REPORT ON HUMAN RIGHTS 2019...NDRA P -FONN HUMAN RIGHTS 5 AP2’s governance of respect for human rights In this section (A), AP2 describes how it expresses its commitment to human

ANDRA AP-FONDEN HUMAN RIGHTS

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REPORT ON HUMAN RIGHTS 2019


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Part A The company’s commitment to and governance of human rights risk manage-ment shall be described.

A

UN Guiding Principles Reporting Framework

Governance of respect for human rights

Part B The company’s salient human rights risks in terms of severity shall be described, as well as how these have been identified.

BDefining the focus

of reporting

Part C The company’s internal processes for addressing its salient human rights issues shall be described.C

Management of salient human rights issues

The graphic shows AP2’s simplified interpretation of the framework. More details on the UNGP Reporting Framework at www.ungpreporting.org

Andra AP-fonden Andra AP-fonden (AP2) is one of Northern Europe’s largest pension funds, and manages SEK 367.4 billion (as per June 30 2019) in virtually all asset classes all around the world. The Fund is actively engaged in integrating sustainability issues as part of its asset management activities, including human rights issues. Some 81 percent of Fund capital is managed in-house, while the remaining 19 percent is handled by external asset managers. The external management of assets may be discretionary or handled by a fund. More about AP2 on the Fund’s website at www.ap2.se

UN Guiding Principles on Business and Human Rights The UN Guiding Principles (UNGPs) constitute a global stan-dard that provides a framework defining the way states and companies ought to act in order to eliminate the adverse impact companies may have on human rights. The term com-panies refers to all types of business enterprise in all sectors, including investors. AP2 is a government agency but operates in a manner similar to a company. The Fund therefore believes that the guiding principles for business enterprises should also apply to AP2. According to these principles, companies shall have a public policy for human rights, an ongoing due-diligence process for managing risks to human rights (inclu-ding the identification, management and monitoring of a company’s risks) and a process for ensuring remedy, should individuals be adversely affected as a result of a company’s actions. More about the UNGPs at www.ohchr.org/Docu-ments/Publications/GuidingPrinciplesBusinessHR_EN.pdf

The ReportSince 2016, AP2 has been engaged in a special project to enhance the integration of human rights issues in its investment decisions. One of the Fund’s focus areas for sustainability is transparency/reporting. This Report is intended to increase trans-parency regarding the funds efforts to implement the UNGPs, as well as the Fund’s achievements and challenges during this process. It is hoped that this Report will both inspire and contribute to a more comprehensive dialogue on human rights issues in the finance industry.

The Fund is keen to hear your views on this Report. They may be mailed to [email protected]

Report structureAP2 has elected to report in accordance with the UNGP Reporting Framework. This framework focuses on the key issues that stakeholders consider most important. The reporting framework provides the Fund with an in-house tool for identifying its deficiencies and developing its human rights work. The first part of the Report (A) addresses the Fund’s commitment, gover-nance and policies on human rights issues. Part two (B) describes the Fund’s percep-tions regarding its human rights risks and the challenge of identifying its salient risks. Part three (C) provides examples of the Fund’s reactive and proactive manage-ment of two of the Fund’s salient risks.

These risks are named in the Report as “The Vale Case” and “Farmland invest-ments in Brazil”. These particular risks are cited because of their severe implications concerning human rights.

The Reporting Framework consists of a number of overarching questions and associated supporting questions. However, with a view to creating a coherent report, the questions have been answered in a different order from that adopted by the Framework. Please turn to the reference index, which lists all the questions.

AP2’s link to human rights The UN Guiding Principles on Business and Human Rights (UNGPs) stipulate corporate responsibility for managing risks associated with the adverse impact on human rights a company might have, might contribute to or to which it might be directly linked. AP2 embraces many roles: employer, client to suppliers, counterpart to other financial institutions, asset owner and asset manager. In all these roles, the Fund may cause or be exposed to risks linked to human rights, either through its own operations or business relations. The Fund believes that the most severe risks it poses concerning adverse impacts on human rights lie in its roles of asset owner and asset manager. This refers to risks arising from the Fund’s portfolio, to which the Fund may in its turn be directly linked or might contribute to through its investment. Consequently, this report focuses primarily on the Fund’s risks related to its investment portfolio and its role as an asset owner and asset manager. In this report, the term “portfolio companies” refers to companies in which the Fund has invested.


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AP2’s governance of respect for human rights

In this section (A), AP2 describes how it expresses its commitment to human rights and how the Fund’s work is organi-zed and governed. This section provides answers to questions A1, A2, C1 and C6 in the Reporting Framework. See refe-rence index for more detailed information.

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AGovernance of respect

for human rights

Sustainable management is integral to operationsAP2 is a goverment agency, whose opera-tions are regulated in accordance with the “Swedish National Pension Funds Act (2000:192)”. According to the Act, the AP Funds shall manage their assets in an exem-plary manner through responsible investment and proprietorship. AP2’s asset management aims to create the greatest possible benefit for the state income pension system. To achieve this, AP2 bases its asset management on risk diversification, cost efficiency and sus-tainability. The term sustainability refers to the environment, ethics, corporate governance and social concerns involving human rights. AP2 believes that a sustainability perspective can contribute to better investment decisions. As a long-term investor, AP2 acts to preserve and create value in its investment portfolio while also promoting sustainable develop-ment. Given the stipulation that the Fund’s asset management activities shall create the greatest possible benefit for pensioners, the Fund engages in global investment to ensure a favourable risk diversification. This results in that the Fund is exposed to numerous risks of human rights violations through its holdings which, in line with its values, it must work acti-vely to combat. For the Fund, this means that it awards high priority both to sustainability and responsible behaviour, as mirrored by the Fund’s business plan, policies and way of working.

AP2’s human rights policyAP2 took an important step in 2017 by esta-blishing a Human Rights policy. The policy describes how the Fund perceives its respon-sibility for respecting human rights and its expectations as to the behaviour of its own organization, employees, suppliers, business partners and portfolio companies. In its Human Rights policy, AP2 commits to respect internationally recognized human rights stan-dards such as “The Universal Declaration for Human Rights; the International Covenant on Economic, Social and Cultural Rights; the International Covenant on Civil and Political Rights and the ILO Core Conventions”. The policy embraces a broad spectrum of funda-mental human rights, in recognition of the fact that the Fund can be linked to a large number of diverse human rights risks. Howe-ver, AP2 intends to review the aforementioned policy. and, where the need for further speci-fic policies addressing the Fund’s most severe human rights risks are identified, such policies shall be drafted.

The Fund’s Human Rigths policy was drafted by in-house experts in human rights in association with members of the executive management committee. Exter-nal inspiration has been derived from the policy guides published by the UN Global Compact and UNHCR, as well as a range of implementation tools for the UNGPs. The policy has been approved by the Fund’s board of directors.

