Responsible Investor

Sweden’s AP funds’ ethical umbrella

Council gives Swedish state funds responsible investment muscle.

Sweden is known for being co-ordinated in ethical and environmental matters. But it came as a surprise when the country’s national pension buffer funds, AP1, AP2, AP3 and AP4, which manage combined assets fast approaching €100bn, established a joint ethical council at the beginning of this year. Nadine Viel Lamare, chairperson of the ethical committee and head of corporate communications at AP1, said its genesis came from a decision by the four funds that they should work together on ethical investment. The potential synergy might seem obvious, but isn’t. Under Swedish law, the four AP funds are in direct competition and have separate investment policies. Viel Lamare explains: “When we started, it was solely with the idea of coordinating research on the environmental and social factors of the funds’ overseas investments. We thought this would give us a better view of the overall market and allow us to discuss the pros and cons before each fund went away to talk with their own advisors and implement

any decision. We ended up realising that we all wanted to work the same way and so we selected GES Investment Services, the Stockholm-based research house, as a unique advisor for an ethical overlay that we could each apply to our individual investment decisions.
We also felt that it would be better to work together as a lobby force against larger companies than to try and do this individually.” Prior to the creation of the ethical council, AP1 was the only fund working actively in ethical investment, although all had expressed an interest in voting their total shareholdings and addressing environmental concerns.
“In the original documentation for the AP pension reforms made at the end of the 1990s, there was one line that said the funds should take into account ethical and environmental criteria as long as it did not lead to any loss in financial terms. That was the only guidance we had, which left a lot more questions than answers!” says Viel Lamare.

Not a member? Register here »