies whose board is virtually homogenous. Entis reproduced this study, but did not consider the results sufficiently convincing to include diversity as a criterium in our investment strategy as yet.’

 

What else has the Entis team worked on in the past year?
‘Aside from generating insights for APG’s investors, the Entis team transferred its proprietary technology platform from Deloitte to an autonomous environment in the Cloud, including the accompanying innovative technology. The technology platform offers important added value. For example, the platform has significantly sped up document scanning: processing time was reduced from weeks to days. The next step is to expand the existing platform to the production environment. In future, this will allow the investment policy for our pension clients and their participants to benefit from Entis’ innovative insights on a daily basis.’

 

What challenges have you faced in the past year?
‘Using artificial intelligence for successful and responsible investment on the long-term is a new idea. As a result, we constantly have to forge our own path. Moreover, there are enormous amounts of data involved: analyzing this takes a lot of time. Staying focused is another challenge. We selected just a few projects to start off with, but we have thirty innovative ideas on our shelf.’

 

What tangible results have been achieved so far?
'Knowledge is power in investment. And Entis has been very busy gathering knowledge this past year. Assigning an SDI classification to those 10,000 businesses was an important milestone. Aside from that, we are currently investigating how the patterns identified by the algorithms could improve the return of our investment strategy. This analysis should determine whether we want to use this information in our investments. We want to consider this carefully: after all, we are now talking about a quantitative equities portfolio of around fifty billion euro under management on behalf of our pension clients.’

 

What can these innovative investment methods offer our pension fund clients and participants?
‘In the near future, we expect artificial intelligence and Big Data to facilitate better investment decision-making, helping us deliver more pension value to the funds. For example, it allows us to identify SDI companies and help achieve our clients’ sustainability ambitions: the 1320 Teslas offer us the opportunity to invest in this type of high-potential business early on. That way, innovations in quantitative investment can help contribute to higher returns and thereby better pensions for the participants: our predictions of when to invest in which companies are getting increasingly accurate, and so is our assessment of risk.’

 

So Entis was worth the investment?
‘Absolutely. The role of unstructured data in investment is increasing. Our acquisition of Entis has allowed us to skip ahead three years compared to where we would be if we had had to do this alone. With the SDI classification system we now have in place, we can take a leading role in sustainable investment for our pension fund clients across the globe. We are now exploring the possibility of granting other pension funds access to the classifications.’

 

How will investing look in the future - will humans still be involved, or will all investment decisions be made by algorithms and robots?
‘We are firm believers in the combination of people and computers. Computers can increasingly take over search and analysis tasks. This allows portfolio managers to work more efficiently and frees them up to make investment decisions. They will continue to perform manual checks, and their expertise and experience will be a key factor in the process. So even in a future with artificial intelligence, humans will remain a constant.’

Volgende publicatie:
APG-QIC Consortium acquires interest in Brussels Airport

APG-QIC Consortium acquires interest in Brussels Airport

Published on: 16 March 2019

Pension investor APG in partnership with alternatives fund manager QIC has agreed to acquire a 36% interest in Brussels Airport.

 

Patrick Kanters, Managing Director Global Real Assets at APG: “As a pension investor, we are continuously looking for attractive infrastructure investments worldwide that help us realize stable and long-term returns for ABP and other pension fund clients we work for.”

 

“This investment in Brussels Airport, on behalf of ABP, fits the core of our strategy as it represents an attractive opportunity to gain access to high quality, resilient infrastructure with promising long-term growth potential. Together with our partners, we are excited to be working alongside existing Brussels Airport shareholders Ontario Teacher’s Pension Plan and SFPI/FPIM over the long term.”

 

Ross Israel, Head of Global Infrastructure, QIC, said, “I’m delighted that our team has been successful in their bid to secure a high-quality core infrastructure asset on behalf of investors in the QIC Global Infrastructure Fund and for one of our long-standing institutional partners.”

 

“This addition to our portfolio provides our clients with important geographic and sector diversification and given its strategic nature, strong downside protection through market cycles. It also directly aligns with our strategy to use active management to build long-term value for our clients.”

 

Brussels Airport – Belgium’s largest – is a freehold perpetual airport located in the political capital of Europe, host to EU and NATO headquarters. It is a strong performing gateway airport, supported by a transparent and stable regulatory regime. 

Volgende publicatie:
After Shell, BP is also committed to climate strategy

After Shell, BP is also committed to climate strategy

Published on: 1 February 2019

Lucian Peppelenbos APG: 'This is a signal to other companies'

 

On behalf of ABP, APG, together with other large investors, filed a climate resolution with oil and gas company BP. ‘This also sends a signal to other companies’, says Lucian Peppelenbos, member of the Responsible Investment Team at APG.

 

At the end of last year, Shell tightened its climate policy, fueled by large shareholders. Now, the large oil and gas company BP is also under increased pressure. Climate Action 100+, a collaboration of large investors, including both APG and pension fund ABP, has filed a climate resolution with BP, which will be put to the vote at the shareholders’ meeting. The resolution poses three demands on BP: a strategy consistent with the Paris Climate Agreement, formulating climate ambitions and goals for the short, middle and long term, and an annual report on this. Senior executives of the British oil and gas company support the resolution. A breakthrough, according to Lucian Peppelenbos, senior responsible investment & governance specialist at APG, which handles investment of pension funds for ABP, bpfBOUW and SPW, among others, and supports the resolution on behalf of them. 

 

The resolution was filed by Climate Action 100+. What is the organization’s mission? 

‘Climate Action 100+ consists of more than three hundred large shareholders, together representing more than 32 trillion dollars. That is about a third of all the money being invested worldwide on behalf of and by parties such as pension funds and insurance companies. APG is a member of Climate Action 100+'s core group. Through global collaboration, we can exert more influence on companies and their climate policies. We focus on 161 companies, that together represent eighty percent of global Co2 emissions. We did this with Shell previously, and now we are doing it at BP through the submission of a resolution.’

 

At Shell, a joint statement was made by shareholders. Why the choice for a resolution for BP?

‘We have been discussing the Paris Climate Agreement with BP for years. Until now the company was barely prepared to be guided by the Paris Agreement's climate goals. BP just appointed a new Chairman, who clearly does understand the importance of a climate policy in which BP defines its future as a company within the energy transition. The new Chairman prefers a resolution over a joint statement, because of its binding nature. Perhaps BP executives will provide additional mandate internally for a strategy that demonstrably contributes to the Paris Agreement. That commitment is the largest progress we will gain through the resolution.

 

As of 2020, Shell will set concrete climate goals, and it will link its rewards to this. To what extent does the BP resolution differ from this?

