Swedish state fund AP7 exits Finnish forest products firm Stora Enso over child labour

Major corporate names appear on 48-strong updated exclusion list at €22.4bn buffer fund

The SEK210bn (€22.4bn) Swedish state pension fund Sjunde AP-fonden (AP7) plans to exclude Finnish pulp and paper giant Stora Enso from next week following revelations of child labour within its supply chain in Pakistan.

Also excluded are US engineering firm Aecom, German graphite firm SGL Carbon, Chinese industrial group Dong Feng and Canadian fertilizer firm Agrium, according to an updated exclusion list (Swedish) that comes into force on December 15. AP7’s exclusion list contains a total of 48 companies, including names such as Airbus, BAE Systems, Barrick Gold, Deutsche Telekom, Hewlett-Packard, Rolls-Royce and Shell.

Last March, a Swedish television programme called “Cold Facts” reported that Stora Enso’s management knew about the child labour issue before agreeing to a joint venture with local firm Bulleh Shah. While Bulleh Shah itself does not rely on child labour, some of its subcontractors in the country do.

Jouko Karvinen, Stora Enso’s CEO at the time, confirmed the accuracy of the Cold Facts report but said the company would not apologise for doing business with Bulleh Shah. “We do not apologize for the fact that we have made the investment and started efforts to help fight child labour in Pakistan. This will take time, as we cannot just force all supplies that have children involved out overnight, but must train the supply base and also work with the communities to find alternative income sources for the families of these children,” Karvinen said in a statement in March.Now it seems, AP7’s patience has run out. According to Swedish press reports, the scheme will exit its SEK31m holding in the firm for violating the UN Global Compact.

“Stora Enso identified the existence of child labour in the supply chain in 2012. But unfortunately, they have not been able to deal with the situation successfully so we are now forced to exclude them,” Dagens Industri newspaper quoted Richard Gröttheim, AP7 Chief Executive, as saying.

Stora Enso is one of five companies AP7 is adding to its exclusion list from December 15. Dong Feng has been included for defying an EU trade embargo on Belarus by supplying that country with military equipment. Aecom and SGL Carbon are on the list for their involvement in nuclear weapons. And Agrium has been added for importing phosphate from the Western Sahara, which is currently occupied by Morocco.

In other Nordic news, the Norwegian Finance Ministry has said the $870bn the $870bn (€701bn) Government Pension Fund (GPFG) would no longer exclude UK mining company Randgold Resources and Dong Feng following recommendations from the Council on Ethics.

In the case of Randgold, the Council no longer believes that the UK firm is violating human rights in the Democratic Republic of Congo by operating a gold mine there. The GPFG may also re-invest in Dong Feng, as international sanctions on Myanmar (Burma) have been lifted. In March 2009, the GPFG blacklisted Dong Feng for supplying military vehicles to Myanmar.