AP2’s policy för human rights is the gui-ding document for the Fund’s work. The Fund’s commitments to human rights are also addressed in the Fund’s Corporate Governance policy. The respective policies are available on the Fund’s external web-site, while Fund employees may access them on the intranet.

In those cases where the Fund commis-sions external asset managers to implement discretionary mandates, such asset mana-gers must subscribe to the Fund’s Corpo-rate Governance policy. External asset managers managing the Fund’s private equity and real estate portfolios are instead referred to the principles of the UN Global Compact. The Fund’s Human Rights policy has so far been communicated through educational dialogues with specific external fund managers who operate in countries which the Fund deems pose an enhanced risk concerning a potentially adverse impact on human rights. Dialogue – AP2’s primary tool for changeAs a responsible asset owner, dialogue is one of the Fund’s most important tools for impac-ting portfolio companies in which it invests in to take responsibility for their human rights risks. The Fund engages both in proactive and reactive dialogues: reactively when there has been an incident that has adversely affected human rights, and proactively to preempt

such incidents. Since collaboration with other investors is one way to achieve success in dia-logues with portfolio companies, the majority of the Fund’s dialogues are coordinated through the AP Funds’ joint Council on Ethics (The Council on Ethics).

Collaboration via the AP Funds’ Council on EthicsThe Council on Ethics was formed jointly in 2007 by AP1, AP2, AP3 and AP4, to coordi-nate efforts concerning the environment and ethical issues. The Council is composed of representatives from the respective AP Funds, led by a full-time Secretary-General. Human rights issues form a key element of the sustainability work conducted by the Council on Ethics. Their primary role is to, through dialogue, impact portfolio compa-nies to address and manage their social and

environmental issues. The Council on Ethics is dedicated to ensuring that portfolio com-panies respect the conventions to which Sweden is a signatory. It strives to achieve this by encouraging companies to adopt policies, guidelines and processes that ensure that their actions do not infringe or are in contravention of human rights. the Council has commissioned the services of a consultancy, Sustainalytics (formerly GES), which assists the Council in its proactive and reactive dialogues, in an attempt to promote change in portfolio companies. Sustainalytics is also tasked with keeping the AP Funds à jour with global develop-ments on human rights issues. In imple-menting these dialogues, the Council on Ethics adopts a systematic working approach. More about the work of the Council on Ethics at www.etikradet.se

Exclusion of portfolio companies Where it is suspected that a portfolio company in which the Fund has invested has seriously and systematically acted in contravention with an international convention to which Sweden is or plans to become a signatory, the facts are to be investigated. This involves a dialogue with the company in question. If such suspicions are confirmed, the company is challenged to pro-vide an explanation and develop an action plan. If the contacts with the portfolio company fails to yield a satisfactory outcome, AP2 shall, after a comprehensive assessment, decide on the possible exclusion of the company. If a portfolio company is excluded, AP2 may no longer invest in the company. The decision on exclusion is taken by AP2’s board, on the recommendation of the Fund’s executive management. All companies excluded by AP2 are listed at www.ap2.se

Analysis of the AP Funds’ holdings

In-depth evaluation

Choice of company and

goal Dialogue

Goal achieved/ Dialogue terminated

Goal not achieved

The Council on Ethics’ working process to proactive and reactive dialogues

Excluded companies

Time-limited dialogue

Dialogue continues

Number of current dialogues on human rights 33 Number of current dialogues on labour rights 26 Number of new dialogues 11 Number of contacts (emails, phonecalls, meetings) 1 007

The Council on Ethics’ dialogues concerning labour and human rights 2018

1007Number of contacts during 2018


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Supporting international initiativesAP2 is a member of and supports a variety of Swedish and international initiatives such as: Hållbart värdeskapande, Swesif and PRI (Prin-ciples for Responsible Investment). The Fund also participates in a number of forums where human rights issues are discussed. Among other roles, the Fund is a representative on the UN-supported Financial Sector Commission on Modern Slavery and Human Trafficking. The Commission comprises 25 delegates, tasked with developing a plan to eliminate modern slavery and human trafficking by 2030. This plan will be presented in conjunction with the meeting of the UN General Assembly in Sep-tember 2019. The Fund also supports the UNGP Reporting Framework and encourages its portfolio companies to report in compli-ance with this framework.

Comprehensive dialogue with stakeholdersIn 2017, AP1, AP2, AP3 and AP4 conducted a joint dialogue with stakeholders to identify

AP2 is actively engaged in integrating sustainability issues, including human rights issues, in its asset mana-gement. One example is the development of two in-house designed indices, used for the in-house manage-ment of foreign equities. An index measures the aggregated return for companies listed on the index. Which companies are included in the index depends on the way it is constructed. One aim of the design of both these indices is to assign portfolio companies that pos-sess a solid sustainability profile a greater weighting, while portfolio companies with an unsatisfactory profile

are assigned a lower weighting. In practice, this means that companies with a less attractive sustainability profile may find it difficult to gain a listing on the indices. Since AP2 only invests in those companies lis-ted on the indicis, it avoids investment in companies with the poorest sustainability profiles, given the fact that sustainability factors are integral to the design of the indces. The AP2 indices includes inbuilt procedu-res for identifying companies involved in human rights controversies, which may therefore not be included in the indicies.

Human rights integrated into investment decisionsFor external asset managers who invest in portfolio companies or regions where the risk of infringement of international conventions is deemed to be high, the Fund has instituted special measures. AP2 has three mandates in Chinese domestic equities under external management. There are sustainability challenges associated with investments in China as transparency of companies and markets in China is not deemed to be as good as in more well-developed mar-kets. The Fund also considers China to be a high-risk country in terms of human rights issues. It therefore maintains close and active collaboration with its external asset managers in China, to ensure that sustainability issues, including human rights, are integrated in investment decisions. This is mainly in the form of a dialogue with managers, where AP2 can contribute with expertise and tools. In 2017 and 2018, these dialogues have focused mainly on human

Enhancing the expertise of Chinese asset managers

the Funds’ key sustainability issues. Repre-sentatives of the Funds’ most important stakeholder groups, affected by or affec-ting the Funds’ activities, participated. These dialogues took the form of a work-shop, with some 60 individuals represen-ting clients, beneficiaries, the community, industry colleagues, suppliers, fund staff and portfolio companies. The three issues awarded priority by the participants were: indirect environmental impact, indirect climate impact and human rights. The participants particularly stressed the belief that public confidence in the AP Funds could be increased by greater transparency and more active communi-cation. The importance of cooperation between different organizations, investors and companies in achieving an impact was also highlighted. It is in light of the fact that human rights was considered a key issue and the wish for greater transpa-rency from the Funds’ that AP2, in line with the UNGPs, has published this report.