‘The resolution does not go as far as the Shell agreement. Shell will set concrete climate goals for the short, middle and long term. These are aimed at the company's CO2 emissions and at greenhouse gas emissions through the use of third-party products. Rewards for Shell top executives will become partially linked to achieving these goals. The BP resolution is about formulating climate ambitions for the long term, combined with measurable targets for the company's own CO2 emissions in the short run. For greenhouse gas emissions through the use of products, the resolution initially asks BP to start measuring these emissions. The resolution also asks to link rewards to climate policy.’

 

Does it go far enough? A resolution by activist shareholders collective Follow This is also on the table, with the same requirements for BP as for Shell.

Follow This’ BP resolution demands binding long-term targets, until 2050. We believe that it is impossible to set goals that far ahead. After all, no one can predict the future. As long-term investors we would rather see a gradual transition, instead of an overly ambitious, risky climate policy. BP has appointed new top executives, who have the right mindset. Based on this resolution, we will continue the dialogue with them in the years to come for achieving leading climate policies at BP.’

 

Can we expect more resolutions in the near future?

‘This resolution is also a signal to other companies. We will also ask this climate policy from them: formulating ambitions for the long term, translated into concrete and measurable goals for the short term, connected to reward policies and structural progress reports. We will continue the dialog on this. Many companies’ current strategies end in 2020. In the new strategies, climate has to play an even more prominent role. Not only for oil and gas companies, but also for companies in other industries, such as mining, chemistry or food.’

Volgende publicatie:
"The green, green grass of home"

"The green, green grass of home"

Published on: 18 January 2019

APG is to invest over 500 million euros in green mortgages for pension funds ABP, bpfBOUW and SPW through Rabobank subsidiary Vista. Two birds with one stone: a good long-term return for members and a contribution to the sustainability of the Netherlands, explain Menno van den Elsaker and Kay Mennens.

 

An old Dutch nursery rhyme begins with the words ‘In Holland is a house’. Now, in 21st century Holland, there are as many as 7.5 million houses, all of which under the coalition agreement must have energy label A by 2030 and be energy neutral by 2050. All these houses have to be adapted to meet the new sustainability requirements. A major social challenge: how do we get this done together, and who will pay for it?

 

Investing a billion in five years

ABP, bpfBOUW and SPW plan to contribute to this by investing over 500 million euros in sustainable mortgages of the new provider Vista, a Rabobank subsidiary. Vista acts as the 'managing partner': the pension funds provide financing, Vista the provision of the mortgage to the consumer and administrative settlement. ABP, bpfBOUW and SPW plan to invest through APG a billion euros in Vista mortgages over the next five years, about half of which will be sustainable. For comparison; ABP invests 19 billion euros in mortgages worldwide of which 4 billion in the Netherlands.

 

Sustainability discount on mortgage interest

Vista's green mortgage offers an 0.1 percent interest discount to customers who make their homes more sustainable to meet the requirements of energy label A during the term of the mortgage, or who buy an existing or new house that already meets that requirement. The investment fits in with the ambition of ABP, bpfBOUW, SPW and APG to invest more sustainably and frequently in the Netherlands. In addition, mortgages also provide a stable, long-term and sustainable return for the pension fund member, say Menno van den Elsaker and Kay Mennens, who are responsible for the investment at APG.

Interest rates are historically low. How can investing in mortgages still yield an attractive return?

Menno van den Elsaker: ‘This low interest rate applies not only to mortgages, but even more so to government and corporate bonds. Viewed in this light, investing in mortgages still provides a relatively attractive long-term return.’

Kay Mennens: ‘We can earn 1 to 1.25 percent extra on mortgages compared to corporate bonds. Also, investing in mortgages involves only a limited risk. Experience shows that Dutch homeowners faithfully meet their payment obligations.'

 

How did the idea for a sustainable mortgage come about? 

Van den Elsaker: ‘In 2018 we were approached by Vista to work together on mortgages. We were the first investor to join, so we were able to put our wishes on the table. We made our investment subject to the condition that at least half of the mortgages would be linked to sustainability. This fits in well with the sustainability agenda of APG and the pension funds, but also with that of Rabobank, as the parent organization of Vista.'

 

Why don't you invest that whole billion in green mortgages? At present, half of it still goes to grey, non-sustainable mortgages.  

Mennens:  ‘Approximately 28 percent of the collateral for our investment is currently green (i.e. newbuild or existing homes with energy label A). That means that if you only invest in green mortgages, you exclude the majority of consumers. We also feel that it’s important for consumers to think about their existing home if it is not yet green. That’s why Vista makes it possible for customers to receive the sustainability discount from 1 April if they make their home more sustainable during the mortgage term.’

 

How green are these mortgages? The consumer is given an 0.1 percent discount on the interest. On an average mortgage of 250,000 euros, that’s 250 euros a year. Is that enough to encourage consumers to invest in an energy-efficient home and compete with other green mortgages?

Mennens: ‘That might not seem much an annual basis, but over the entire term of the mortgage we're talking about thousands of euros. There aren't yet many other green mortgage providers. Compared to that, Vista offers a simple sustainable mortgage with a relatively quick procedure for its provision. Other suppliers sometimes link the discount to stricter sustainability requirements, which raises the threshold for the consumer.'

 

Van den Elsaker: ‘Other than that, in the future we’ll be able to work with Vista on tweaking discounted rates, sustainability requirements and volume, depending on how the market develops. It's also the intention that in the coming years other large investors will also join for more volume.’

 

Do you dream of greening APG's global mortgage portfolio as well?

Van den Elsaker: ‘Our primary objective is to achieve a good pension for the members. That means constantly finding the right balance between the desired long-term return and investing the money as sustainably as possible. Greening the mortgage portfolio is part of this. We see this as a good first step.’

Volgende publicatie:
'It feels good to make a difference, like we did with Shell'

'It feels good to make a difference, like we did with Shell'

Published on: 11 December 2018

Following a lengthy dialog with APG and other major investors, the moment has arrived: Shell is going to set concrete climate targets and make part of the remuneration of its top executives dependent on achieving them. Jags Walia and Terhi Halme on holding companies to account.

 

What contribution are you making to solving the problem of climate change?’ This is the question that Jags Walia, senior portfolio manager at APG, raised at the shareholders’ meeting of oil and gas group Shell in 2015, and again the following year, shortly after 174 countries had signed the Paris Agreement. In the meantime intensive discussions had been held with Shell’s top executives. The company came forward with a long-term target of halving its carbon footprint by 2050. Although more ambitious than the targets of other oil and gas companies, this did not go far enough for APG and other major investors. They insisted that concrete climate targets should be set for the short and medium term and linked to remuneration so the company could actually be held to account. It was recently announced that Shell had listened to its institutional investors and would be introducing the requested measures from 2020.  

