As an investor, how can we exert influence?

APF Pension Fund is able to exercise its influence on companies in which we hold shares in or of which we have loans. We encourage socially responsible behaviour at those companies.

One way of doing this is by casting our vote at a shareholders' meeting. Or by entering into discussions with the company's board of management. This falls under the heading of engagement. We also exclude certain companies and do not invest in them as a matter of principle.

Voting
Through its investments, APF Pension Fund is a shareholder in the companies in which it invests. As a co-owner, we feel it is important for those companies to be future-proof. We actively exercise our voting rights and cast our votes around the world at shareholders’ meetings of companies in the fund's investment portfolio. After the end of each year, we render account about how we have acted as a shareholder. You can read a summary of this in the Annual Report 2021 (pdf, in Dutch).

Exercising our voting rights is the ultimate way to bring issues directly (and concretely) to the attention of the highest management level. By doing this, we can share our expectations with the companies we invest in. We also provide the senior management of the company with clarification of the points on which the pension fund has cast a dissenting vote (votes against management).

In summary, the guiding principle for our voting policy is to maintain and improve long-term value creation. Voting on environmental and social issues is based on the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles (UNGP) on human rights.

Engagement
Our voting policy plays an important role in engagement: entering into a long-term active dialogue with companies on environmental, social and good corporate governance issues. Before we cast our vote, a dialogue takes place with the company concerned, supplemented by correspondence. We believe that engagement is the most fruitful way to create long-term value. Not only financial value, but also social value. And that both reinforce each other.

APF Pension Fund makes use of securities lending, i.e. loaning shares that we own to other parties. This allows us to generate extra return. A disadvantage of this practice is that we cannot always exercise our voting right. In case of votes with a large financial impact, we can decide to recall shares from the lending programme and to exercise our voting right. Furthermore, every lending agreement stipulates that securities lending may not be aimed at the unwanted use of voting rights.

Because we invest in many different companies, we cannot conduct all these talks and cast votes ourselves. For those tasks, we work together with a specialised agency.

Exclusion of companies
We do not want to invest in companies that do not abide by the United Nations Global Compact Principles. Each year, we update the list of companies that do not comply with these principles. In these efforts, too, we work together with a specialist agency.

Through our investments, we do not want to associate ourselves with companies that have or might have a significant negative impact on the world. Our preferred approach is to enter into dialogue and not to exclude too many companies in advance. However, we do exclude companies that:

• are in some way connected with the following controversial weapons:
  - cluster bombs and cluster munitions
  - land mines
  - chemical weapons
  - biological weapons
  - nuclear weapons
  - white phosphorus
  - uranium
• generate more than 50% of their turnover from the production of tobacco and tobacco products.

Our country cover policy excludes government bonds from countries that are subjected to UN sanctions legislation. Sanctions legislation is a response to violations of international law or human rights in an attempt to bring about a change. Sanctions also play a role in the fight against terrorism.

Within the investment category of commodities, we do not invest in so-called soft commodities. These are agricultural and livestock commodities. From a long-term sustainability perspective, we do not consider it appropriate to invest in such soft commodities.

Further details are available in:

• Exclusion list (pdf)