Responsible Investments

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1 Responsible Investments Christer Jönsson Feb 2018 AMF in one minute Swedish pension company with 4 million customers Owned by the Swedish Trade Union Confederation and the Confederation of Swedish Enterprise. Operated on mutual principles all profits are returned to the customers. Manages approx. SEK 590 billion (USD 75 billion) in assets (Q3 2017) the sixth-largest shareholder on the Stockholm Stock Exchange. Two subsidiaries AMF Mutual Funds and AMF Real Estate -Commercial properties. Approximately 350 employees 1

2 Key data Q ,4% 8,4% Average return per annum over 10 years Average return per annum over 5 years 0,11% Expense ratio 196% Solvency ratio SEK 591 billion Assets under management Responsible Investments We believe that companies that pay attention to sustainability issues in their business have a better ability to generate good long term returns. Therefore, we strive to invest in the most sustainable companies in each industry, in a global perspective. AMF invests in: Swedish and foreign equities Fixed-income securities Property and Infrastructure 2

3 Our guidelines for ethics and sustainability AMF strives to make sustainability part of every investment decisions and in all assets. As a rule, AMF is not opposed to specific industries or products; instead, our assessments is based on a holistic view on sustainability. AMF does not invest in companies that breach international conventions on human rights, labour rights, environment, anti-corruption and controversial weapons. We want companies to respect Human Rights Labour Rights Environment Anti-corruption Transparent information Consumer interest Competition Tax 3

4 Criteria for AMF - ESG integration Implementation of ESG critera/factors should be for the entire non domestic equity portfolio No regional or sector bias vs standard global benchmark ESG is developing quickly,calls for a flexible solution Integrate ESG in the investment process Systematic ESG framework Active ownership AMF is an active investor, that gives us flexibility in choice of benchmark and investments. Not excluding industries made Best in Class well suited for our ESG integration and riskmanagement. We where determined to integrate ESG decisions to the PM level. Systematic ESG framework as starting point for ESG integration Choosing a policy benchmark resonates in dialouge with stakeholders. AMF ESG-Implementation Normsbased screening / negative screening Evaluated ESG alternatives. Best in Class, positive screening is chosen for AMF ESG integration MSCI ESG research is implemented Change of benchmark / investable universe Recruited, Head of sustainable investments Process for investments outside the benchmark developed Portfolio realignment to ESG best in class excecuted dec 2014 ESG and company meeting-logg started Portfolio GHG footprint measured for the first time. Governance,owner ship report for non domestic equities launched First proxyvotings done Q2 Evaluating normbaserad screening providers. Sustainalytics ESG research added as complement to MSCI ESG research Measuring of portfolio alignement towards the 2 degree target Further ESGoptimization of industry, sectors Started work with SDG goals and how to intergrate with the investment process UNPRI- Collaboration and engagement 4

5 AMF-Equity Portfolios CO2 Intensity ESG Integration ACWI companies Process for investments outside ESG Leaders universe ESG Leaders companies Main investable universe ESG analysis Portfolio optimization Normbased screening Stock selection Financial analysis Active ownership proxy voting 5

