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Stockholm (NordSIP) – Shortly after the publication of the AP funds’ interim reports for 2024, NordSIP caught up with Fredric Nyström, Head of Sustainability and Governance at AP3, to hear about the recent developments in the asset owner’s sustainability work.
On his way to Helsingborg to participate in the “A Sustainable Tomorrow” conference, Nyström discussed the recent publication of AP3’s Action Plan on Biodiversity and its recent engagement work on health and safety with Swedish real estate companies.
Publishing AP3’s Biodiversity Action Plan
“AP3 recently published an Action Plan on Biodiversity. This is the latest of AP3’s action plans focused on the sustainable areas of work set by its board,” Nytröm says. “The Action plans ensure that the sustainability work focuses on those areas that are regarded as having the greatest impact on the investments, and where the Fund is deemed to effect the greatest benefit and have the best opportunity to influence. They define what each of the four focus areas means to AP3 and help us set mid-term targets for our engagement work,” he adds. Prior to this action plan the asset owner had already published another three action plans, focusing on human rights, climate change and governance.
With the publication of the Biodiversity Action Plan, AP3 is now better equipped, Nyström argues. “More than 50% of GDP is dependent on Nature. Risks to biodiversity continue to increase which is an issue to us from two different perspectives for AP3 and its investment portfolio. On the one hand, some of the companies in the portfolio contribute to biodiversity loss. On the other hand other companies depend on biodiversity to conduct their commercial activity. So there are risks from both of these perspectives,” Nyström adds.
From Plan to Action
Despite its publication less than six months ago, the Action Plan on Biodiversity has already affected AP3’s work with its investee companies. “We’ve started using the Encore tool to monitor where AP3’s investments have an impact on biodiversity and identified real estate, industrials and healthcare and pharma as the main focus of our efforts,” Nyström explains.
“We’ve also joined the Nature Action 100 initiative and engaged with the companies most relevant to AP3. In those dialogues, we have clarified what their expectations are for investee companies based on Taskforce on Nature-related Financial Disclosures (TNFD) and the disclosures that they recommend. Those expectations are about having policies and implementing the LEAP (Locate, Evaluate, Assess and Prepare) approach to nature-related disclosures,” Nyström explains
Nyström argues that it is still too early to assess the effectiveness of the action plan, but he is optimistic. “The main outcome for us at the moment is that we are able to raise awareness about biodiversity and clarify why we care both internally and externally.”
Keeping an Eye on Real Estate Health and Safety
Beyond AP3’s work on its biodiversity action plan, Nyström also highlights the asset owner’s work on health and safety in the Swedish real estate sector. “Unfortunately, we have seen a negative trend in injuries and fatalities in the real estate sector in Sweden over the last years, an issue which has remained and even increased so far this year,” he explains.
“AP3 started a dialogue last year with real estate companies in our portfolio about health and safety in the work place. We’re continuing this work this year and are together with a few companies developing tools that will help companies facilitate a safe work place. It’s a work in progress,” Nyström adds.
“Regulations are in place. Companies have very good policies. However, it seems as though there are some weaknesses in implementation. The big challenge is in the supply chain. As a real estate company hires a subcontractor and that subcontractor hires its own subcontractor, the main company loses control and the ability to ensure compliance with its health and safety policy,” he explains.
“With the last action plan in place, we have laid the foundation for our work going forward. Now we will prioritise broadening the work to cover more asset classes beyond listed equities and credits. At the same time we see a need to collaborate with other asset owners to address the reduced support for ESG-related shareholder proposals and fact that several assets managers reduce their support for important investor initiatives,” Nyström concludes.