Organization and assignment of responsibilitiesAP2 has long worked on human rights issues. In 2016, the Fund increased resources for develo-ping its integration of human rights issues and to enhance its expertise in this field. A working committee was established featuring staff from various parts of the Fund to manage human rights issues in its day-to-day operations. The Fund recognizes that human rights issues have relevance for several functions. It therefore seems natural that the working committee con-sist of staff from different departments and that its composition should vary to access the speci-fic expertise required for the assignments with which the committee is tasked. A diversified working committee also ensures broader com-mitment throughout the organization and helps spread greater awareness of these issues. The work is led by a steering committee consisting of the Fund’s General Counsel, the Head of Communication & HR and the Head of Quanti-tative Strategies. The presence of some mem-bers of executive management on the steering

committee offers the executive management a clear insight into its work and establishes clarity about its in-house and external commitment. Ultimate responsibility lies with the Fund’s CEO. The executive management receives reporting on the Fund’s work, and participates in discus-sions about Fund strategy on human rights issues. The board receives ongoing reports of the Fund’s progress as part of the sustainability and corporate governance information, and decides on the exclusion of portfolio companies.

Expertise-enhancing activitiesTo increase expertise and interest in human rights, the Fund has conducted two obligatory courses for all employees, including manage-ment. The first focused on the UNGP frame-work. During the second course, the focus was on fundamental human rights and how the Fund’s activities can adversely affect them.

The Fund’s policy on human rights was also addressed, to ensure that employees had stu-died and understood its implications.To better clarify an asset manager’s responsi-

bility for respecting human rights, AP2 has also received advisory support from the Shift organization, which possesses leading exper-tise on the UNGPs. This collaboration has generated a broader understanding both of the principles and of how AP2’s human rights risks might potentially have an adverse affect on people. The enhanced understanding has influenced AP2’s in-house processes. For example, AP2 initiated intensified collaboration with AP1, AP3 and AP4 on an exchange of information about the identification of risks to human rights in order to handle these issues more efficiently, both in-house and externally. More on this collaboration under section B.

Expectations on business relations The Fund believes that serious human rights risks can derive from its investments, either directly or via externally managed mandates. The Fund is therefore determined that its externally commissioned asset managers shall take sustainability issues into account in their work, including human rights issues. Some 19

percent of Fund capital is under external mana-gement. The Fund’s policy on human rights sta-tes the expectation that its suppliers, business partners and portfolio companies will respect human rights in their business activities. In selecting asset managers, the Fund bases its choices on a range of parameters, sustainability being one of them. In the agreement concer-ning the management of discretionary manda-tes, asset managers are informed that portfolio companies will be screened twice a year, to ensure that they are not in contravention of international conventions to which Sweden is a signatory. All the Fund’s external managers are subject to an annual appraisal, which includes sustainability.

Whistle blower system It is mainly in its role as employer that AP2 can cause a directly adverse impact and thereby have a clear responsibility to remedy. The Fund currently implements a whistle blower function, whereby employees can anonymously report problems such as unethical behaviour.

rights issues. For example: a more thorough review of the UN Gui-ding Principles on Business and Human Rights has been conducted, to communicate AP2’s commitment to respect human rights and raise asset managers’ awareness and competence in implementing these principles. These managers have also been informed of the Fund’s policy for human rights and of its expectation that its busi-ness partners shall respect human rights in their business activities. The work of these asset managers is regularly monitored on a quar-terly basis, both in the form of a written report from the asset mana-ger and through dialogues, where specific portfolio companies and the risks they or their sector may incur are discussed. External asset managers are also subject to an annual assessment, including their performance on sustainability. A poor result may lead the Fund to terminate its collaboration with the manager in question.


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AP2’s risk identificationand report focus

In section two (B) of the Report, AP2 describes its work in identifying its salient human rights risks in terms of severity, as well as the challenges, results and reflections arising from this work. The section answers the questions listed in B1, B2, B4 och C3 in the Reporting Framework. See reference index for detailed information.

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AGovernance of respect

for human rights

BDefining the focus

of reporting

A company can cause, contribute to or be directly linked to a great number of human rights risks. This is why a key element of the UN Guiding Principles is that companies shall be aware of these risks, i.e. identify them, and determine which should have priority. It is extremely important that this priority is based on an assessment of severity, so that the risks deemed to have the most severe negative impact on human rights are addressed first i.e companies’ salient human rights issues.

AP2’s comprehensive risk identificationAs noted earlier, a business may be linked to various human rights risks not only through its own activities but even via those of its busi-ness partners. As an investor, this therefore exposes AP2 to the risk of adverse human rights risk in several situations, as in its roles of employer, customer of suppliers, counterpart to other financial institutions, asset owner and asset manager.

AP2 has charted the potential and actual risks linked to the above named roles, with a view to evaluating these according to their severity. ”Potential risks” refers to situations where there is a risk of an adverse impact. “Actual risks” refers to situations where indivi-duals and groups have actually been affected. A risk assessment, based on risk to human rights, and not on the Fund’s own activities, has been implemented. In this work, the Fund

has been assisted by Shift, which is an expert on the UN Guiding Principles on Business and Human Rights.

Portfolio holdings expose AP2 to severe risksThe predictable conclusion arising from the extensive risk-identification process is that the Fund’s salient human rights risks derives from its roles as an asset owner and asset manager, which expose it to the risks its portfolio com-panies may incur. AP2 may contribute to or be directly linked to portfolio companies’ risks via its holdings in these comapnies. Those who might be adversely affected could be employ-ees of these various portfolio companies, con-sumers of their products or communities that are negatively affected by portfolio companies’ business activities. Consequently, these risks have been analysed in greater detail.

The assessment was in part conducted as a collaboration between AP1, AP2, AP3 and AP4 during 2018. Each AP fund chose to analyse an optional asset class or a part of its overall portfolio. Shift assisted with various criteria as a basis for the risk analysis and held joint workshops for the AP funds, where insights could be exchanged. The risk analysis addres-sed risks common to those sectors in which portfolio companies operate. Attention was also paid to whether portfolio companies operated in a context or regions considered

highly vulnerable to human rights abuses, and whether the companies had instituted policies and processes for managing these risks. In determining the severity of potential human rights risks, special attention was paid to the scale, scope and irremediable character of the risks. For example, portfolio companies active in an industry with wide-ranging problems related to slave labour are considered high risk, given that both the scope and the scale of the nega-tive impact they represent is deemed severe. In the analysis, special attention was also paid as to whether vulnerable groups such as women, children, minorities or indigenous peoples might be adversely affected.

During the charting process, AP2 chose to analyse the asset class ”listed global equities”, since this class constitutes a large part of the Fund’s total portfolio (about 28 percent). The Fund manages most of this asset class quantita-tively, involving small holdings in a large number of portfolio companies that are active across the globe as well as in different sectors. The wides-pread nature of these holdings is a particular reason for wishing to establish a clear idea of the risks within this asset class.