6 Investments and Engagement Portfolio Manager Process Research and invests in single stocks, Analysis incorporates ESGresearch ESG- Impact Explains our ESG-best in class strategy Relevant ESG-questions when meeting directly with companies Head of Global Equities Approves investment outside of best in class universe. Decides purpose and goal of engagement Continuous dialogue with companies CIO (ESG-committee*) Monitors progress and decides on further dialogue or dissengagment. Decides on collaborations, joint endevaours on ESGissues, UNPRI etc. External reporting Contact with companies Collaborations *Chief Investment officer, Head of Equities, Head of Global Equities, Head of Responsable Investments, Head of Fixed Income, CEO AMF Mutual Funds Investments outside of Best-In-Class benchmark Documented investment decision PM to motivate financial and ESG benefits Plan and purpose of engagement Underlag till ägande utanför MSCI ESG Index liv utland Om avsteg önskas göra från MSCI ESG Index ska detta motiveras skriftligen. Det ankommer på ansvarig kapitalförvaltare att upprätta sådan dokumentation och stämma av investeringen i förväg med chef liv utland aktier alternativt aktiechef eller kapitalförvaltningschef. 1. Bolag Information om det aktuella bolaget a) Namn: Softbank. Ticker : 9984 JP b) Nuvarande betyg i MSCI ESG Index: IVA BB (BBB) Impact Monitor 5 2. Motivering Motivering Beskriv nedan motivering och bakgrund till ansökan om avsteg från MSCI ESG Index. Vad är den aktuella sakfrågan och varför vill bör AMF investera i bolaget? Softbank har fått nedjusterat betyg från BBB till BB (Mars ). Bolaget är sedan tidigare ett innehav och ingått i MSCI ACWI ESG. Men blev av pga nedjusteringen utbytt mot annat telecom bolag. vid MSCI s halvårsgenomgång juni 2015.Justering och genomgång är i linje med den best in class metodologi som ligger till grund för Indexets konstruktion.bolaget har varit snabbt växande och åstakomit en högre avkastning på eget kapital än lokala konkurrenter har också varit mer innovativt i sina investeringar och strategi där de var först med att lansera I phone i Japan. Under 2013 förvärvade de dock Sprint i USA vilket varit en mindre lönsam investering vilket inneburit ökat både risk och möjlighet för framtida vinster. Men givet den goda historik bolaget och ledningen, framförallt huvudägaren/grundaren och CEO Masayoshi Son som kontrollerar 19% av kapitalet påvisat, tror jag det en fortsatt god investering långsiktigt för våra andelsägare och värt att föra en förbättrings dialog med bolaget angående skälen till dess sämre ESG betyg och potentialen för förbättring 3. ESG-plan Beskriv ESG-frågan Beskriv aktuell ESG-fråga och hur den kan hanteras. Två huvudfrågor 1) Förvärvet av Sprint har skett i USA vilket är en ny marknad och en marknad med högre risk för arbetstagare konflikter i form av strejker och andra relaterade konflikter då Softbank för USA har en avsaknad av starka företags policys i frågan. 2) Corporate governance där de är bland de sämre inom industrin. De huvusakliga skälen till detta är att huvudägare både är CEO samt orförande i styrelsen, samtidigt har styrelsen endast tre oberoende medlemmar varav en Mr. Tadashi Yanai suttit i över 10 år vilket kan ifrågasätta hans oberoende. Utöver detta får bolaget kritik då de inte har en oberoende ersättnings kommitté Vid nästa möte med bolaget under 2015 lyfts bägge frågorna och svar dokumenteras efter det görs en bedömning om AMF aktivt kan påverka eller få gehör för eventuella förändringar 6

7 ESG research. Two independent providers Data getting better and more standardised 7

8 Logg company meetings Our view on governance AMF s ambition is to be an active owner where this is possible and where it can make a difference, rather than to serve as principal owners. AMF s actions in active ownership and responsible investment proceed from the regulations that the Board of Directors of AMF adopt yearly. These regulations state the standpoints on nomination committees, Boards of Directors, auditors, ethics and sustainability, as well as compensation issues. The regulations also stipulate compliance with the principles of UN Global Compact, OECD Guidelines for Multinational Enterprises and the United Nations Principles on Responsible Investments. AMF and AMF Fonder collaborates on corporate governance issues to enhance the potential of influence. 8

9 Different strategies to influence Proxy voting 9

10 UNPRI collaborative engagements Human rights in the extractive sector Tax responsibility Cattle-linked deforestation Engagement on corporate carbon footprint disclosure ESG Framework 10

11 AMF -SDG 5. We can make a difference in gender equality by our active work in nomination committees in Sweden and when proxy voting in global equity holdings 12,13. Investments in renewable energy. We have invested SEK 8,2 billion in British windfarms. We measure our Co2 footprint and how aligned our portfolios are with the two degree target. UNPRI collaborative engagements Human rights in the extractive sector Tax responsibility Cattle-linked deforestation Engagement on corporate carbon footprint disclosure 11

12 Are we prepared to change we have done it before 12

13 Consumption growing, but also awareness Finally..our experiences and moving forward with ESG Not Black and White Systematic framework Involve Portfolio Managers from the start Not standardized data Work with companies How quickly companies have responded to ESG Collaborations with companies and institutional investors on key issues Standards for reporting and measuring. (CO2) Consumer awareness Regulation 13

14 More information at: 14