 

Leaders and laggards
APG uses its 482 billion euros of invested capital (July 2018) on behalf of its pension funds – among which ABP and bpfBOUW-  to exert an influence over companies and encourage them to take their responsibilities. This is referred to as engagement. ESG (environmental, social and governance) factors have been fully integrated into its investment policy: alongside risk, return and costs, for new and existing investments consideration is also given to aspects such as the environmental and social performance of companies. APG actively invests in companies that are leading the way in these areas and conducts probing discussions with the laggards, or ‘achterblijvers’, as they are known in Dutch. This Dutch word is even used by investment professionals in the US and Hong Kong, albeit with a heavy accent, chuckle Walia and Terhi Halme, senior sustainability specialist.

 

Does Shell’s decision represent a breakthrough in the area of engagement?  
Jags Walia: ‘Absolutely. The questions raised at the shareholders’ meeting and the discussions with the management clearly served as a wake-up call. Shell was the first company in the oil and gas sector to set ambitious targets for its CO2 emissions and is now taking an extra step to realize these ambitions. They are also imposing their own standards on their suppliers and industry peers, which may prompt other parties to follow their example, as is already the case at Total. This generates momentum and that’s something we are pleased to see.’

Terhi Halme: ‘As APG we are keen to play a leading role with a responsible investment policy, on behalf of the pension funds that we work for. Certain sectors, such as tobacco and controversial arms manufacturers, are excluded. For all other categories we adopt an integrated approach: that means we don’t focus on risk and return alone and only then consider the ESG factors separately, like a layer of veneer on top. Our investment decisions are a combination of all factors. By investing in the leaders and putting pressure on the laggards, we can realize the returns that pension participants require and also reduce the risks of our investments. Shell is one example of that.’

 

Do companies listen sufficiently to what APG has to say?
Walia: ‘APG has 750 million euros invested in Shell. My mother-in-law, on the other hand, has invested just 150 euros. That means she has no way of influencing the company, but we do. The same goes for the other companies in which we invest. Over the past twelve years I have undertaken four engagement projects with companies and in the end they all listened to us, although sometimes it can take a while.’

 

What do you do if companies are not quick enough to act? 
Halme
: ‘We talk to various people, including management, within a company about a range of topics. These issues can be both financial in nature and related to social or environmental issues. If the management disagrees with your view, you look for other approaches. For example, we can ask to speak at the shareholders’ meeting, use our voting rights and work together with other investors to increase the pressure for change.’

 

As was the case with Shell’s Arctic oil drilling?
Walia: ‘Initially, the discussions we held with the then management concerning the risks, including a potential oil spill, did not go as we had hoped. When the current CEO, Ben van Beurden, took up his post, a constructive dialog developed. Nevertheless, we were still not given immediate access to the manager in charge of the Arctic project. To increase the pressure, we expressed our views at shareholders’ meetings and gave interviews. Three days later Shell invited us to join them on a trip to the Arctic. It was June and I was standing amidst the ice in my T-shirt.’

 

What were your impressions?
Walia: ‘I noticed that the local population was not anti-Shell, but were actually pro-Shell, because of the investments the company was making in infrastructure. The locals even held a prayer meeting on the drilling platform. I was also impressed by how quickly Shell would be able to respond to an oil spill: it would need just 12 to 24 hours, whereas it took BP four months to deal with the oil spill in the Gulf of Mexico. Nevertheless, I still had concerns, which I shared with the management upon my return. On September 24, 2015, at 7.30 a.m., Shell announced that it would be halting its drilling in Antarctica.’

 

NGOs often say that APG and other major investors should pull out of companies like Shell to force them to change.
Halme: ‘Divestment is hardly ever the most effective option. We want to bring about positive change, which is why we put so much energy into engagement.’

Walia: ‘If you simply sell your shares, you’ve done nothing to make the world a better place. You’re washing your hands of the issue. You also don’t know whether the buyer of these shares will make their voice heard. We see it as our responsibility to do just that. We need to earn money so that people have access to a decent pension later in life. But we need to do this in a responsible way to ensure that in future we still have a planet on which people can retire.’

 

Earlier this year you also spoke to Madonna Thunder Hawk, a tribal elder of the Lakota Sioux. She is waging a crusade against the construction of oil pipelines on American Indian land.
Walia: ‘It was one of the nicest meetings I’ve had in my career. Madonna believed that responsible investment is a binary choice: if you have concerns about a company’s behavior, you divest. If you stay, you evidently don’t care. We explained to her that there is also a third way: exerting an influence. We share her concerns and also asked her for her help: what are her and the local community’s experiences of the improvements that we agreed with the company behind the oil pipeline? We need independent sources, in addition to the management and NGOs. We can then go back to the company with this feedback.’

 

What is your personal motivation in carrying out this work?
Walia: ‘If you manage to exert an influence, as in the case of Shell, it feels really good. I have children and as a parent and a human I am concerned about the future.’

Halme: ‘My children give presentations on climate change at school and that affects you. I find it inspiring to seek out opportunities to invest in companies that act responsibly or to make a contribution to positive change. This personal commitment is a characteristic of every member of our team.’            

 

Volgende publicatie:
APG wins IPE-award for sustainable investments

APG wins IPE-award for sustainable investments

Published on: 5 December 2018

On Tuesday december 4, 2018 received the IPE-reward for environmental, social and governance (ESG) investments. The award was granted in recognition of APG’s efforts to develop tangible criteria to determine whether or not a company’s products and services contribute to the UN Sustainable Development Goals (SDGs).

 

Gerben de Zwart, Head of quantitative equities at APG, received the award at the annual IPE Conference, which this year was held in Dublin. ‘Our clients are explicit about the specific societal goals they want to achieve and actively allocate capital to. We have developed an innovative methodology to measure and disclose their contribution to the UN Sustainable Development Goals, while meeting their risk and return requirements.’

 

As part of this effort, APG has created a framework (the so-called SDI Taxonomies) to translate the UN Sustainable Development Goals into UN Sustainable Development Investments (SDIs), bridging the gap between the UN’s targets and tangible investment opportunities. APG is currently taking steps to integrate big data and artificial intelligence to further advance the company classification of SDIs for the benefit of our clients and their beneficiaries.  

Two of our clients have set concrete targets for their SDI exposure in 2020: ABP aims to have €58 billion in SDIs, whereas bpfBOUW has set a target of €11 billion. Last year, APG received the IPE-award for Climate Related Risk Management.

