The Swedish Government has appointed Ole Settergren, from the Swedish Pensions Agency, as a new member of AP2’s board.

During 2012 the Ethical Council conducted dialogues on various aspects of environmental and social responsibility with a total of 118 companies worldwide. The Ethical Council’s external consultant held discussions with a further 102 companies on the Ethical Council’s behalf. The Ethical Council increasingly takes a preventive approach to encourage companies to act more responsibly and avert the risk of non-compliance with international conventions. Focus areas in 2012 included human rights, business ethics and environmental issues in the extractive, tobacco and cocoa industries. The Ethical Council has seen many examples where dialogue can be an effective tool to influence companies towards sustainable stewardship.

“The Ethical Council’s extractive industries project clearly shows that preventive initiatives are an effective way to exert influence,” said Christina Hillesöy, Chairwoman of the Ethical Council.

“By highlighting strengths and weaknesses in corporate sustainability strategies, we have in multiple cases been able to drive change in areas where we have identified shortcomings. That is exactly what preventive measures can achieve: making a difference and encouraging companies in which the AP funds invest to move towards more responsible stewardship.”

In 2012, two of the companies on the dialogue list – Rio Tinto and Goldcorp – took action in accordance with the Ethical Council’s demands and met our initial objectives. Rio Tinto adopted a policy stating that riverine and shallow marine disposal of mining waste must be avoided at new mines. With regard to Goldcorp, the Ethical Council joined with a group of Canadian investors to demand that the company respect human rights in current and future projects. Goldcorp responded by commissioning an independent human rights impact assessment and subsequently implemented an action plan to address identified deficiencies.

Christina Hillesöy said: “The dialogue with Goldcorp is a prime example of how we can work with other stakeholder groups to spur companies to move in a positive direction. The discussions with Goldcorp have been constructive and the company has now implemented a range of measures. The company itself says that the dialogue has resulted in decisive changes in its Guatemalan operations and has helped to shape its work on sustainable stewardship. Goldcorp has also told us it has received inquiries from other mining companies keen to learn from its experiences.”

For further information, please contact:
Christina Hillesöy, Ethical Council Chairwoman for 2013
Tel: +46 8555 17 123
Email: info@ethicalcouncil.com

Read the report (PDF-document, 6,6 MB)

About the Ethical Council: The First, Second, Third and Fourth Swedish National Pension (AP1, AP2, AP3 and AP)coordinate their work on environmental and social responsibility via the Ethical Council. The Ethical Council is the funds’ joint platform for driving positive change in foreign companies implicated in non-compliance with international environmental and human rights conventions. Combining a preventive and reactive approach, the Ethical Council works to make a difference in the field of environmental and socially responsible stewardship. Preventive initiatives include actions to ensure that companies in which the funds invest operate in accordance with relevant ethical, social and environmental standards and have policies and operating and monitoring systems in place to enable responsible stewardship. Reactive measures include engaging in dialogue with companies that violate international conventions to encourage them to comply with those conventions and to take action to avoid any future non-compliance.

The Second Swedish National Pension Fund/AP2 has posted a net result of SEK 28.6 billion for 2012, bringing its total capital assets to SEK 241.5 billion. Return on investment for the year, excluding costs, was 13.5 percent. Return relative to benchmark index amounted to 1.1 percent, excluding alternative investments and costs. Over the past ten years, the Fund has generated an average annual return of 7.6 percent.

• The Second AP Fund’s capital assets totalled SEK 241.5 (216.6) billion on December 31st 2012, against which net outflows to the national pension system were charged in an amount of SEK -3.8 (-1.2) billion.
• The Fund posted a net result for the year of SEK 28.6 (–4.6) billion.
• The Fund’s return on the total portfolio was 13.5 (-1.9) percent, excluding commission costs and operating expenses. Including these costs, the portfolio generated a return of 13.3 (-2.1) percent.
• The relative return on the portfolio of quoted assets, excluding alternative investments and costs, amounted to 1.1 (-0.3) percent.
• Return on alternative investments was 13.9 (8.4) percent.
• In the past ten years, the Second AP Fund has generated an average annual return of 7.6 percent. Adjusted for inflation, this corresponds to an annual real return of 6.2 percent, as compared to the Fund’s long-term targeted average of 5 percent.

“At the close of the year, we can state that the Second AP Fund’s capital assets have never been greater. With a return of no less than 13.5 percent and fund capital amounting to SEK 241.5 billion, in spite of the continued turbulence on financial markets, we have demonstrated that our long-term strategy is working well,” states CEO Eva Halvarsson, Second AP Fund.

The English version of the AP2 Annual Report 2012 will be available at www.ap2.se from the beginning of March.

For further details, contact CEO Eva Halvarsson, Second AP Fund, on 46 (0)31-704 29 00 or Ulrika Danielson, Head of Communications, on +46 (0)31-704 29 29.

