NETHERLANDS - APG has updated its corporate governance and voting policy in a "clear recognition" of boards' obligations to factor in stakeholder interests and sustainability issues.
The Dutch pension fund manager's revamped 'responsible ownership' guidelines will set the framework for its approach to topics including voting, how it engages with the 4,000 companies it owns on behalf of investors and shareholder litigation.
APG head of sustainability and governance Claudia Kruse said the annually updated guidelines now included a requirement that boards consider "whether it is appropriate to include in its remuneration policy factors, other than financial ones, that can have an impact on long-term company value".
Sustainability is one such factor.
In a statement, APG said: "All criteria that are part of the remuneration policy must be measurable, relevant to the company and transparent."
However, it does not support targets linked to sustainability indexes.
This year's update of the annually reviewed guidelines follows a recent decision effectively to boycott sovereign bonds issued by countries subject to an arms embargo by the UN Security Council.
The asset manager said its shareholder activism was predicated on its recognition of a link between good governance and risk-adjusted returns.
It said: "Our aim is to enable the pension funds, on whose behalf we invest, to provide an inflation-proof pension at an affordable premium.
"We achieve our returns in a responsible manner through a focus on environment, social policy and good governance."
Including non-financial factors in the investment process would improve the risk/return profile of its portfolio, the manager added.