Volgende publicatie:
Engagement bears fruit: Shell makes sustainability targets more concrete

Engagement bears fruit: Shell makes sustainability targets more concrete

Published on: 3 December 2018

Sustainability targets also linked to top remuneration

That engagement in the area of ​​sustainability and ESG with listed companies bears fruit is shown by the statement that Shell publishes together with a large number of institutional investors today. The investors, including APG, together account for around $ 32 trillion and acted jointly on behalf of the Climate Action 100+.

 

Shell announced today that it will set targets in the foreseeable future to reduce its 'Net Carbon Footprint' in the long term and thus contribute to the realization of the Paris Agreements and to combat climate change.

At least as important is that Shell now wants to link these goals to the remuneration of top management.

These are both points on which APG, in the name of the funds for which it works, was in close dialogue with the top management of Shell. This as part of the embedding approach of APG.

 

On behalf of ABP, the largest pension fund for which APG works, Corien Wortmann stated: "This is an important step, as Shell's management is making further progress towards contributing to achieving Paris's climate goals. That Shell has now embedded its ambition in its remuneration policy offers confidence that Shell is really committed to it. long-term responsible investors and shareholders in Shell, we keep in touch with the company and follow the progress with interest, and we hope that other companies will follow Shell."

 

Read more

The press release of Shell and investors

Financial Times: "Shell yields to investors by setting target on carbon footprint"
 

Volgende publicatie:
APG already invests over 4.8 billion euros in renewable energy

APG already invests over 4.8 billion euros in renewable energy

Published on: 27 November 2018

Fair Insurance Guide doesn't include alternative investments APG

 

The Fair Insurance Guide (FIG) has conducted a study into the role of investors in combating climate change. The FIG does not include APG's 4.8 billion investment in renewable energy in its research. The study only looked at investments in listed shares, while APG also invests heavily in sustainability in other ways. At the end of 2017, APG recorded an increase of no less than 85% in investments in renewable energy compared to 2015. In the same period, the CO2 footprint fell by 27.5%. This is all set out in the APG Responsible Investment Report, which was published earlier this year on our website.

 

APG invests on behalf of pension funds and their members and attaches great importance to honest and transparent communication about its sustainability policy. It is partly for this reason that an extensive dialogue has been conducted in recent years with the FIG researchers on various subjects. It is disappointing that they do not take account of APG's major efforts in the area of investments in renewable energy as only investments in equities are included.

 

Nevertheless, APG has a great deal of respect for the work of the FIG in encouraging organizations to invest responsibly. APG believes in a good pension in a sustainable world. We will continue to conduct the dialogue with the FIG and the underlying stakeholders in the future.

Volgende publicatie:
Responsible investing is not a 'quick fix' but really very hard work

Responsible investing is not a 'quick fix' but really very hard work

Published on: 15 November 2018

'As APG we are truly world leaders in the field of responsible investment, but responsible investment is not a kind of 'quick fix', it is really hard work and very intensive'. According to Gerard van Olphen of APG, last night during a meeting of Triodos Bank in Pakhuis De Zwijger in Amsterdam.

 

APG's chairman of the board spoke with other leaders from the financial world and an engaged audience about the question of what the financial sector is doing to achieve the climate goals by 2050. Van Olphen: 'Our clients, the pension funds, place high demands on responsible investment. Because they and we too believe in a good pension in a sustainable world. Our investors and specialists are making good progress with our funds. '

Other participants in the lively debate were Kees van Dijkhuizen, CEO of ABN Amro Bank, Frank Elderson of the Nederlandse Bank, Peter Blom, CEO of Triodos bank, Annemiek of Melick, CFO of Volksbank and Kees Vendrik of Triodos Bank.

Volgende publicatie:
APG invests €250 million in Smart City Infrastructure Fund

APG invests €250 million in Smart City Infrastructure Fund

Published on: 13 November 2018

Whitehelm Capital and APG, on behalf of ABP and other pension fund clients, announced today the first close of the Smart City Infrastructure Fund (the “Fund”), an investment vehicle set-up to pool pension fund investments in select Smart City infrastructure across Europe, North America, Australia and other major urban areas in the world. The Fund is launched with an initial commitment of €250 million from pension investor APG.

 

The Fund aims to invest in the development of independent and open access infrastructure projects leading to the proliferation of so-called Smart City solutions, such as smart lighting, parking, waste collection and pollution control. Such projects promise to improve quality of life and have the potential to generate revenues and savings for cities, thus enabling sustainable development of urban areas.

The Fund was established to meet the growing demand for financing the scale up of integrated Smart City solutions, which currently do not have access to long-term institutional financing and capability. This initiative will complement existing instruments from public institutions to enable a sustainable transition from small-scale pilot projects to mainstream applications. The Smart City Infrastructure Fund is the first large scale initiative from the private sector to provide concrete solutions to known challenges for the sector, with the view to unlock societal benefits and a rapid transition towards low carbon, resource efficient and competitive economies.

Graham Matthews, Chief Executive at Whitehelm Capital, said “the Smart City Infrastructure Fund aims at transposing the benefits of long-term infrastructure investment to new business models and innovative use cases. The demand for better infrastructure and services is high and the Fund will act as a hub to share knowledge effectively across markets and to realise the much-needed physical infrastructure that underpins smart city developments.”

Smart Cities is an urban development vision to integrate multiple information and communications technologies and the sensor-enabled Internet of Everything solutions in a secure fashion to manage a city's assets and processes. The roll-out of such developments at scale requires an effective combination of digital and physical components. The Fund promotes a modular layered approach to ensure appropriate control and risk transfer between each of these layers and to make projects viable.

Ron Boots, Head of Infrastructure Europe at APG, said “as a long term responsible investor, we are very pleased to support investments that promote the development of a sustainable society for future generations. The Fund is the latest of the many exciting initiatives that APG is pursuing with the aim of incorporating the UN Sustainable Development Goals into a tangible investment product that can deliver attractive risk-adjusted returns. The ultimate objective of the Fund is to improve quality of life and meet the needs of cities, allowing city officials to interact directly with the community, to improve physical infrastructure and how essential services are delivered. The launch of the Smart City Infrastructure Fund –the first of its kind, globally– fits the long term goals of ABP and our other pension fund clients that we work for.”

The Fund has raised €250 million at first closing through commitments from APG. In view of the scale of investment required by the sector, estimated globally to be worth over €1.5 trillion by 2025, subsequent closings will occur to meet investment demand.

Volgende publicatie:
ABP and APG invite Greenpeace to cooperate on strengthening engagement

ABP and APG invite Greenpeace to cooperate on strengthening engagement

Published on: 26 September 2018

ABP and APG invite Greenpeace to cooperate on strengthening engagement 

 

Greenpeace and ABP / APG will meet again in the spring of 2019 to discuss ABP's sustainability objectives. That is the most important outcome of the discussion that took place yesterday between a delegation from Greenpeace and CEO’s Corien Wortmann from ABP and Gerard van Olphen (APG).