One insight from this process was the Fund’s difficulty in determining which of the identified risks in the selected asset class should be awar-ded priority. This was partly because most sec-tors in which the portfolio companies were active in posed severe risks. To highlight this

problem, it may be noted that AP2 identified some 40 sub-industries in this asset class, consi-dered to pose potentially serious risks, all of which could qualify as posing the Fund’s salient human rights risks. Also, partly because it is diffi-cult to refine priorities among the severe risks identified, based on the data available to AP2.

Further development of proactive risk identificationTo further refine the prioritorization of the risks the Fund has identified, in an efficient and structured manner, and to better target its proactive approach, the Fund wishes to build on the experience gained from the joint pro-ject. During 2019 and 2020, it is therefore AP2’s ambition and goal to create an in-house quantitative data model that can provide the Fund with a more adequate and complete pic-ture of the risks it is exposed to in its dual roles as asset owner and asset manager.

The model will be developed in line with Shift’s recommendations on risk identification. Specific issues will systematically be analysed and monitored, such as how the risk of child labour is changing in different sectors and countries over time. The results from the data model can, for example, be used in preventive dialogues with selected high-risk companies, for expertise enhancing activities within the Fund or as risk mitigating measures as part of the Fund’s processes.

One of the challenges confronting the Fund is the difficulty of obtaining geographic data on portfolio companies’ operations. This makes it difficult to identify portfolio companies opera-ting in geographic areas considered to pose a high risk. Another challenge the Fund has encountered is the lack of data suppliers to the finance industry that subscribe to a clear human rights perspective, given that AP2 is keen that these risks should be analysed in terms of risk to affected people, as opposed to risk to the portfolio companies.

Norm-based screening – a furtherrisk identification processAs well as the risk identification process descri-bed above, the Fund also conducts a norm-based screening twice yearly on all listed port-folio companies included in AP2’s in-house portfolio of equities, as well as in its external discretionary mandates. This review is intended to identify portfolio companies that are dee-med to have infringed international conven-tions and guidelines embraced by Sweden, to enable the Fund to act on any charges made. The review is conducted by Sustainalytics which have expertise in human rights, on beh-alf of the Council on Ethics. The screening is news-based so it captures incidents where companies have been criticised for human rights abuse in the media or by non-state organizations. The incidents are analysed by

Sustainalytics, which then submits its assess-ment and recommendations for possible action.

See above the incidents that were identified in the screenings 2018.

Two salient human rights issues – focus for rest of the ReportA number of severe cases and human rights issues may here be discerned from the Fund’s risk identification work as described above. In this Report, the Fund highlights a specific case of adverse impact and an area of high risk. The selected case and area of risk have been chosen because of their level of severity. The case selected is the Vale company’s dam disasters in Brazil (named as The Vale Case in the Report). The area of risk the Fund wishes to highlight is the Fund’s farmland invest-ments in Brazil (named in the Report as Farm-land investments in Brazil). In the following section (C) of the Report, the Fund will des-cribe the Vale case and how it has been managed, as well as how the risks associated with AP2’s farmland investments in Brazil have been handled.

For other severe reactive cases identified during 2018, which have been managed within the framework of the Council on Ethics, please refer to the Council on Ethics’ annual report.

Africa 9%

Asia 39%

Central and South America 22%

Europe 11%

Middle East 2%

North America 17%

In 2018, 46 new cases were identified of incidents involving labour rights and human rights

Regions where incidents have occurred


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AP2’s management of salient human rights risks

In section C, AP2 exemplifies its work on human rights by reporting on the mining company Vale’s dam disasters and the Fund’s reaction in light of its earlier holdings in Vale. AP2 also describes its handling of the risks it identifies in its farmland investments in Brazil. The section answers the questions C1, C2, C4, C5 and C6 in the Reporting Framework. See reference index for detailed information.

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CManagement of salient

human rights issues

The Report highlights the Vale case in light of the severe consequences the accidents had with reference to the three criteria of severity: scale, scope and irremediable character.

Vale S.A (Vale), a Brazilian company foun-ded in 1942, is the world’s largest in the pro-duction of iron ore and the fifth largest in the world in mining and logistics.Vale has over a short space of time expe-rienced major accidents involving the cata-strophic failure of two of the company’s tailings dams and the flooding of huge areas with mining waste in the form of sludge. Both accidents occurred in Minas Gerais state, Bra-zil. The first accident, in November 2015, which occurred at joint-owned company Samarco’s operation in Mariana (owned jointly by Vale and BHP), caused the death of 19 people and contaminated 600 kilometres of the Rio Doce river, some very seriously. The second accident, at Vale’s mine in Cor-rego do Feijao Brumadinho, on January 25th 2019, caused the death of at least 134 people, with a further 199 still missing.

Dialogue with ValeThe 2015 dam disaster was attended globally and was also noted in the Council on Ethics’ norm-based screening. AP2, through the Council on Ethics, conducted a dialogue with both BHP and Vale after the first accident at Mariana in 2015. Communication was initiated

on November 16th 2015 (11 days after the dam failure at Samarco). The dialogue first and foremost focused on ensuring that the portfolio companies accepted responsibility for the accident and implemented appropri-ate measures, initially for the villages destroyed by the mudflow, but also for the thousands of people along the banks of the Rio Doce River whose daily lives were affec-ted in the long term. It also aimed to gather facts on the background and causes of the accident, and to ensure the safe handling of mine waste and the security of other tailings dams. The measures deemed appropriate were developed by BHP and Vale in the light of discussions held not only with investors and the Council on Ethics, but also with people with considerable experience of the mining industry as well as the local residents in Brazil, who had seen their villages destroyed by the disaster. The Council on Ethics and their consultant Sustainalytics, also visited the accident site at Samarco, as well as Vale in Sao Paulo, in June 2017, together with a group of investors. Some 20 people attended the meeting, some being staff from various departments in Vale, including its head of sustainability in Brazil, as well as representatives from other investors in the company. The meeting focused on the Samarco accident, the company’s response and Vale’s sustainability efforts in general.

Upon their return, the Council and Sus-tainalytics followed up theirvisit with some questions concerning maintenance checks on the other tailings dams. These questions were detailed and addressed the type of technical equipment Vale used, with the emphasis on dams that posed high risk. Questions were also asked as to how the company organized the security of its dams. Many of the Council on Ethics’ goals for its engagement in the matter of the Samarco accident were realized in 2018, and the dialo-gue was concluded in August 2018, when the reconstruction of the destroyed communities had been started. In this specific case, it was noted that the 2015 incident with Samarco led to contact between the Council and affected individuals in July 2017. Since the accident, the Council has received regular updates on those most immediately affected and news of the thou-sands of other individuals on the banks of the river who have also suffered. The next dialogue with the victims was held in 2018, this being attributable to the fact that it generally takes time for organiza-tions, the local community and its victims to get organized. After the new accident on January 25th 2019, the Council on Ethics and Sustainalytics resumed the dialogue with Vale via email, as well as participating in joint meetings organi-

zed by PRI (Principles for Responsible Invest-ment) and individual face-to-face meetings med Vale in June 2019. Concerning the 2019 incident, Sustainaly-tics reports that no organized groups have made their appearance and that it is likely to take time before a direct dialogue and inte-raction can be established. This assessment is also thought to depend on the manner which Vale handles the repercussion of the incident, in terms of a responsible response and com-pensation to affected families. A further fac-tor that can affect this process is when the cause of the incident can finally be determi-ned and made public.