The Second Swedish National Pension Fund (AP2) is investing USD 325 million in the American real estate company, US Office Holdings. The company is jointly owned with the South Korean National Pension Fund, NPS, and an affiliate of the American real estate company, Tishman Speyer.

AP2 has acquired 41 per cent of US Office Holdings, which is owned by NPS and Tishman Speyer’s affiliate. In addition to three directly-owned properties, US Office Holdings is a co-owner with the Government of Singapore Investment Corporation of the property company, PPI (Prime Plus Investments Inc), which has 12 properties.

The total property portfolio comprises 15 well located office properties, totalling approximately 830 000 m². The market value of the US Office Holdings portfolio is over USD 1.8 billion. Seventy per cent of the portfolio value comprises properties on the east and west coasts of the USA, in New York, San Francisco, Seattle and Beverly Hills. Twenty per cent of the portfolio value comprises properties located in Chicago.

Through the investment, the AP2 fund acquires 41 per cent of the shares in US Office Holdings for USD 325 million.

“This investment enables us to invest in the American property market together with other long-term investors with extensive local knowledge and experience. Investing in the USA is also attractive since this is a mature and transparent market with potential for growth,” says Eva Halvarsson, CEO of AP2.

For further information, please contact:
Eva Halvarsson, CEO AP2, telephone +46 (0)31-704 29 00
Ulrika Danielson, Head of Communications & HR AP2, telephone +46 (0)709-50 16 13

The Second AP Fund posted a total return of 5.8 percent, excluding costs. Relative to benchmark index, return was 0.5 percent, excluding alternative investments and costs. Fund capital increased by SEK 10.6 billion to SEK 227.3 billion for the first half of 2012.

• The Second AP Fund’s assets under management totalled SEK 227.3 (227.5) billion on June 30th 2012, against which net outflows to the national pension system were charged in an amount of SEK -1.7 billion.
• The Fund posted a first-half net result of SEK 12.3 (5.1) billion.
• The Fund’s return on the total portfolio was 5.8 (2.4) percent, excluding commission costs and operating expenses. Including these costs, the portfolio generated a return of 5.7 (2.3) percent.
• The relative return on the portfolio of quoted assets, excluding alternative investments and costs, amounted to 0.5 (0.1) percent, corresponding to a net contribution of SEK 0.9 billion.
• Operating costs in terms of asset management costs remained low, totalling 0.08 percent for the period.
• Excluding net inflows from the national pension system, Fund capital has increased by SEK 82.9 billion since its start in 2001, corresponding to an average annual return of 3.9 percent, after costs.
• The Fund’s level of currency exposure was 15 (18) percent.

“It is pleasing that the Fund’s active return amounted to 0.5 percent, roughly equivalent to SEK 1 billion. The result for the first half is consistent with our long-term objective of generating an average annual real return of five percent,” states CEO Eva Halvarsson, Second Swedish National Pension Fund.

The complete half-year report (pdf) will be published on the Fund’s website at www.ap2.se

A Corporate Governance Report will be published separately in October.

For further details, please contact CEO Eva Halvarsson, Second Swedish National Pension Fund, or Ulrika Danielson, Head of Corporate Communications, on +46 31 704 29 00.

The tenth edition of AP2’s annual Women’s Index shows that the number of female board members is down somewhat on the previous year, with women making up 22.7 per cent of boards. However, the number of women in company management positions is continuing to increase, reaching 16.3 per cent this year; the highest percentage recorded since the start of the survey in 2003.

“This year marks ten years since we started publishing the Women’s Index, and there has been a positive development in the number of female board members and company managers in this time, even if numbers have occasionally fallen. The rate of change is nevertheless painstakingly slow. At the current pace, it would take 27 years before the share of female board members reached 50 per cent, and 52 years; that is, until 2064, before we would see women occupy 50 per cent of company management positions. We believe that it is important that as many as possible take action in order to achieve a more rapid pace of change. If not, we risk seeing a continued loss of expertise, which we believe would have a negative impact both on the competitive power of companies and on society as a whole,” says Eva Halvarsson, CEO of AP2.

The larger companies listed on the Stockholm stock exchange employ the largest number of women, together with industries with a large number of female employees. The service and finance industries have the largest number of female board members while the media and health industries have the largest number of female employees in management positions. The commodities sector ranks bottom both when it comes to the number of female board and management group members. However, the number of women in company management positions has increased and men now occupy less than 90 per cent of these positions.

The number of women studying for degrees in fields that have historically been a source of recruitment for company management and board members has increased over the past 30 years; from just under 20 per cent to just over 40 per cent today. However, women tend to drop off in the transition from graduates to employees (almost a third), to managers (one fourth) and to Group management (one seventh).

Since 2003, AP2 has conducted an annual survey together with Nordic Investor Services to measure the number of women in middle management roles, in company management positions and on the boards of companies listed on the stock exchange. In addition, the number of women graduating from degree programmes that have traditionally served as a basis for recruitment to company management and boards has also been measured.