 

 reason for the conversation was a petition that Greenpeace offered earlier that day to draw attention to investments in tar sands.

As was to be expected, both parties did not come closer together on the 'tar sand dossier'. Corien Wortmann once again clarified that ABP / APG only invests in companies that already belong to the top in this area and respect human rights. Greenpeace maintains its position that ABP / APG must immediately stop investing in tar sands.

On the part of ABP / APG, both directors were given ample opportunity to explain the sustainability policy. Van Olphen pointed out what he calls the 'four-digit PIN code' of ABP / APG's investment policy. He emphasized that sustainability weighs in as much as the traditional criteria of return, risk and costs.

 

Corien Wortmann invited Greenpeace to a meeting in March 2019. 'Let's meet again to see what our investment portfolio looks like. Then we can also assess whether we have been able to challenge each other. Moreover, we can then talk about what the sustainability objectives of ABP should be after 2020.'

Gerard van Olphen agreed: 'Greenpeace knows so much about sustainability. Help us to further increase our engagement.' The Greenpeace delegation sympathetically accepted the invitation for further discussion.

Volgende publicatie:
Strong growth in investment in sustainable real estate and infrastructure

Strong growth in investment in sustainable real estate and infrastructure

Published on: 20 September 2018

APG, the Netherlands' largest pension provider, is making great strides in improving the sustainability of its real estate and infrastructure investments. APG now invests 21.7 billion euros in sustainable real estate. This represents an increase of 1.3 billion euros compared to 2017. Investments in the most sustainable infrastructure category are also showing strong growth. Compared to 2017, these investments increased by approximately 900 million to 2.3 billion euros. Investments in sustainable real estate and infrastructure contribute to the objective of APG's largest pension fund client, ABP, to have invested 58 billion euros in business that helps to meet the UN's sustainable development goals by 2020. APG manages a total of 482 billion euros in pension assets.

 

GRESB

APG uses the Global Real Estate Sustainability Benchmark (GRESB) survey to measure its efforts in the field of sustainable real estate. This organization measures the sustainability performance of the property investment sector worldwide, with 5 stars being the maximum sustainability score for a specific investment. Together with APG, in 2016 GRESB also developed 'GRESB Infra', which now maps out the sustainability of infrastructure investments as well as real estate.

 

Contribution to sustainable development goals

APG currently invests 21.7 billion euros in real estate with 4 or 5 stars under this GRESB standard. An example of such an investment is the interest in the Dutch residential investor Vesteda,

which has an outstanding GRESB score. These investments qualify as Sustainable Developments Investments. APG thus contributes to the UN's sustainability goals, especially goal 11, 'Sustainable cities and communities'. At the same time, these investments also ensure a stable and long-term return.

The share of APG's infrastructure investments that were awarded the maximum score under the GRESB infrastructure standards also rose sharply in 2018, from 1.4 to 2.3 billion euros. A recent example of this is the  increase of investments in Småkraft, a sustainable Norwegian hydropower company, by 48 million euros. Over the next few years the company will double its renewable energy capacity to 2Twh in 2022. This is enough energy to supply some 570,000 households with sustainable energy.

The GRESB Infra scores also provide an insight into the subject of health and safety. The infrastructure investment scores on this subject also show an improvement. APG intends to use the GRESB scores of the investment portfolio to enter into talks with the aim of gaining a clearer understanding of health and safety.

 

Patrick Kanters, Managing Director Global Real Assets: “APG invests in real estate infrastructure for its pension fund clients, provided our strict requirements in terms of returns, risk, costs and of course ESG criteria are met. In recent years we have succeeded, in close cooperation with our investment managers, in making our investments emphatically more sustainable. We will be continuing this in the years to come."

Volgende publicatie:
APG active at Global Climate Action Summit San Francisco

APG active at Global Climate Action Summit San Francisco

Published on: 14 September 2018

APG has not made investments in coal-fired power plants in the last decade and will not invest in any new coal-related infrastructure going forward. 

 

San Francisco, September 13th 2018; As an leading investor of pension capital, APG regards climate change as a systemic long-term risk for the global economy. At the Global Climate Action Summit in San Francisco several representatives of APG are present and active.  APG’s CEO Gerard van Olphen gave an insight in the Dutch approach to reach very ambitious goals in cutting emissions: “We are leading the Dutch financial sector’s contribution to our government’s ambitious objective of cutting emissions nearly in half by 2030. We have already reduced the carbon emissions of our equities portfolio by 25%.”

As one of the world’s largest owners of infrastructure assets, APG has not made investments in coal-fired power plants in the last decade and will not invest in any new coal-related infrastructure going forward. On behalf of our client ABP we will have invested EUR 5bn in renewable energy by 2020.

We are committed to providing our clients and their participants a good pension in a sustainable world.

Volgende publicatie:
APG and Corsair acquire majority of the interests in Spanish toll road operator Itínere

APG and Corsair acquire majority of the interests in Spanish toll road operator Itínere

Published on: 10 September 2018

APG and funds managed by Corsair Infrastructure Partners (“Corsair”) have agreed to acquire and have exercised rights to reach a 59.2% majority of the interests in Itínere Infraestructuras S.A. (“Itínere”) at a € 1,300 million (on a 100% basis) equity valuation. Itínere is a major Spanish infrastructure management company that operates five toll road concessions, all fully operational, in Northern Spain.

 

Earlier today, agreements have been signed and rights have been exercised to acquire these stakes from Gateway Infrastructure Investments, L.P., a fund managed by Corsair, and certain minority shareholders. APG and Corsair now intend to facilitate a solution for the remaining minority shareholders. APG and Corsair expect to close the different transactions by the end of 2018, once the necessary anti-trust and regulatory approvals (as applicable) have been granted.

Ron Boots, Head of European Infrastructure at APG: “We are continuously looking for attractive infrastructure investments across Europe that help us realize stable and long-term returns for our pension fund clients and their participants. The 552 kilometers of toll roads that Itínere manages are vital infrastructure and fully operational. Therefore, we are very pleased with today’s agreement to acquire a majority of the interests in the company together with Corsair.”

Hari Rajan, Head of Corsair Infrastructure Partners: “We are pleased to be partnering with APG and the investors in our funds to take Itínere into a new phase of its evolution. Itínere is a unique company with a highly attractive network of roads, strong management and talented team of employees, and it has been an important part of Corsair’s infrastructure portfolio. We’re thrilled to support the company alongside APG as it capitalizes on new opportunities in the Spanish market moving forward.”

