Report blasts Sweden’s AP funds for lack of policies and engagement transparency on biodiversity

The seven buffer funds, however, insist that they are doing their utmost

A new report by a Swedish NGO has criticised the country’s seven pension buffer funds (AP Fonden) for not having a specific policy regarding the protection of biodiversity nor a transparent engagement process on the issue in the companies they invest in, and is urging the Swedish government to correct this. The report, entitled “Pushing the Planet to Retirement,” was compiled by Fair Trade Center (FTC), a Stockholm-based NGO that promotes awareness of social and environmental responsibility. The sponsor of the report was the World Wildlife Fund (WWF). In the report, FTC criticises both the lack of a specific biodiversity policy at the funds as well as what it says is a lack of transparency with regards to the lobbying they do with companies on the issue: “Engagement dialogue with companies is the funds’ main tool for managing the environmental impact of their equity portfolios. Yet due to the lack of information available on the results of the conducted dialogues, it is difficult to evaluate what kinds of outcomes that the funds achieve,” the NGO said. The AP funds manage money on behalf of the Swedish state for future national pension commitments.
The report cites the United Nations-supported Principles for Responsible Investment (PRI), which it says has estimated the cost of the environmental damage caused by the world’s 3,000 largest listed companies at $2.15 trillion annually. It says the AP fund investments are linked to key drivers of biodiversity loss such as pollution from mining and oil & gas operations, deforestation caused by the palm oil industry in Indonesia and Malaysia and loss of natural ecosystems due to soy production in South America, as well as broader climate change damage.For example, FTC said the first four AP funds did not provide any detailed information on exactly why they had excluded Freeport McMoRan Copper & Gold Inc, a US mining company. Freeport has been criticised for the negative environmental impacts of mines in Indonesia. Another example, according to FTC, is AP7, which it said had failed to report on the rationale for its exclusions of Barrick Gold, BP, Royal Dutch Shell and Transocean for their involvement in violations of international norms for environmental protection. FTC said none of the AP funds were engaged with actors producing or trading with soy in South America, even though, it said, the expansion of soy fields is one of the leading causes of the loss of ecosystems in the region. In addition, the funds’ engagement with the palm oil industry – which has been said to be destroying the rainforests of Indonesia and Malaysia – was “far too little” last year, the NGO said. FTC said that as part of the current debate on a new pension reform, the Swedish parliament should develop guidelines that “require the funds to take preventative measures to avoid contributing to biodiversity loss and include provisions regarding engagement transparency.” It suggests that the AP funds pursue a commitment to exclude companies for whom environmentally harmful practices and biodiversity loss “are an integral part of the business model”. In a response statement, the Ethical Council, which vets the investments of AP1 to AP4 according to their sustainability, rejected the notion that the schemes were not doing enough to protect biodiversity. Beyond investing in companies with a low environmental impact, the funds develop and support resolutions at annual general meetings (AGMs) aimed at limiting such an impact, the statement said.

Link to FTC report