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AP2 to audit Brazil farmland assets

The second Swedish pension fund is to audit its Brazilian farmland assets – part of its commitment to TIAA-CREF Global Agriculture LLP – to ensure they adhere to sustainability and corporate governance principles.

AP Fonden 2, the $38.5 billion Swedish pension fund, will work with an external auditor to review its Brazilian farmland assets, after it was criticised by a domestic lobbyist group.

An independent agency will look into how efficiently the United Nations Principles for Responsible Investment in Farmland have been implemented, according to a press release.

AP2 is an original signatory of the farmland principles that were fully incorporated into the UN’s broader Principles for Responsible Investment in August.

The audit decision follows accusations by Swedwatch, a Swedish lobbyist group, that AP2’s local business partners in Brazil transgressed local people’s labour rights and the land rights of indigenous populations. In response, the pension fund has pledged to conduct these independent audits of its Brazilian farmland holdings over the coming year, according to Eva Halvarsson, AP2’s chief executive, in a related press release.

AP2’s Brazilian farmland assets are invested via the TIAA-CREF Global Agriculture LLC collective investment vehicle and are set to increase in size after the pension fund invested a further $750 million with the US pension provider and agriculture manager in its second vehicle.

The pension fund is already quite conservative about the location of its farmland investments, stipulating the need for clearly defined legal structures where assets are located. So far this has restricted the fund’s farmland investment to the US, Brazil and Australia.

The announcement of the auditor’s appointment accompanied the fund’s Sustainability and Governance Report 2013/2014, which was published on Tuesday.

AP2 has invested $100 million in Teays River, a US-focused collective investment vehicle and $450 million in TIAA-CREF Global Agriculture. More recently it invested $750 million in TIAA-CREF Global Agriculture II.