Swedish government readies response as criticism of AP funds’ holdings intensifies

Minster and ex-pension exec Norman to stress role of engagement

The Swedish government is preparing its response to a barrage of criticism from campaign groups about the AP buffer funds’ holdings in controversial companies.

Peter Norman, the former head of AP7 who is now Minister for Financial Markets, will argue the case for engagement with problematic firms, RI has learnt.

It comes as the Swedish Consumers’ Association and three NGOs have taken the funds to task for investing in controversial companies – among them Barrick Gold and Total – as well as the fossil fuels sector.

In June, one of the three NGOs, the Fair Trade Council, blasted the funds for lacking a policy on protecting biodiversity and urged the government to take action. The AP funds invest the Swedish public’s contributions to the state pension plan.

Now the business daily SvD Näringsliv reports that the Consumers’ Association, the Fair Trade Council – along with Swedwatch and the Swedish Society for Nature Conservation – are urging the funds to divest Canadian mining firm Barrick Gold, French oil giant Total and US industrial group Jacobs Engineering due to ethical controversies. “The funds’ holdings in these firms are simply grotesque,” SCA General Secretary Jan Bertoft told the newspaper.

So Norman, the minister who oversees the funds, plans to respond to the critics in written form next week. His spokeswoman said that he would make clear that engagement with problematic companies was preferable to outright divestment.

Before he entered government, Norman was Chief Executive of buffer fund AP7, the state-owned alternative to the private investment funds offered by thepremium pension system – where he was instrumental in pioneering its responsible investment approach.

Barrick Gold has been criticised for environmental pollution and human rights abuses at mines in Papua New Guinea and Africa. Total is prospecting for oil in the disputed Western Sahara territory, leading Norwegian life insurer KLP to exclude it for human rights violations. And Norway’s giant Government Pension Fund has divested Jacobs after its Ethical Council flagged up that it was developing nuclear warheads.

Svante Axelsson, the general secretary of the Society for Nature Conservation, also told Näringsliv that the funds should exit fossil fuel companies like Chevron and BP due to their responsibility for climate change. Axelsson said this would free up billions for renewable energy investment.

The critics say that such controversial investments show that the government’s policy of letting the funds decide how to invest responsibly isn’t working and that the Swedish parliament should define guidelines as part of an upcoming pension reform. This would include which “unsustainable” companies should be excluded and how exactly the funds should engage.

Like Norway’s Government Fund, the AP funds have an Ethical Council that advises them on responsible investment and handles corporate engagement. Responding to the criticism, Council Chairman Arne Lööw insists that the funds’ responsible investment approach is effective. “We not only invest along ethical and environmental considerations, we do so in a way that does not conflict with returns,” SvD Näringsliv quoted him as saying.