John Howchin bows out as Swedish Council on Ethics prepares for overhaul

Body, set up in 2007 to advise the AP funds on responsible investment, is due for a redesign

Sweden’s public pension funds have announced plans to overhaul the country’s influential Council on Ethics, in a move that will see the departure of its longstanding head, John Howchin.  

The council is overseen by four of the six funds that make up Sweden’s national pension system, known collectively as the ‘AP funds’, and it has advised them on responsible investment and stewardship activities since 2007. In particular, the body provides recommendations on how to address issues such as human rights and the environment at portfolio companies, and when to divest. Two members of each fund are assigned to the Council. 

But now, AP1, AP2, AP3 and AP4 have said they will together conduct “a strategic review” of the Council, in response to heightened emphasis on ESG and responsible investment at the funds. 

‘There’s a lot of talk now about ESG from up in the ivory towers, but we need change in the real world’ – Howchin

“Since its formation, the Council on Ethics has engaged thousands of listed foreign companies in dialogue,” they said in a statement. “Sustainability and responsible investment practices have grown in importance and been more widely [integrated] into the strategies and processes of the AP Funds in recent times, including in their legal mandate. It is against this background that the funds have now jointly decided to review the Council of Ethics’ mission and strategy.”

In 2019, the Swedish Government reformed the mandates of the four funds – plus its affiliate, AP7 – to legally require them to be “exemplary” on ESG. 

Since then, they have continued to show leadership on ethical and ESG issues. Last year, AP2 adopted Paris-aligned benchmarks for large swathes of its portfolio. AP1 has been at the forefront of thinking on decarbonising emerging markets investments, and has this week re-tendered a portion of its EM portfolio to find managers with ESG capabilities. Last month, AP4 and AP6 took part in a €900m fundraise by a private equity-focused impact investment fund.

But the funds, which have different investment strategies in regards to asset classes and geographies, have developed notably different approaches to sustainability. It is unclear whether this is the driver of the decision to redesign the Council on Ethics. 

More information is expected in Spring of 2022. 

In the meantime, Howchin will step down at the end of the year after 12 years as Secretary General of the body. During that time he has become a leading voice on responsible investment in Europe, and has recently been working closely with Adam Matthews, Director of Ethics and Engagement at the Church of England Pension Board, to develop an Investor Mining & Tailings Safety Initiative – on the back of the 2019 Brumadinho disaster.

Howchin told RI he did not currently have plans to take up a role elsewhere. 

“It’s a good time for me to take a step back and see what the world looks like,” he explained, adding that he expected to remain involved in sustainable and ethical finance. “I think the work we’ve done at the Council on Ethics has for a long time shown how you can create change at companies. There’s a lot of talk now about ESG from up in the ivory towers, but we need change in the real world. And so I intend to remain here, with my boots firmly on the ground.” 

The AP funds will appoint an acting Secretary-General for the Council on Ethics to take over responsibility for day-to-day operations, they said.