“Critical thinking, transparency and asking questions to companies and institutions on these issues are relevant items of our approach globally, and also in China where we are integrating ESG in a similar way as in other countries.”Īs for APG’s relationship with E Fund, Steverink says it is also pushing into new and interesting areas like knowledge exchange around pension systems, AI, IT and talent management. He notes most progress in ESG integration in environmental and climate matters, rather than social and governance, and says APG’s approach draws on the same tools the fund uses everywhere else in its giant portfolio. “APG is one of the global leaders in responsible investing and we think that we can contribute to set new standards in China.”
APG HOUSING FULL
The availability of data on ESG and the transparency of most institutions isn’t very high so it will take more time and effort to select institutions that full fill our responsible investment standards,” says Steverink who hopes APG will be a catalyst for change. “The challenge is getting access to ESG data since this information is not easy to find and Chinese institutions are less used to this concept. That same capacity will ensure ESG is integrated across the portfolio, a challenging and time-consuming task even with the help of APG’s partner on the ground, $193 billion Guangzhou-based E Fund Management Co which also helps APG run its $657 million China A Shares strategy, launched early 2018. Since we are used to doing this already, we have a comparative advantage on asset managers that do rely on rating agencies.” “We analyse the risk of each issuer and create a diversified portfolio with good risk/return characteristics. In China the output quality of most rating agencies is questionable, which makes it challenging to get an objective measure of the credit risk in the portfolio,” says Sandor Steverink, head of treasuries at APG who believes the manager’s capacity to carry out its own research is one of the reasons it has been able to launch the strategy ahead of competitors. It means that all research and due diligence on the allocation, which will span private companies and government-run entities and won’t have any size limits or target particular maturities, will be done in-house rather than with the help of China’s credit rating agencies. None more so than ensuring APG’s strict ESG criteria are met and navigating the indebted status of many Chinese companies. Dutch asset manager €473 billion ($575 billion) APG’s recent decision to allocate €75 million ($82.6 million) to its first local currency China fixed income strategy has come with much thought on the potential risks.