Deutsche Bank acted as exclusive financial advisor to APG.

About Corsair
Founded in 1992, Corsair Capital is a leading global specialist investor. Corsair has a highly regarded private equity platform that has invested in substantially all of the subsectors of the financial services industry including wealth & asset management, payments & financial technology, services, insurance and banking & specialty finance. Since inception, the firm has led or co-led $8 billion of private equity investments. The firm also has a global infrastructure equity sponsorship and investment management business, Corsair Infrastructure Partners, which was established in 2015 and manages a $2.9 billion infrastructure fund. More information on Corsair Infrastructure Partners can be found at www.corsair-infrastructure.com.

About Itínere
Itínere Infraestructuras S.A. is the second largest toll road operator in Spain, managing 5 toll road concessions in Northern Spain under operation (Audasa, Aucalsa, Autoestradas, Audenasa and AP-1), totaling 552 km and participates in Acega. Itínere has the longest concession life road platform in Spain (c. 22 years). It also has a concession management contract for another toll road and participates in Bip & Drive, the leading company in the electronic toll collection sector in Spain. Itinere is headquartered in Madrid, Spain.

Volgende publicatie:
Responsible Investment Report 2017

Responsible Investment Report 2017

Published on: 24 July 2018

The APG investments contributing to the United Nation's development goals, have increased to €55.3 billion in 2017. Today, we as APG published the Responsible Investment Report 2017, which shows for the first time which part of our investments contribute to such issues as combating poverty, quality education, and affordable and clean energy. Read for more information about this and our other steps our Responsible Investment Report 2017 here.

 

Read the full report here

Volgende publicatie:
Sustainable investments increase to more than €55 billion

Sustainable investments increase to more than €55 billion

Published on: 24 July 2018

Today, we as APG published the Responsible Investment Report 2017, which shows for the first time which part of our investments contribute to such issues as combating poverty, quality education, and affordable and clean energy.

 

For a number of years now, we have been seeking out investments for our clients that not only generate good returns, but also contribute to a more sustainable world. In 2016, it was decided to use the 17 sustainable development goals of the United Nations as a starting point. In 2017 and early 2018, we mapped out which investments contribute to these goals. By the end of 2017, APG had invested almost 12% of all its managed assets (€470 billion) in these goals. By the end of 2016, this was only 10%.

 

Windmills and micro financing

The goal to which we contribute most, is ‘sustainable cities and communities’ (€24.5 billion). Among these are not only the real estate investments with a high score on the annual sustainability study by GRESB. Through stocks in Danish windmill maker Vestas, APG contributes to the ‘affordable and clean energy’ goal. APG contributes combating poverty With shares in the micro-finance bank Rakyat Indonesia.

 

Voting in 4,300 meetings

The report also shows progress that is being made on the introduction of the inclusion policy. This should ensure that as of 2020, we as APG only invest our clients’ assets in shares and bonds of companies with a sufficient score on responsible entrepreneurship (forerunners). And also in companies that clearly want to make progress in this area (promising). We also look at the way in which APG as a shareholder voted on more than 47,000 proposals in about 4,300 meetings worldwide.


Please read the entire Responsible Investment Report 2017 here.

Volgende publicatie:
Marcel Prins on Using Alternative Data in Institutional Investing

Marcel Prins on Using Alternative Data in Institutional Investing

Published on: 25 June 2018

Marcel Prins (COO APG AM), together with Ashby Monk and Dane Rook from Stanford University published a thought leading article on using Alternative data in Institutional Investing.

 

As alternative data steadily becomes mainstream in finance, institutional investors may benefit from rethinking how they engage with alternative datasets. Specifically, they could gain from rethinking 1) alternative data’s value proposition, 2) how they characterize alternative data, and 3) how they access alternative data.

 

The article describes alternative data as value proposition and also deals with turning alternative data into sources of operational alpha. The article is published in The Institutional Investor.

Volgende publicatie:
APG contributes to sustainable investment strategy EU

APG contributes to sustainable investment strategy EU

Published on: 20 June 2018

APG’s Head of Responsible Investment & Governance Claudia Kruse has collaborated with the High Level Expert Group (HLEG) on Sustainable Finance on a blueprint for a sustainable investment strategy for the EU.

 

In a video interview, which will be shown on June 20 during a discussion meeting on ‘the challenges of measuring sustainability’, Kruse will talk about her work for the HLEG and sustainable investment at APG. Fondsnieuws, a journalism platform aimed at investment professionals, organizes the meeting.

 

The interview shows that the European Commission wants to work on encouraging sustainable investment and on what is needed to make progress. The EU aims for a uniform classification system for sustainable investment, with which it wants to end the discussion on definition regarding this topic. A positive development, according to Kruse, seeing how more capital could be moved to sustainable investments if market parties would have more clarity on what can and cannot be considered sustainable.

 

Clients have their own sustainability goals
In the Fondsnieuws conversation, Kruse paints a picture of the sustainable investment practices at APG. She explains that APG works on behalf of clients who have set up their own sustainability goals. The most comprehensive goal is the implementation of the so-called inclusion policy. In this policy, companies in which investments are made are expected to comply with the United Nations guidelines for responsible entrepreneurship. These pertain to human rights, labor rights, anti-corruption and environment.

 

Goals far exceeded
By now, APG invests a considerable sum in sustainable development on behalf of its clients (55.3 billion Euros at the end of 2017) and for 2020 it aims for 61.5 billion Euros. The goal of 25% reduction in CO2 emissions for the 2020 investment portfolio had been reached by a wide margin at the end of 2017. For 2020, APG wants to have 5 billion Euros invested by order in sustainable energy, of which 4 billion Euros were already realized by the end of 2017. The goals for investment in education and communication technology (1.6 billion Euros in 2020) have already been exceeded by a wide margin.

According to Kruse, the greatest challenge will be guaranteeing reliability of investment data for a substantial and diverse investment portfolio (480 billion Euros). APG has therefore invested substantially in systems for integrating this data in its investment processes.

Volgende publicatie:
APG contributes in solving Irish housing shortage

APG contributes in solving Irish housing shortage

Published on: 18 June 2018

Today’s edition of Dutch newspaper Het Financieele Dagblad features an article on a major real estate investment by APG in Cherrywood, Ireland. Here APG has entered into a joint venture with US property developer Hines with a view to realizing a development that includes more than 1,200 fully maintained rented apartments in the new town center.

 

There is currently a significant shortage of housing in this region. The investment will be APG’s biggest in Ireland to date, with total development costs for the project amounting to approximately €450 million.

 

APG investor Paul van Stiphout: “We are also looking at other projects in Dublin, especially rented apartments in the middle segment of the market, as we are achieving good results with these kinds of investments in other countries. We are confident that this project will deliver a good long-term return.”