Integration of human rights in the Fund’s decision process and actionAP2 was a shareholder in Vale at the time of the first incident in 2015, via its in-house investments in global equities. As noted ear-lier, AP2 responded to the incident by enga-ging in a detailed dialogue with Vale through

the medium of the Council on Ethics and its consultant Sustainalytics. At the same time, during 2016 and 2017, AP2 was involved in developing two new indices for the in-house management of glo-bal equities. One aim of these indices is to assign portfolio companies with strong sus-tainability profiles a higher weighting, while portfolio companies with poor sustainability profiles are assigned lower weightings. Among the elements used to assess the qua-lity of a company’s sustainability work are specific factors that determine whether a company is involved in controversies on human rights. Companies that have been involved in such controversies are generally assigned such a low sustainability rating that they are not included in the index, which was the case with Vale. The Fund’s board appro-ved the introduction of these indices in autumn 2017, which were subsequently implemented between February and April 2018. As already noted, Vale was one of the

companies not included in the index due to these controversies. Consequently, as of April 2018, the Fund no longer had any holdings in the company. AP2 nevertheless chose to continue its dialogue concerning the Vale case, in part via its representatives on the Council on Ethics. Sustainalytics considers Vale, according to the UNGPs, accountable for the aforemen-tioned incidents, and that the company has been in contravention of ILO Convention No. 155 on Occupational Safety and Health, as well as of the Universal Declaration on Human Rights. Furthermore, Sustainalytics believes that Vale consciously exposed its employees to serious risks. This in light of Vale’s own risk analysis from April 2018, which noted that its own facility, i.e. the staff canteen in which employees resided, was at serious risk in the event of a possible col-lapse, given its location a mere 700 metres from the foot of the dam. In spite of this, Vale took no action to move the canteen to a safe

AP2 acted on the incident, as noted earlier, by engaging in an exhaustive dialogue with Vale via the Council on Ethics and

its consultant Sustainalytics.”

The Vale Case - dam failures

”


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area, which resulted in the death of more than 100 of Vale’s own staff when the dam failed. The Council on Ethics came to a similar conclusion and recommended that AP1, AP2, AP3 and AP4 should exclude Vale, since the company could be linked to a contravention of the Universal Declaration on Human Rights, article 3 “Everyone has the right to life, liberty and security of person”; the Internatio-nal Covenant on Civil and Political Rights, article 6 “Every human being has the inherent right to life” and ILO’s convention No. 155. This assessment, together with Sustainaly-tics’ report on the incident, has provided AP2 with solid decision data, leading to the deci-sion to exclude Vale from its portfolio in May 2019. Even though Vale was not included in the Fund’s index for in-house managed glo-bal equities, the decision to exclude the com-pany was thought important. Since Vale was not included due to the way the index was

designed, a design open to change, there was a risk that Vale might be included again, if no formal exclusion was approved. It should be noted that AP2 does not see a dialogue that ends in exclusion as desirable in itself. As cited earlier, AP2’s desire and goal is – through active communication – to per-suade companies to shoulder responsibility and implement the changes required. In the specific case of Vale, the Council on Ethics, in spite of the exclusion, continues to maintain a dialogue with the company. This is due to the serious circumstances surroun-ding the case. This dialogue is currently maintained via PRI.

AP2’s ongoing commitment to change the mining industryAP2 has maintained its involvement in the industry, given that it is a sector highly likely to have a severe negative impact on human rights.

Following the accident in Brazil, the Council on Ethics, with several other inves-tors, is demanding independent audits of tailings dams. These demands require the establishment of an independent classifica-tion system and new safety standards for mines’ tailings dams. An official public database, to post the annual audits of all tailings dams across the globe, as well as verification of implemented safety standards, will also be introduced. This should help prevent dam failures. All reports shall be public and available on the database, which shall be accessible by com-munities, governments, civilian society and investors.

Monitoring in practiceEvery time AP2 needs to take action against a portfolio company in the form of dialogue, by exerting pressure or making demands, milestones are established to chart and

monitor the change management process expected of the company. Portfolio compa-nies are evaluated through indicators that determine their amenability to dialogue, their efforts to prevent future abuse as well as a broad assessment of the success and results of dialogue. The Vale case, however, is a classic example of how complex it can be, and the difficulties involved, in determining the degree to which actions taken yields results – or not. Via the Council on Ethics, AP2 was already actively engaged in monitoring and exerting pressure on Vale immediately following the 2015 incident. As stated above, this involved extensive contact, including teleconferencing and actual visits to the company. The company constantly claimed that measures had been taken to manage mine waste at its tailings dams and yet a further incident occurred in 2019,

which demonstrated that the company had in fact not implemented the measures necessary to secure the safety of its dams. Vale has recently stated that it plans to invest about US 1.9 billion over the next five years in the closure of nine tailings dams. When asked what this will actually mean, Vale has replied that it may take two forms: 1) the ending of discharges from storage facilities or 2) the broade-ning and integration of these dams into the environment. The former CEO had also declared that Vale would exceed international standards to ensure its dams achieved a secure stan-dard. However, the details relating to this promise have been extremely vague. Vale has now created a new role, Direc-tor for Operational Excellence, although it has already been confirmed that the newly appointed director lacks any mining expertise.

Key measures for mine-waste management and safety at all Vale’s tailings dams, requested in 2015 after the Samarco accident by the Council on Ethics and others

Measures Result

That the company should conduct an internal review of its tailings dams in the Iron-Ore Division (the Base Metals Division at Vale had already con-ducted such a review).

The Iron-Ore Division shall implement such a review.

That the company shall integrate expertise in the inspection of tailings dams within the various business units. Vale has a decentralized structure.

Vale has not wholly integrated expertise between its units, but holds quarterly meetings focused on “best practice” and has increased communication on the subject between divisions.

That the company should improve inspection of its tailings dams, inclu-ding more frequent monitoring and third-party audits.

Vale has implemented improvements in both areas.

The company shall develop/review emergency evacuation plans. Vale conducted a risk analysis, prioritized the dams believed to pose the greatest potentially negative impact and identified the areas that could be affected by a possible dam failure.

Compensation to victimsAccording to the UNGPs, companies that have caused a negative impact shall pro-vide remedy to those affected. In cases where AP2 is directly linked via its invest-ments to a negative impact on human rights, as in the Vale case, responsibility for compensation or remediation falls on the portfolio companies. AP2 believes it is its role to hold the portfolio companies in which it invests responsible for actions that have a negative impact on individuals and groups. In the Vale case, according to Sus-tainalytics, the cause of the 2019 incident has yet to be ascertained and made public. It may nevertheless be noted that Vale has so far offered families that have lost a family member a degree of financial remu-neration. These payments are being made over and above any potential legal negoti-ations and processes associated with even-tual compensation for victims.