Read the report. (PDF document, 566 kB)

For further information, please contact:
Eva Halvarsson, CEO AP2, +46 (0)31 704 29 00
Ulrika Danielson, Communications Manager, +46 (0)709 50 16 13

The Swedish Government has appointed Ulrika Boëthius, Chairman of Finansförbundet, Lenita Granlund, Negotiations Secretary LO and Niklas Johansson as new members of AP2’s board.

The Ethical Council’s annual report for 2011, which covers joint efforts in the environmental and ethical area between the First, Second, Third and Fourth AP Funds (AP1, AP2, AP3 and AP4), shows positive development for the companies that have been targeted for ongoing dialogue. These improvements can among other things be explained by the Ethical Council’s preventative measures and collaboration with other investors.

Guided by the AP funds’ AP mission and shared core values, the Ethical Council works both on a preventative and reactive basis to make a difference in environmental and ethical issues. Preventative initiatives are an increasingly important way to influence companies and industries towards responsible ownerships and in 2011 the Ethical Council started a special project focused on the mining industry. Other sustainability-related areas where the Ethical Council has launched preventative initiatives include anticorruption, climate change, labour conditions in the electronics industry and environmental impact in the oil sector.

“By taking a preventative approach to strengthening the companies’ sustainability efforts it is possible to avoid serious incidents. The Ethical Council has screened some thirty mining companies to analyze their sustainability performance, and we will now move forward by addressing the shortcomings that have been identified,” says Ulrika Danielson, Chairwoman of the Ethical Council.

In 2011 the Ethical Council conducted dialogues in various ethical and environmental areas with a total of 126 companies worldwide. Two companies on the dialogue list, Duke Energy and Bridgestone, took action in accordance with the Ethical Council’s demands and these discussions can now be terminated.

“Through active dialogue with and monitoring of the companies in relation to well defined requirements, we can see that the Ethical Council is making a difference. At the same time, we are humble and know that there is still much to be done. But the progress we have seen for companies like Duke Energy and Bridgestone, as well as Goldcorp, where the Ethical Council has been pushing for a change since 2008, is a clear example of how we can exert an influence through active ownership,” says Ulrika Danielson.

Read more about the Ethical Council’s company dialogues and other activities in the annual report for 2011, which can be downloaded from the Ethical Council’s website, www.ethicalcouncil.com

For more information contact: Ulrika Danielson, Chairwoman of the Ethical Council in 2012 Telephone: +46 31-704 29 29, E-mail: info@ethicalcouncil.com

The Second Swedish National Pension Fund/AP2 posted a return of -1.9 percent for 2011 on its total portfolio, excluding expenses, which was less than the decline noted by the major stock markets. Diversification of the Fund’s portfolio assets in recent years has served to counteract this negative trend. The Fund’s return relative to benchmark index was -0.3 percent, excluding alternative investments and costs.

• The Second AP Fund’s assets under management totalled SEK 216.6 (222.5) billion on December 31st 2011, against which net outflows to the national pension system were charged in an amount of SEK -1.2 (-4.0) billion.
• The net result for the year amounted to SEK -4.6 (22.3) billion.
• The Fund’s return on the total portfolio was -1.9 (11.2) percent, excluding commission fees and operating expenses. Including these expenses, the portfolio noted a return of -2.1 (11.0) percent.
• The relative return on the Fund’s overall portfolio, excluding alternative investments and expenses, was -0.3 (0.8) percent, -0.16 percent of which is attributable to implementation effects.
• The most substantial contributions to ROI derived from alternative investments and fixed-income securities. The return on these asset classes was 8.4 (15.0) and 6.8 (0.5) percent respectively.
• During the spring, the Fund instituted a comprehensive reallocation of its portfolio assets, from Swedish equities and fixed-income securities to emerging market equities and government bonds.
• During 2011, the Fund established a joint real-estate company in association with the First Swedish National Pension Fund/AP1, focused on investment in European real estate. The Fund has also launched a joint venture with US pension fund TIAA-CREF, which will focus on investment in agricultural real estate in the US, Australia and Brazil.

“The European debt crisis and falling stock markets the world over have had an impact on much of the year – and on the result. In spite of this, we can report a limited decline in market worth than experienced by the major stock markets. This derives from our long-term commitment to diversify the portfolio,” states CEO Eva Halvarsson, Second AP Fund.

The English version of the AP2 Annual Report 2011 will be available at www.ap2.se from the end of February.

For further details, contact CEO Eva Halvarsson, Second AP Fund, on 46 (0)31-704 29 00 or Ulrika Danielson, Head of Communication, on +46 (0)31-704 29 29.

The investors behind the Sustainable Value Creation initiative have published their second report.

Read the press release (PDF-document, 372 kB)

Read the report (PDF-document, 1,5 MB)