 

Smart investment delivers good returns
By investing smartly, APG helps generate good returns for pension fund clients and participants. This is important, as returns on investments account for by far the largest portion of a pension.

Read the full article on the FD website in Dutch (login required).

Volgende publicatie:
The green revolution is coming to us

The green revolution is coming to us

Published on: 11 May 2018

In the latest edition of the Fondsnieuws magazine, an interview with APG's Claudia Kruse about Sustainable Investing and new European rules to promote sustainable investment. Claudia Kruse is at APG Managing Director Responsible Investment & Governance.

 

She was involved as an expert in the High Level Expert Group (HLEG), which formulated recommendations for the European Commission to enable the financial sector to play a greater role in the transition to a sustainable economy. A uniform classification system, as proposed by the HLEG, is an important precondition and driver for this.

 

Read the full Dutch article here (login required).

Volgende publicatie:
43/5000 Gerard van Olphen guest at BNR Zakendoen

Gerard van Olphen guest at BNR Zakendoen

Published on: 2 May 2018

On Wednesday 2 May, Gerard van Olphen was a guest in BNR Nieuwsradio's BNR Zakendoen program. In conversation with Thomas van Zijl and Paul Laseur, he spoke about investment returns, sustainable investment, bonuses and the possible consequences of a different pension system for the pension provider.

 

It was also emphasized that the Netherlands, together with Denmark, has one of the best pension systems in the world.

 

You can listen tot the Dutch interview here.

Volgende publicatie:
Interview in FD with Ronald Wuijster

Interview in FD with Ronald Wuijster

Published on: 9 April 2018

Unfortunately, this article is not available in English.

Volgende publicatie:
Investment APG leads to reinforcement Afsluitdijk Dam

Investment APG leads to reinforcement Afsluitdijk Dam

Published on: 21 March 2018

The Dutch governmental department of Waterways and Public Works grants the Afsluitdijk project to consortium Levvel, in which APG, among others, participates.

 

Van Oord joins forces with asset manager Aberdeen Standard Investments and APG in this consortium. Together these companies have a 46% share. BAM and pension administrator PGGM also have a 46% share. Consultancy firm Rebel has an 8% share in the project.

Jan-Willem Ruisbroek, Head of Global Infrastructure Investment Strategy: “APG likes to invest in Dutch infrastructure, provided our high demands in terms of returns, risk, cost and sustainability are met. The entire Dutch population will benefit from this investment in the reinforcement of the Afsluitdijk Dam. Furthermore, this investment qualifies as a Sustainable Development Investment (SDI) and the returns for our pension fund participants are attractive.” 

 

Work on the Afsluitdijk Dam starts in the fall of 2018 and will be completed in 2023. After the Dam has been renovated, it can withstand the type of storm that only occurs once every ten thousand years. The discharge capacity will also be increased: drainage sluices will be expanded, and pumps will be installed. 

 

Volgende publicatie:
APG’s stance on European Action Plan on Sustainable Finance

APG’s stance on European Action Plan on Sustainable Finance

Published on: 9 March 2018

On March 8, the European Commission published its Action Plan on Sustainable Finance. This is inspired by the final report of the EU High Level Expert Group on Sustainable Finance (HLEG) appointed by the Commission, which included Claudia Kruse, Managing Director Responsible Investment & Governance at APG. The expert group worked diligently for over a year to make substantive, well-considered recommendations and are delighted to see a comprehensive and clear response from the Commission.

 

Claudia Kruse: "At APG we all work hard every day to make sure that every beneficiary of our pension fund clients can enjoy a good pension in a sustainable world. APG strongly believes that only a financial system which has sustainability at its core will enable citizens and investors to contribute to a sustainable development. As a leading responsible investor, APG, on behalf of its clients, is actively contributing to this goal. APG thus warmly welcomes the EU Action Plan for Financing Sustainable Growth and thanks the European Commission for their resolve and ambition on this theme."

 

APG will continue to contribute to the European Strategy on Sustainable Finance through our engagement with policy makers, the financial sector, civil society and our investees, to maximize the opportunity that sustainable finance represents to our economy and the beneficiaries we serve.

 

To facilitate the dialogue and engagement, APG will be hosting an event to discuss the Dutch perspective on European Action on Sustainable Finance with the Commission and the Dutch financial sector on 14th March.

Volgende publicatie:
Ronald Wuijster speaks about sustainable investment during FT Climate Finance Summit

Ronald Wuijster speaks about sustainable investment during FT Climate Finance Summit

Published on: 7 February 2018

During the Financial Times Climate Finance Summit in New York yesterday, Ronald Wuijster, CEO a.i. of APG Asset Management, was one of the main speakers. He also had a conversation with former US Vice President Al Gore.

 

Wuijster spoke about APG’s policy and conviction that as a pension investor the organization must contribute to a sustainable future. Because, Wuijster said: “Let’s be real, it’s nice to have a pension, but it is hard to enjoy it if your house is flooded as a result of climate change, or if you are worried about the future of your children and grandchildren. Fiduciary duty is, for us, about creating financial value, but also creating long-term sustainable value.”

In his presentation to key climate finance influencers, Wuijster discussed some examples of APG's sustainable investment policy: its active dialogue with the portfolio companies, truly green investments, and the way climate change risks are managed in APG's investment decisions. APG's investment approach considers return, risk and costs, but also sustainability and responsible entrepreneurship. In 2020 APG wants to have at least 58 billion euros in investments that contribute to attractive returns for participants as well as to the UN goals.

 

Al Gore

Wuijster also had a conversation with former Vice President Al Gore. In 2004 Gore co-founded Generation Investment Management, a long-term sustainable investor with more than $18 billion dollars under management. In a half hour, both sustainable investors discussed their approach, best practices, and shared ambition to stay ahead in sustainable investing.

 

A good pension in a sustainable world

Volgende publicatie:
APG puts artificial intelligence to work for sustainable investing

APG puts artificial intelligence to work for sustainable investing

Published on: 2 February 2018

APG is taking over the data analytics activities for sustainable investing from Deloitte Nederland. This business unit is well known for its great expertise and knowledge at the cutting edge of artificial intelligence, big data, and sustainable investing. The thirteen employees will be working for APG in an independent business unit. The takeover will significantly accelerate APG’s use of artificial intelligence and big data for sustainable and responsible investing.

 

The new APG team will be tasked with identifying listed companies that make an important contribution to solutions for climate change, or for problems in the areas of health care and education. The team will complement the expertise already available at APG in the areas of artificial intelligence and big data. The technical infrastructure and the team’s smart algorithms are fully operational and are a very good fit with APG’s current investing activities.

