APG and Sustainability

Rob Lake, Head of Sustainability & Governance

17 September 2010

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Introduction to APG

• Asset Management for pension funds• Pension assets of around €240 billion (as at 31 Dec ‘09) • More than 20,000 employers and 4,000,000 participants• > 30% of all collective pension schemes in the Netherlands• Strong commitment to integrate ESG across the portfolio• International network and offices in NY and HK• We take a long term investment view

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APG’s Responsible Investment Policy

The main purpose:

• Contribute to APG’s risk-adjusted financial return

• Demonstrate social responsibility

• Contribute to the integrity of financial markets

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APG’s Responsible Investment Policy: Implementation

• Integrating ESG into the investment process• Promoting compliance with the UN Global Compact and raising

ESG standards through engagement with companies• Actively exercising voting rights• Investing in sustainability solutions • Engaging with legislators and policy makers

• Excluding companies are directly involved in the production of weapons prohibited under Dutch or international law, and companies that do not comply with the UN Global Compact

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• Global Survey on integration of environmental practices– Listed Real Estate companies: more than 200 companies– Non-listed funds: close to 500 funds

• In conjunction with: – The sector: input from large European REITs– Other investors: PGGM, USS– Leading real estate associations: EPRA, INREV and ACSI– Maastricht University

• IPE Real Estate platinum award 2010 for ‘Outstanding Industry Contribution’

Global Environmental Real Estate Survey

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Sustainable RE companies perform better

+15% since Dec-06

Source: J.P. Morgan Europe Equity Research September 2010

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Unlisted assets – sustainability standards and reporting in contracts

Commodities

Forestry - FSC

Mining – IFC Standards

Biofuels – Roundtable on Sustainable Biofuels

Soy – Roundtable on Responsible Soy

Infrastructure

European infrastructure fund – new policy developed

Hedge funds

ContourGlobal – energy in emerging markets: IFC

environmental and social standards

Real Estate

Global environmental survey

All new funds will have to complete the APG survey from

Q2 2011

Committee on Investment Proposals

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• Korean tire producer, 6th largest worldwide• Concerns about working conditions and safety performance

– Health risks: 15 fatalities related to serious diseases in 3 years time

– Financial risks: Health related claims

• Upon APG’s request Hankook Tire improved its performance:– Improved standards

– Regular medical checks

– Clinic opened with company doctor

– Sustainability report in 2010

Engagement - Hankook Tire

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• Riverine tailings disposal at Grasberg mine

• 25 April 2008 – engagement started• 11 June 2009 and 9 June 2010:

shareholder resolution (32.5% and 33% in favour): appoint a board member with environmental expertise

• Meetings with CEO• Engagement continues

Engagement – Freeport-McMoRan

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Investing in sustainability solutions

Renewable Energy e.g. €185m in infrastructure

funds

Clean technologiese.g. €250m private equity Microfinance

approx. €150m

In total around €2 billion

Carbon reduction approx.

€500 million in carbon trading and

reduction

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Summary

• Contributing to improving risk-return profile

• Demonstrating social responsibility

• Contributing to integrity of financial markets