APG on behalf of its clients uses its influence to improve companies’ sustainability and long-term performance. In this series, we explore how stewardship is applied in the different asset classes and strategies making up APG’s diversified portfolio. In this fourth installment, Olivier van Hirtum (Head of Developed Markets Equities Fundamental) and Asimwe Ruganyoisa (Responsible Investment & Governance Specialist) discuss how APG leverages its influence in the Developed Markets Equities Fundamental (DMEF) strategy. Van Hirtum: “Without a solid stewardship approach, we as a pension investor would not have a social license to operate.”
The DMEF strategy focuses on large-cap companies listed in developed markets. The international team of 25 investment specialists looks at the long-term prospects of a company; investment choices are based on fundamental analysis of all relevant factors that may impact a company’s valuation. Van Hirtum: “Given our focus on equity investments, exercising shareholder rights is a crucial instrument in our stewardship approach. This includes voting at shareholders’ meetings, and also (co-)filing or supporting shareholder resolutions. In addition, we use our leverage as investors to actively engage with our investee companies on behalf of our clients.”
Making informed voting decisions
Voting is a powerful tool that enables the DMEF team to influence the behavior of its portfolio companies. The investment team’s specialists work with APG’s Global Responsible Investments & Governance (GRIG) team, which coordinates the exercise of all equity voting rights.
Ruganyoisa: “We use the services of proxy voting service advisors that carry out analysis and make recommendations based on our general voting criteria. In the case of more complex issues or where our clients want us to review on a case-by-case basis, a deeper dive is required. Additionally, information from research studies can supplement our knowledge of a company. This makes it easier for us to take a stance and helps us to make more informed voting decisions. For example, where we see that a company is making progress on reporting on its Scope 3 carbon emissions* but is not yet where it should be, we may want to encourage it to try harder and vote in a way that reflects this.”
Achieving meaningful dialogue
Shareholder resolutions too can be a means to convey APG and its clients’ views, and reinforce their message. For example, earlier this year APG co-filed a climate resolution on behalf of its clients at Toyota Motor. The proposal urged the car maker to improve disclosure of its climate lobbying activities and demonstrate industry leadership in support of the Paris Agreement’s goals. Van Hirtum: “APG and also co-filers have been intensively engaging with Toyota over the past three years, but were unable to find common ground with the company on the topic of lobbying activities. We filed the proposal to protect long-term shareholder value and mitigate reputational risk, by supporting the long-term sustainability of Toyota’s business.”