The new business unit is also an excellent supplement to other innovative initiatives at APG, such as Kandoor, a smart digital platform where people can go to with all their financial questions. This helps APG further strengthen its innovative power and as such ensures optimal cross-pollination of high-tech knowledge, from which pension funds and their participants can profit as much as possible.

 

Ronald Wuijster, Interim member of the Executive Board of APG Group, responsible for asset management said: “We are constantly seeking out innovative and sustainable investment opportunities to achieve the highest possible return at the lowest possible costs. Using the unique knowledge this team has in relation to big data and artificial intelligence will make us even better at that.”

 

Gerard van Olphen, Chairman of APG’s Executive Board said: “By making smart and good investments, we contribute to the maximum possible pension value for the participants in the pension funds for which we work. This is another way in which we give pension funds and their participants more control over their financial future.”

 

Innovative pension administration

The takeover of the data analytics activities for sustainable investing is just one of APG’s many initiatives in the area of innovation. APG invests fully in new technology, both in relation to investments and pension administration.

 

Artificial intelligence is also being used to improve the service to pension fund participants. Algorithms are developed by a special team using, among other things, contact history, personal data, pension details, and the online browsing behavior of large groups of participants. By combining this information for different target groups, it can be predicted with high reliability when they will contact the pension fund in relation to which topic. These insights are used to proactively approach the pension fund participants, but also to communicate more efficiently and effectively with the participants.

 

APG announced earlier this year that together with PGGM, it had successfully completed the first phase of an experiment with a blockchain application for pension administration. In the long term this technology promises more flexibility and lower costs for pension funds and their participants. Most of the work will take place at the Smart Services Campus in Heerlen.

Volgende publicatie:
"Not Apple's impact on China, but Alibaba's impact on Europe"

"Not Apple's impact on China, but Alibaba's impact on Europe"

Published on: 5 January 2018

Unfortunately, this article is not available in English.

Volgende publicatie:
Sustainable development investments (SDIs)

Sustainable development investments (SDIs)

Published on: 7 July 2017

APG together with PGGM have developed a methodology to identify investment opportunities linked to 13 of the United Nations’ 17 Sustainable Development Goals (SDGs). They refer to this methodology as so called taxonomies. More information about it in the IPE interview with Claudia Kruse and Els Knoope of APG.

 

Kickstart the conversation

Taxonomies are the results of the research. These are demonstrated areas APG and PGGM consider being potential sustainable development investments (SDIs), bridging the gap between the UN’s targets and tangible investment opportunities.

Claudia Kruse, managing director responsible investment and governance at APG, told IPE the “taxonomies” were designed to provide “clear guidance on what type of investments qualify as SDIs”. “The taxonomy is by no means perfect yet,” she said. “A lot of work and thought has gone into it but what we are really hoping is that it is the start of an in-depth conversation between asset owners on how we can take this further as we gain more and more experience implementing this in our portfolio.” The intention was to “kickstart the conversation about a market standard for SDIs”, said Kruse.

 

Wider asset owner backing

APG and PGGM have shared the taxonomies and supporting guiding materials with several other institutions. Sweden’s four main buffer funds and Australia’s Construction and Building Unions Superannuation fund are said to have explicitly expressed their support. Kruse said APG and PGGM believed the guidance was the first to come from asset owners that are private market entities.

Els Knoope, senior responsible investment and governance specialist at APG, said the intention was to share the work with external managers to encourage the development of investment opportunities meeting APG’s and PGGM’s standards. “We already see some proliferation of products being developed at the moment that maybe are not as close to what we intend, so we really hope that sharing this work and further developing it will help,” Knoope said.

 

More information

 

Volgende publicatie:
New Corporate Human Rights Benchmark

New Corporate Human Rights Benchmark

Published on: 17 March 2017

Today a new Corporate Human Rights Benchmark for responsible investing was presented in London. Together with the Dutch Association of Investors for Sustainable Development (VBDO), Aviva and Nordea Wealth Management APG initiated this benchmark to rank companies on their human rights policies.

 

Designated on our own research, until now

Claudia Kruse, Director Global Responsible Investment & Governance at APG: "APG used to perform its own research. But this benchmark creates more standardization, provides access to more investors and will ensure that APG can be part of a broader front.” A total of 87 investors support the benchmark, including PGGM, MN, Kempen CM, Robeco, Actiam, Amundi, and BNP Paribas IP. Claudia: "We will use it in our engagement activities."

 

Benchmark for potentially 500 listed companies

The first edition of this benchmark assessed 98 companies in tree high-risk industries (agriculture, mining and apparel) based on hundreds of indicators per company. In the future, the benchmark will include 500 listed companies.

 

Results 2016

The first edition, which looked at 2016, has seen relatively low ratings for the companies (a mere 29%). Relatively good ratings are obtained by:

  • Marks & Spencer and Unilever (agriculture)
  • M&S, Adidas and Hennis & Mauritz (apparal)
  • Rio Tinto and BHP Biliton (mining industry)

 

Relatively low ratings are obtained by:

  • McDonald’s and Walmart (agriculture)
  • Costco, Macy’s and Kohl’s (apparal)
  • Coal India and China Petroleum (mining industry)

More information:

Volgende publicatie:
Growing awareness integrated reporting

Growing awareness integrated reporting

Published on: 24 November 2016

In 2016, the Authority for the Financial Markets (AFM) conducted three studies theme, focusing on the financial reporting of a selection of listed companies.

 

Growing awareness

The AFM study shows that the majority of enterprises further steps in the right direction put in the field of integrated reporting. This is important because a more integrated way of governing, with an emphasis on the contribution to the strategic objectives and managing the associated risks, companies create stronger. This is expected to more socially responsible investment and promotes a sustainable financial well-being.

Compared to previous years, is increasingly reported over financial information. There is an increasing focus on value creation model, stakeholder dialogue and materiality analysis. Integrated reporting is expected to contribute to the strategic direction of the company and this has more impact than just accountability.

 

Social impact of their investment decisions

Investors and other stakeholders are increasingly in need of non-financial information. Responsible investing also involves accountability by institutional investors about the social impact of their investment decisions. The AFM sees self gives way to regulations and that the FSB, the banking supervisory authorities and the EU take the lead in further shaping thereof. The AFM calls on companies involved in setting up these national and international developments and further steps in the field of integrated reporting. The implementation of the EU Directive non-financial information in Dutch legislation, which applies here is expected to be a further stimulus from fiscal year 2017.

Volgende publicatie:
APG is sixfold investing in green bonds

APG is sixfold investing in green bonds

Published on: 16 November 2016

Unfortunately, this article is not available in English.