Första AP-fonden’s investment portfolio contains  agricultural investments. The intention is that such investments will generate a long-term stable and secure return and, through a differing return pattern, serve as a supplement to the rest of the portfolio.

In order to reduce ESG risks in the investments, the Fund’s strategy is to invest in agricultural properties in advanced markets, where agricultural production is efficient and not dependent on government subsidies or other support. It is also important that the agricultural properties are located in countries with clear legal structures.

At the end of 2014, 0.4 per cent of the Fund’s assets under management were in agricultural properties, to a value of around SEK 1,100 million. That equals around 27,000 hectares of farmland spread across 18 agricultural properties in Australia and as many in New Zealand. Första AP-fonden does not farm the land itself; it is either leased to local farmers or run by the external managers appointed by the Fund.

Major sustainability challenges

The challenges in agricultural investments are considerable – it is an industry confronted by all types of sustainability risks. Analysis of sustainability factors is therefore handled as an integral part of the Fund’s evaluation process before investment decisions are made and forms part of the ongoing monitoring of the investments. As a basis for this analysis, the Fund uses PRI’s Principles for Responsible Investment in Farmland, which have been endorsed both by the Fund and its managers. The principles cover the following areas: environment, labour rights and human rights, land and resource rights and business ethics. When selecting managers, evaluation of how the manager integrates sustainability aspects into its operations is key.

The Fund has two managers – AAG Investment Management in Australia and Southern Pastures Management in New Zealand. Both managers integrate sustainability aspects into their daily business. In their view, active sustainability work is fundamental to creating better-run farmland. Not only does it improve financial results, it also helps enhance local community development and food supply.
Examples of how the farmland principles were implemented in 2014 are provided below.

New Zealand

In New Zealand, investments consist entirely of farmland for milk production. All investments are preceded by an independent eco-audit in order to identify flora and fauna of particular ecological value. The information is then included in the source materials for business planning for each individual piece of farmland. Similarly, any land conversion is preceded by independent investigations regarding, for instance, impact on water flows. Measures have subsequently been taken to preserve and improve wetlands present on the farmland. In order to improve the knowledge of its dairy farmers, both about environmental matters and health and safety, the Fund’s manager organises a two-day training conference each year.

The Fund’s manager is also one of the founders of the Upper Waikato Sustainable Milk Project. It is the most extensive initiative in New Zealand to promote a better environment in connection with milk production. Another area in focus in 2014 was the origin of the feed supplements fed to the cattle when the agricultural properties were purchased.

The Fund’s manager is in regular dialogue with representatives of the indigenous people of New Zealand – the Maori. For example, in 2014 it conducted a study with a local tribe of an area following indications of early settlements. The area has now been separated from the rest of the farmland and the local tribe has access to it.


In Australia, the focus of the Fund’s farmland is more varied. On some, grain is farmed, while others are used for cattle rearing and milk production, or a mixture of the two. Some of the Fund’s investments are also included in projects aimed at restoring failed afforestation to farmland. In Australia too, all investments are preceded by detailed environmental and social evaluations that cover e.g. soil analysis, water, form of ownership, neighbour relations, waste management, the existence of environmental management systems and costs of any measures deemed necessary by the manager. Clear goals and follow-up thereof are key components of the operations. The farmers that farm the land are trained in environmental matters, health and safety and the safe handling of chemicals.

Work on sustainability matters is integrated into the operating activities, although in order to perform systematic follow-up, the Fund’s manager has created a database in which all measures are registered. Registration of deficiencies and actions can now be done  directly on site using a smartphone, making the process easier. Examples of activities in 2014 are an analysis and action plan following land erosion at one of the agricultural properties, the installation of solar powered water pumps, asbestos clearance or the demolition of a number of buildings containing asbestos, a discussion with one of the farms regarding its participation in the “Koala management round table” and certification (FSC) of forestland as well as safety improvements in filling silos.

Principles for responsible investment in farmland

Principle one – Promoting environmental sustainability

We will promote measures aimed at protecting the environment and contributing to the sustainability of specific crops and locations, for example by reducing soil erosion, protecting biodiversity, reducing chemical emissions, effectively managing water, and mitigating climate impacts.

We will require investment managers and operators acting on our behalf to conduct an environmental assessment identifying the relevant environmental impacts and risks of a planned investment.
Based on this environmental assessment, investment managers and operators will be expected to implement mitigation and management measures relevant and appropriate to the nature and scale of the proposed investment.

Principle two – Respecting labour and human rights 

We will respect labour and human rights in our farmland investments.  We will require investment managers and operators acting on our behalf to do the same and to avoid complicity in human rights abuses.
We will require investment managers and operators to identify relevant labour and human rights risks and impacts of a planned investment and to implement mitigation and management measures to address them appropriately.

Depending on the location and the nature of the investment we expect investment managers and operators to explicitly implement policies to respect rights such as those relating to indigenous peoples, vulnerable groups, unique cultural systems and values, local food security, labour and any other relevant rights in the scope of their risk assessment and mitigation measures.

Principle three – Respecting existing land and resource rights

We will respect the existing use of and ownership rights to land and other resources and we will require investment managers and operators acting on our behalf to do the same.
Investment managers and operators acting on our behalf will be required to implement processes for land acquisitions and related investments that are culturally appropriate and transparent, are monitored, ensure accountability and the engagement with relevant stakeholders.

For investments with potential significant adverse impacts on affected communities, the investment managers are expected to implement processes to ensure their free, prior and informed consultation and facilitate their informed participation as a means to establish whether a project has adequately incorporated affected communities’ concerns.

Principle four – Upholding high business and ethical standards

We will promote high business and ethical standards in our farmland investments.

We will require that investment managers and operators acting on our behalf respect the rule of law even where it is poorly enforced. We will also require them to implement processes aimed at avoiding corruption in all its forms, including extortion and bribery, and to reflect an informed view of industry best-practice in their operations.

Principle five – Reporting on activities and progress towards implementing the Principles and promoting the Principles

We will report publicly on our activities and progress towards implementing the Principles, taking into account appropriate confidentiality considerations.

We will encourage other institutional investors to endorse and implement the principles for responsible investment in farmland.