“Working with Matter and using their screening tool has enabled us to skip a whole big process of market research.
"Working with Matter and using their screening tool has enabled us to skip a whole big process of market research. We avoided having to start from scratch with understanding both market demand for sustainable investment products and the types of sustainable investment products and the types of sustainability criteria we work with".
Head of Responsible Investments at AP Pension.
In 2019 it became clear for AP Pension, a Danish commercial pension company, that they wanted a big shift into making sustainability a key strategic business priority rather than a ‘hygiene factor’ in their investment decisions:
"Before 2019, we only did the bare minimum when it came to responsible investing. We had policies about excluding controversial weapons, but we weren’t doing enough. Today, sustainability is a key value and strategic priority for our whole business and we're constantly on the lookout for new opportunities and best practices within the area. This whole journey would have been much more complicated without the insights and expertise from Matter’s tools and team,” says Sandra Metoyer, Head of Responsible Investments at AP Pension.
Matter helps AP Pension by analysing their investment universe on a quarterly basis. The speed and depth of Matter's screening analysis ensures that coverage on a large number of equities is combined with in-depth insights that normally require manual work from ESG-analysts.
With the new strategic focus, AP Pension had an ambition not only to do better than before, but set entirely new sustainability standards within the financial sector in Denmark. The pension fund set out to create a sustainable investment universe that lived up to strict sustainability standards, which required additional insights beyond traditional ESG data and ratings.
“What we really like about Matter's screening tool is that it gives us flags, not ratings. There are lots of different ESG ratings out there and we subscribe to some of them, but the problem is that most ESG ratings are focused on financial materiality and they don't give you a clear insight into the sustainability profile of a company”
Head of Responsible Investments at AP Pension.
With Matter's screening tool, you don't get ratings – you get flags. A flag enables you to understand what positive or negative actions a company might have been flagged for by external sources such as NGOs: "by drawing from reliable expert sources on specific sustainability issues the flags give you a much better indicator of the sustainability profile of a company, which then enables you to make more informed investment decisions," she explains.
As a part of their strategic shift, AP Pension launched a new sustainable pension plan - AP Sustainable - in 2019. Using Matter’s screening analysis, AP Pension made it possible to avoid investments in controversial and harmful industries and behaviours such as fossil fuel, weapons and human rights violations and find more sustainable and green alternatives such as renewable energy, health and certified forestry.
“For our sustainable product, we wanted to go beyond the financial materiality aspect and try to look at whether the company was behaving in a sustainable way. This is where Matter's screening tool was useful. It provides a range of positive and negative flags for a wide variety of parameters, which allowed us to dig into those flags to determine whether the company could be considered sustainable, or whether there were issues that would exclude them from our investable universe,” says Sandra Metoyer.
AP Sustainable has been live for a little over a year and has outperformed all other pension products in the Danish market in 2020. Killing the myth that sustainable investments perform badly has only given AP Pension more motivation to go further with their sustainability efforts.
"Launching a dedicated sustainable product was a way for us to set the bar of where we wanted to be as a company in terms of the sustainability agenda. We expect that in time the rest of the business will follow and in the future we hope to have lifted the standards of the sustainability profile of all investment products in AP Pension," says Metoyer.
To continue their work with making all their investment products more sustainable, AP Pension combines qualitative research with quarterly screenings from Matter of the investment universe to stay updated on any developments in companies’ behaviour and profiles.
Working with Matter, AP Pension did not only manage to launch the first sustainable pension product in the market, they made a transition from seeing ESG as a hygiene factor to making it one of the most important strategic priorities of their businesses. They will continue to use Matter to stay informed on sustainability performance and find new ways to invest more sustainably.
Sustainable investing is about more than just equity analyses, it’s also about working together about finding great solutions and empowering investors. Matter is proud to further partner with AP Pension on understanding and communicating the impact of alternative investments and green bonds to AP Pension's customers.