In autumn 2014, PRI took over the responsibility for administering the principles of responsible farming that AP2 was involved in preparing in 2011. As a consequence of this, farmland principles have been developed in the form of Guidance for Responsible Investment in Farmland. PRI encourages all signatories that have invested in farmland to implement the guidance.

AP2 maintains a continuous dialogue with the managers and also visits the farmland a couple of times a year. Nuveen publishes a report annually, where it describes its implementation of the guidance for responsible investments in farmland. It has developed a number of indicators based on the guidance, which Teays River also uses in its reporting to AP2. Read more about the guidelines on PRI’s webbsite. Below is a summary of how the managers work with the guidance.

The first guideline concerns contributing to environmental sustainability by promoting measures such as reducing the risk of soil erosion and working for more efficient water management. The water issue is very central both environmentally and economically. Therefore, continuous investments are made to achieve a more efficient water management, for example, the construction of storage tanks and more effective irrigation methods. Achieving better control is one of the indicators in the environment, the proportion of agriculture that has detailed information on water use. In order to reduce the risks when using and storing pesticides and fertilisers, the portfolio managers are working to introduce programmes that will ensure good management of chemicals.

Before a farm property is acquired, an environmental assessment is always performed by an external party. The consultant performing the assessment also suggest, if necessary, measures to reduce the risk of environmental impact.

The second guideline relates to respecting the employees and human rights. As with environmental issues, the Fund’s managers always make an assessment of the risks and impact. This is a part of the evaluation process prior to a property purchase. To reduce the risks for migrant workers and/or seasonal workers who mainly work with harvesting fruit and vegetables, Nuveen is working to implement third party verified programmes concerning the workers’ health and safety.

The third guideline concerns the use of and ownership rights for land and other natural resources. These questions are particularly important in emerging countries, where there is not always a formal system for who has the right to use the land and who owns the land. Of the countries where AP2 has agricultural investments, it is only in Brazil where it can be complicated to determine who is the rightful owner of a property. That is why the manager in Brazil performs a detailed examination of who has owned the property’s land from today’s date back to the first time the land was sold by the government. This examination uses georeferences (GPS coordinates) and satellite imagery, among other things. The manager also has a dialogue with representatives of the local community and land owners. Before a property is acquired in Brazil, the manager has ensured that the investment will not have a negative impact on the local environment and that there is no doubt regarding the ownership. Since 2000 it is a requirement in Brazil that all properties that are transferred have been registered with GPS coordinates.

The fourth guideline concerns business ethics. Managers and operators shall respect and implement processes that mean that all forms of corruption are counteracted. Laws must be followed even if they are weakly implemented. To combat corruption, the employees have received training in these issues. The managers require their employees to comply with laws and regulations and to work towards good business ethics. The majority of the managers and operators in the United States have received training in the American corruption legislation, the Foreign Corrupt Practices Act.

No legal offences or disputes were reported for farmland investments in the jointly-owned companies in the past year.

The fifth guideline concerns the reporting of activities in connection with the implementation of the guidelines. AP2 has chosen to include this report in the Fund’s annual report. It is now the fifth year that the Fund is reporting on its activities to implement the guidelines. Nuveen reports about how they implemented the guidelines are available on its website.

Key performance indicators for PRI’s Guidance for Responsible Investment in Farmland, %

Guideline 1 Promoting environmental sustainability

Environmental integrity

Percentage of farmland acquired during report period subjected to environmental assessment by an independent third party100
Percentage of farmland owned more than a year and which has been assessed by the manager
Chemicals management

Percentage of farmland devoted to annual crops for which detailed data on pesticides and inorganic fertilizers is available100
Percentage of farmland devoted to perennial crops, vegetables or berries for which detailed data on pesticides and inorganic fertilizers is available
Soil health

Percentage of farmland subject to regular testing for quality, pH and nutrients100
Water management

Percentage of farmland that relies on irrigation featuring detailed data on water consumption72

Percentage of these farms that implement water conservation techniques100

Guideline 2 Respecting labour and human rights

Labour compliance

Percentage of tenant farmers/operators that observes national labour legislation100
Health and safety

Percentage of farmland inspected in the past year to determine compliance with health and safety regulations97

Guideline 3 Respecting existing land and resource rights

Ownership and local land rights

Percentage of investments featuring a formal registration of title to land and where an investigation has been conducted to verify previous ownership history100
Percentage of agricultural activities operating in compliance with legislation for the protection of native right

Guideline 4 Upholding high business and ethical standards

Investment ethics

Percentage of investment staff to have participated in an annual course in business ethics100 (Westchester)
(Teays River)

Guideline 5 Reporting on activities and implementation

Under the heading ‘Reporting on implementation of PRI’s Guidance for Responsible Investment in Farmland’ in this report
Based on data for 2018