Time

Incidents

Council on Ethics’ dialogue

AP2’s holdings in Vale

Chain of events, Vale case

November 2015 2016-2017 April 2018 August 2018 January 2019 May 2019

Dam accident Samarco

Dialogue initiated with Vale and BHP

AP2 holds equitiesAP2 develops new index

Dialogue in progress

Holdings sold, because Vale is not included in the new index

Dialogue concluded as goal considered achieved

Dialogue resumed with Vale

Exclusion of Vale recommendedDialogue maintained via PRI

Dam accident Vale

AP2 excludes Vale from its portfolios


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”

Potentially severe issues in the agricul-tural sectorAP2 has earlier identified the agricultural sec-tor as a challenge in terms of human rights, an impression confirmed during the Fund’s above mentioned proactive risk analysis of 2018. Potential human rights issues in this sector include: health and safety of employ-ees and local communities, the risk of child and slave labour, negative impacts on the living standards of local communities, abuse of land rights and the forced displacements of indigenous populations. The issues cited here are considered severe as per the seve-rity criteria of scale, scope and irremediable character. The adverse effects can be signifi-cant, both in terms of the scale and the scope of the negative impact, as with slave labour or the forced displacement of entire

local communities. If these abuses materia-lize, they can also be difficult to remediate, as when human health and safety are adversely affected. In agriculture, there is also the increased likelihood that vulnerable groups, such as women, children, migrants and indi-genous peoples will be affected, raising the level of severity. The Fund recognizes it is directly linked to these potential risks via its investments in the sector.

AP2’s investments in farmlandInvestment in farmland is part of AP2’s stra-tegy for diversifying its overall portfolio. Some three per cent of Fund capital under management is invested in farmland. The Fund’s investments in farmland are made mainly through joint ventures with other investors. At present, AP2 has holdings in

three joint ventures and a fund. The joint ventures employ managers to handle their investments. The land is owned by these joint ventures and either leased out to local far-mers and agro companies or handled by the manager. When farmland is leased out, it is the lessee (farmer) who decides what to grow and is responsible for production and sales of the harvested crops.

Joint ownership brings AP2 closer to the issuesA fundamental principle for the Fund is that these joint ventures and their managers share its values concerning a long-term approach and responsible and sustainable investment. Through joint ownership, as a major partner and representative on the company’s board, AP2 can exercise its influ-

ence more effectively. Joint-ownership also gives AP2 a clear insight into the work of both company and manager, enabling it to play an active role in improving the sustaina-bility efforts of both. Human rights issues are integrated and central to the farmland investment process employed by managers and joint ventures.

One element of the Fund’s strategy for investment in farmland is to focus on countries with major agricultural sectors, that are limited in their dependence on agricultural subsidies and that feature clear and stable legal structures. This makes many geographical regions inappropriate for investment. Farmland in which AP2 has holdings are located in the USA, Brazil, Australia, Poland, New Zealand and Chile.

Brazil – identified as a high-risk country The Fund has farmland investments in Brazil via two joint ventures, TCGA and TCGA II. These are managed by Nuveen’s affiliated asset manager Westchester. Nuveen is one of the largest investment managers in the

world, with specialist expertise in areas such as farmland investments. In this Report, AP2 has chosen to focus on the Fund’s farmland assets in Brazil. This because the Fund consi-ders that the risk of human rights abuses is higher in Brazil than in other countries in which AP2 has farmland investments. This derives partly from the greater likelihood of abuse, partly from the level of severity since there are reports of child labour and abuse of indigenous communities in the agricultral sector in Brazil. This assessment has been made jointly with the manager, which has more detailed knowledge of the issues invol-ved in the agricultural sector. Consequently, this Report will address both the manager’s and AP2’s efforts to deal with the aforemen-tioned issues.

It should be noted that AP2 is also expo-sed to farmland investments in Brazil through its investments in listed equities and corporate bonds, which are held in the Fund’s global portfolios. Holdings in these listed portfolio companies are subject to the same process as previously noted for

other listed equities, i.e. a norm-based screening twice a year. Dialogues are cur-rently being conducted via the AP Funds’ joint Council on Ethics with two of these lis-ted Brazilian portfolio companies.

Guidelines for farmland investmentsAP2 employs the global standard ”Guidance for Responsible Investment in Farmland” as a steering document and requires that these be implemented by its external managers and by the jointly-owned companies. These guidelines derived from an industry initia-tive, AP2 being a member of the working committee, which aimed to provide inves-tors with a framework for sustainable farm-land investments. Since 2014, these guideli-nes have been administered by the UN-supported organization PRI (Principles for Responsible Investment). The guidelines, which embrace respect for the environment, good working conditions, human rights, respect for land and ownership rights and business ethics, address serious human rights issues in the agricultural sector.

Guideline 1 Promote environmental sustainabilityGuideline 2 Respect labour and human rights Guideline 3 Respect existing land and resource rightsGuideline 4 Uphold high business and ethical standardsGuideline 5 Report on activities and progress

More on the Guidance for Responsible Investment in Farmland at www.unpri.org

Guidance for Responsible Investment in Farmland

Human rights issues are integrated and central to the farmland investment process employed by fund

managers and joint ventures”

Farmland investments in Brazil

”


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AP2’s implementation of the guidelinesSince its first investment in TCGA, AP2 has had a close and ongoing dialogue with Nuveen concerning the issues addressed in the above mentioned guidelines. Nuveen was also part of the working committee that developed the guidelines with other institu-tional investors. The Fund has offered its support to Nuveen on human rights issues, should the need arise. AP2 operates a thorough due-diligence process when selecting new managers of farmland assets, making human rights issues a central and decisive part of the process. Should the manager reject the Fund’s demands concer-ning implementation of the above named guidelines, it will impact the Fund’s decision. AP2 submits an annual report on its imple-mentation of the guidelines, available at www.ap2.se

Managers’ implementation of guidelinesTo ensure that human rights issues are add-ressed correctly, all the Fund’s farmland managers shall implement the guidelines for responsible investments. One example of such implementation is the use of an exter-nal party who conducts an environmental

assessment when acquiring farmland assets. A negative environmental impact more than often also has a negative impact on people. The consultancy that conducts the assess-ment will be, if so required, tasked with recommending methods to limit a possible negative impact on the environment. To reduce the risks linked to the use and storage of pesticides and fertilizers, mana-gers are actively engaged in introducing programmes to ensure the safe handling of chemicals. Lessees’ chemical handling pro-cesses are subject to annual reviews.

