The ESG Needs of AP1’s EM Small Cap Equities Search

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    Stockholm (NordSIP) – AP1 has announced it is searching for managers investing in Emerging Markets Small Cap equities. The search is part of the periodical retender of its Emerging Markets Small Cap equities dedicated strategies which currently oversees SEK6.2 billion SEK (US$730 million) worth of assets.

    To participate in this search asset managers need to answer a request for proposals (RFP) survey. The deadline for submissions of answers to the survey and supplements is November 30th, 2021.

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    ESG integration in the investment process is now a natural thing for asset managers and institutional investors. Much like it is focused on a strong investment process, this mandate is also focused on sustainability.

    ESG Integration Needs

    To better understand the sustainability needs of AP1 for this mandate, NordSIP reached out to Tina Rönnholm, Portfolio Manager, External Partnerships and Innovation at AP1. “The board of AP1 decided last year to divest from fossil fuels. Anything we look at now and going forward must meet this new requirement,” Rönnholm tells NordSIP.

    “Previously we have divested from the tobacco sector as well. You can think of excluding these two sectors as our new minimum standard in order to be considered in the search. We have an exclusion list as well and during the due diligence process we will explore a fit with the asset manager,” Rönnholm continues.

    “However, these requirements are only a minimum standard for us. A successful candidate in this search must do much more in order to succeed. Beyond this minimum threshold, the integration of ESG factors throughout the entire investment process will be key in progressing in the search,” Rönnholm adds.

    “During the due diligence process, we will spend a lot of time to understand how ESG factors are integrated at different stages of the investment process. We will assess all stages starting from investment philosophy, every stage in the investment process including portfolio construction and risk management, all the way to reporting,” Rönnholm concludes.

    Image courtesy of AP1
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