AP2 has identified four focus areas within which the Fund’s sustainability work is concentrated.

The choice of focus areas is based on materiality, according to the following parameters:

• Potential impact on expected return and risk in the Fund’s portfolio.
• Relevance within the Fund’s investment universe and potential for integration in the investments.
• The positive or negative impact that AP2 exerts through its investments, such as through the portfolio companies’ impact on people and the environment.
• The importance of the area to the Fund’s stakeholders.

The Fund’s choice of focus areas entails the long-term commitment considered necessary to achieve results. Within each area, the Fund develops a strategy based on a six-part method, with a defined long-term goal and/or commitment as a benchmark.

Our responsible ownership process

We see stewardship as an important influence tool for exercising the ownership role in sustainability work and in practice it is integrated within all focus areas. Stewardship work includes dialogues, voting and collaboration with other stakeholders and owners.

As an active owner, AP2 can influence companies in a positive direction. The Fund’s stewardship takes place, for example, through dialogues with companies, voting and proposals at general meetings, and work on nomination committees. We use the Fund’s ten Ownership Principles as a starting point in such work.

AP2’s ambition is to influence the companies identified as having high risk and inadequate management of these risks. Engagement is pursued if possible in collaboration with other investors, or otherwise on our own.

Active dialogues normally involve meetings with companies at least twice a year. We also follow up defined performance indicators and the progress of the dialogue. If required, the dialogue can be escalated via voting or shareholder proposals. Divestment is a last resort, which is the case if the Fund has exhausted opportunities for engagement and there has been no result.