Respect for labour and human rights forms a key element of the earlier named guidelines, where work is ongoing to for-mulate a third-party verified programme that specifically concerns the health and safety of migrant and itinerant workers, who can constitute vulnerable groups and can thus be severely affected by a possibly negative impact.

Concerning business ethics, managers’ staff have attended training on corruption issues. Staff are required to observe laws and regulations and to promote good busi-ness ethics. No misdemeanours or disputes linked to farmland investments in the joint-

owned companies have been reported over the past year.

Land and ownership rights where vulne-rable groups such as indigenous people and local communities can be negatively affec-ted are additional areas addressed by these guidelines. The following provides a con-crete example of how these specific risks, which are deemed to be at greater risk of exposure, are managed in Brazil.

AP2’s monitoring of managers’progress with the guidelinesAP2 conducts an annual review of the managers of all the joint-owned companies that invest in farmland, employing a number of indicators based on the Guidance for Responsible Investment in Farmland. These indicators have been developed by Nuveen. Based on dialogues with the managers and the monitoring of indicators, the Fund belie-ves that the managers are doing a sterling job in implementing the guidelines.

Sustainability audits of farmland in BrazilSince Brazil has been identified as a high-risk country concerning the potential risk of severe negative impacts, more exhaus-

Management of land rights in Brazil The utilization of and ownership rights to land and other natural resources are issues of special importance in emerging countries, where formal systems of ownership rights are often non-existent. Of the countries in which AP2 has invested in farmland, Brazil is the only country that the Fund has identified as having particular issues in determining the legitimate owners of farmland assets. Via Westchester, Nuveen (manager of the joint-owned companies for agricultural investments in Brazil) conducts an exhaustive investigation into owner-ship of farmland. This analysis includes georeferencing (use of GPS coordinates) and satellite imaging. A back-ground check of the vendor and whether the land in question has been involved in any legal disputes is also conducted. If suspicions are raised, third-party expertise is co-opted for further checks. Before a farmland asset is acquired in Brazil, the investment is checked to ensure that it poses no negative impact on the local environment and that no uncertainties or legal disputes exist concerning ownership rights. Only when the investment manager is satisfied with the results of the assessments can the acquisition proceed.

2018 2017 2016 2015

Guideline 1 Promote environmental sustainability

Environmental appraisal Farmland acquired during the report period for which a third-party environmental appraisal has been conducted

100 99 100 N/A

Farmland owned more than a year where the manager conducts an environmental appraisal

100 100 100 N/A

Chemical management Farmland with annual crops that report on pesticides and artificial fertilizers

100 100 98 N/A

Farmland with perennial crops, vegetables or berries that report on pesticides and artificial fertilizers

97 93 58 N/A

Soil quality Farmland where regular tests are conducted to determine soil quality, pH levels and nutrients

100 100 100 99

Water management (farmland with artificial irrigation)

Farmland that reports on water consumption 72 83 81 85

Farmland conducting water conservation 100 100 100 100

Guideline 2 Respect labour and human rights

Labour compliance Portion of lessees/operators that respect state and national labour legislation

100 100 100 100

Health and safety Farmland inspected according to health and safety regulations 97 93 59 N/A

Guideline 3 Respect existing land and resource rights

Ownership and local land rights Farmland acquired during the report period with a formal land registration, and verified ownership rights

100 100 100 100

Agricultural activities in compliance with indigenous peoples’ rights 100 100 100 100

Guideline 4 Uphold high business and ethical standards

Business ethics Portion of employees in managers’ investment organisations that has completed the annual training in business ethics¹

W: 100, T: >80

W: 100, T: >80

W: 93, T: 90, R: 93

TC: 86,T: 90

Guideline 5 Report on activities and progress

Ongoing reports from managers, including annual appraisals

Annual published report from AP2

Key indicators for AP2’s farmland holdings based on Guidance for Responsible Investment in Farmland, (% hectares)

¹W = Westchester, T = Teays River, R = Radar, TC = TIAA-CREF


19 20

tive third-party audits of the Brazilian farmland assets in which AP2 invests are carried out. Introduced in 2015, so far two audits have been completed. Looking ahead, some 25 per cent of all farmland assets in Brazil will undergo an annual audit, which means that every asset will be inspected every four years. In 2015, the global sustainability con-sultancy BSD Consulting reviewed the farming operations’ regulatory compli-ance regarding working conditions, health and safety at work as well as the environment and business integrity. These audits were designed to determine whether the rules and regulations were being observed in Brazil, and to ensure that they complied with the Guidance for Responsible Investment in Farmland. Les-sees’ management systems were also assessed. All farmland assets in the Fund’s first joint-owned company, TCGA, were exa-mined, totalling 14 lessees. The audits showed that a majority of lessees have satisfactory management systems, alt-hough all farmland assets had instances of non-compliance and/or observations on the sights. Some of these instances of non-compliance and observations related to policy and governance, while others involved concrete observations. No cases of child labour were identified. One case of forced labour was identified, where a number of lessees failed to provide trans-port between city and farm. Brazilian rules and regulations require employers to provide transport to the farm where public transport is unavailable. The results of each audit were reviewed in consultation with each lessee. Action plans and monitoring procedures were established. In total, 48 per cent of all noted criticisms were remedied within twelve months. Subsequent to the audit, a contract was terminated with one of the lessees, who was found to have material instances of non-compliance. This lessee was responsible for a large part of the criticisms noted in 2015.

Result and follow-up of 2018 auditDuring 2018, third-party audits were con-ducted for all farmland assets under management of newly formed joint-owned company TCGA II, and eight les-sees from TCGA were revisited, being con-sidered to pose a high risk of deviating from regulations, based on the 2015 audit. A total of 34 operating units and 24 les-sees were audited. The total audit compri-sed 33 579 employees of all lessees. The result demonstrated that the majo-rity of the Brazilian farms are managed by certified lessees who have established sta-ble and solid on-site processes. Where observations were made, they were mostly related to a lack of formal processes. To better support lessees, the manager has changed the site-visiting process, to include a more thorough review of the les-sees’ activities. The manager has also established a detailed Code of Conduct for lessees, discussed personally with each lessee. A governance and supervisory pro-cess to ensure that this Code of Conduct is respected is being implemented.

Nuveen’s dialogue with current stake-holdersIn its role as an active asset owner, AP2 wishes to ensure that its external managers adopt the measures necessary to consis-tently integrate stakeholders’ views as part of their processes.

Nuveen, via its farmland investor West-chester, is actively engaged in keeping itself up-to-date in areas such as human rights through its interaction with stake-holders. In 2017, for instance, Nuveen was in contact with experts in indigenous peoples’ rights and land rights in Brazil, enabling identification of areas for impro-vement in the manager’s processes. This inspired development of a new assessment model for analysing social issues in the manager’s investments in parts of Brazil. This new assessment model, used prior to making a farmland acquisition, focuses clearly on a dialogue with adjacent com-munities, which includes on-site observa-tions and conversations with stakeholders such as state and local authorities, non-profit organizations and representatives of the local community. This assessment was developed in-house, but is now employed by Imaflora, an independent third-party. When identifying relevant stakeholders, the manager is keen to promote a thorough and genuine understanding of local communities’ views.

