Investments in farmland form part of AP2’s efforts to diversify the overall portfolio. Of the Fund’s assets under management, about 3 per cent is invested in farmland. Sustainability issues are central to AP2’s investments in farmland. The Fund’s strategy is to invest in large-scale farmland assets in countries with clear legal structures. This means that many geographic regions are not available for investment.

AP2 has chosen to invest in farmland through joint ventures with other investors, a form of investment that suits the Fund’s long-term view on these investments. The Fund has invested in three jointly-owned companies and one fund: TIAA-CREF Global Agriculture (TCGA), TCGA II, Teays River Investments and the TIAA European Farmland Fund (TEFF). TCGA and TCGA II own farmland in the USA, Australia, Brazil and Chile. AP2 has invested USD 450 million in TCGA and committed to invest USD 750 million in TCGA II and USD 100 million in TEFF. The Fund has invested USD 100 million in Teays River Investments, which mainly invests in the USA.

TCGA, TCGA II and TEFF are managed by Nuveen, whose company Westchester is responsible for the operational management of the farmland. AP2 is actively working to improve the companies’ sustainability activities, for instance via the Board of Directors. The Fund’s representative on the Board of TCGA is also a member of its ESG committee. During 2018, AP2 held discussions with Nuveen on deforestation. In August 2018, Nuveen adopted a policy that makes clear that Nuveen and Westchester have zero tolerance for the acquisition of deforested land. Land cannot be acquired if it has been deforested after the dates stated in the policy (between 2006 and 2017). The various dates are due to the fact that Brazil is divided into different biological zones.

Nuveen is continuously working on increasing transparency, for instance with regard to the geographic location of the farmland.

AP2 does not cultivate any land. The land is either leased to local farmers/ companies or managed by the external managers of the jointly-owned companies. Where the farmland is rented out, it is the lessee (the farmer) who decides which crops to grow and is responsible for production and sales of the harvested crops. If the farmland has permanent crops, such as fruit trees, the farmland will be managed by an operator appointed by the external manager. Most of the area owned by the jointly- owned companies is leased out. However, the majority of the investments made by Teays River are managed directly by the operating companies.