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.”