Dialogue between AP2 and farmland stakeholders resulted in actionIn 2018, AP2 was criticised by human rights organizations based on suspicions on a farm which one of AP2’s jointly-owned companies has investments in, were constituting a negative impact on

the local population. The asset manager in question, Westchester, initiated a dialo-gue with the local population and, follo-wing these conversations, rejected the cri-ticism. In this specific instance, AP2 also took part in communicating with stake-holders, to gain a more qualified under-standing of the allegations. Conversations were held with FIAN, the international human rights organization that reported on these claims, as well as representatives for the local community and Solidarity Sweden – Latin America. Topics addres-sed during these meetings were AP2’s approach to the agricultural industry, the environmental and social risks it sees in the sector, its processes for combating deforestation of the rain forest and its processes for ensuring that farmland is acquired in a correct manner, i.e. to avoid land grabbing. As a result of these meetings, BSD Con-sulting was tasked with conducting a third-party audit of selected farms in the MAT-

OPI region, with a special focus on interaction with the local communities. Some 19 communities were visited in the region. Regarding the allegations of abuse over land rights or the violence of private guards, no claims were noted by BSD Con-sulting in connection with Westchester’s activities. Since these conversations, AP2 has worked with Nuveen and other investors on developing a Zero Deforestation Policy, which Westchester has implemen-ted. The policy declares Nuveen’s zero tolerance regarding the acquisition of deforested land in Brazil. AP2 has also engaged in a dialogue on greater trans-parency with Nuveen, which now publis-hes data on the geographic location of farmland on its website.

Grievance mechanism introduced on AP2’s initiative Nuveen has implemented a grievance mechanism for the state of Piauí, in Brazil,

and is working to introduce another for the rest of the MATOPIBA region. This is the result of an AP2 initiative, after exter-nal stakeholders told the Fund of their wish for a complaints mechanism. To avoid conflicts of interest, the mechanism is being implemented by a third party. Business cards have also been distributed in communities where Westchester has operations, to provide an additional channel which the public may use to for-ward complaints to the company.

AP2’s report onhuman rights This report is the first written by AP2 based on the UNGP Reporting Framework. The Fund intends to continue to develop its human rights reporting on an ongoing basis. AP2 hopes that this Report will inspire other companies and organiza-tions to report in accordance with the Reporting Framework. Viewpoints are welcome, and may be emailed to [email protected]

Result of 2018 audit

• 100% of lessees employ soil-conservation measures• No cases of child or forced labour • 82% of operational units have formal procedures to prevent agrichemical

drift during application• 99.9% of workers have a formal contract of employment• 78% of the fields are equipped with facilities for workers such as toilets

and portable shelters• 88% of operational units have a grievance channel available


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cc

Section of the Framework Page where addressed

A. Governance of Respect for Human Rights

What does the company say publicly about its commitment to respect human rights? A1 5

How has the public commitment been developed? A1.1 5

Whose human rights does the public commitment address? A1.2 -

How is the public commitment disseminated? A1.3 5, 8

How does the company demonstrate the importance it attaches to the implementation of its human rights commitment?

A2 5, 6, 7, 8

How is day-to-day responsibility for human rights performance organized within the company, and why?

A2.1 7, 8

What kinds of human rights issues are discussed by senior management and by the Board, and why?

A2.2 8

How are employees and contract workers made aware of the ways in which respect for human rights should inform their decisions and actions?

A2.3 8

How does the company make clear in its business relationships the importance it places on respect for human rights?

A2.4 5, 8

What lessons has the company learned during the reporting period about achieving respect for human rights, and what has changed as a result?

A2.5 9, 10

B. Defining a Focus of Reporting

State the salient human rights issues associated with the company's activities and busi-ness relationships during the reporting period.

B1 10

Describe how the salient human rights issues were determined, including any input from stakeholders.

B2 9, 10

If reporting on the salient human right issues focuses on particular geographies, explain how that choice was made.

B3 16

Identify any severe impacts on human rights that occured or were still being addressed during the reporting period, but which fall outside of the salient human right issues, and explain how they have been addressed.

B4 10

Reference index UN Guiding Principles Reporting Framework

C. Management of Salient Human Rights Issues

Does the company have any specific policies that address its salient human rights issues and, if so, what are they?

C1 5, 16

How does the company make clear the relevance and significance of such policies to those who need to implement them?

C1.1 17

What is the company’s approach to engagement with stakeholders in relation to each salient human rights issue?

C2 11, 12, 19, 20

How does the company identify which stakeholders to engage with in relation to each salient issue, and when and how to do so?

C2.1 -

During the reporting period, which stakeholders has the company engaged with regar-ding each salient issue, and why?

C2.2 11, 12, 19, 20

During the reporting period, how have the views of stakeholders inflenced the company's understanding of each salient issue and/or its approach to addressing it?

C2.3 19, 20

How does the company identify any changes in the nature of each salient human rights issue over time?

C3 10

During the reporting period, were there any notable trends or patterns in impacts rela-ted to a salient issue and, if so, what were they?

C3.1 18

During the reporting period, did any severe impacts occur that were related to a salient issue and, if so, what were they?

C3.2 11

How does the company integrate its findings about each salient human rights issue into its decision-making process and actions?

C4 12, 13, 15, 16, 17

How are those parts of the company whose decisions and actions can affect the mana-gement of salient issues, involed in finding and implementing solutions?

C4.1 -

What tensions arise between the prevention or mitigation of impacts related to a salient issue and other business objectives, how are these tensions addressed?

C4.2 -

During the reporting period, what action has the company taken to prevent or mitigate potential impacts related to each salient issue?

C4.3 13, 19, 20

How does the company know if its efforts to address each salient human rights issue are effective in practice?

C5 13, 14, 17, 18, 19

What specific examples from the reporting period illustrate if each salient issue is being managed effectively?

C5.1 18

How does the company enable effective remedy if people are harmed by its actions or decisions in relation to the salient human rights issues?

C6 8, 14, 20

Through what means can the company receive complaints or concerns related to each salient issue?

C6.1 20

How does the company know if people feel able and empowered to raise complaints or concerns?

C6.2 -

How does the company process complaints and assess the effectiveness of outcomes? C6.3 -

During the reporting period, what were the trends and patterns in compalints or con-cerns and their outcomes regarding each salient issue, and what lessons has the com-pany learned?

C6.4 -

During the reporting period, did the company provide or enable remedy for any actual impacts related to a salient issue and, if so, what are typical or significant examples?

C6.5 -


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Documents

REPORT ON HUMAN RIGHTS 2019...NDRA P -FONN HUMAN RIGHTS 5 AP2’s governance of respect for human rights In this section (A), AP2 describes how it expresses its commitment to human