Sweden’s AP funds’ Council on Ethics has detailed its work on sustainability, with five focus areas prioritised.

These five areas are Antimicrobial resistance, child labour and forced labour, climate, big tech and human rights, and water. The Council said the past year has seen it undertake “intensive work” within the selected focus areas.

AP Council on Ethics chair, Magdalena Håkansson, said the rapid development in the field of sustainability places ever greater demands on the AP Funds’ sustainability work.

“During the year, we have continued to develop the Council per the new strategy with a new governance model and more resources, which will allow us to achieve better outcomes more efficiently over time,” Håkansson said. “We have also decided on five new focus areas for our proactive work.”

Its proactive work aims to prevent and manage significant sustainability risks in the AP Funds’ portfolios through dialogue with companies. One example of proactive efforts is in the big tech and human rights focus area – an area in which the Council on Ethics has been involved in since 2019.

“Social media is playing an increasingly important role in society and brings many benefits but also several challenges in relation to human rights,” Council on Ethics head, Jenny Gustafsson, said.

“In March 2023, the Council launched a partnership with some 30 institutional investors with over €7,000bn under management. These investors will work together for positive change in line with the UN Guiding Principles on Business and Human Rights.”

In parallel, around 3,500 companies have been screened by the Council for possible involvement in breaches of international norms. In total, 76 dialogues were conducted during 2023, of which seven were closed as the objectives were met. The reactive work is based on the international conventions and guidelines that Sweden has ratified, and the Council on Ethics uses structured processes to identify and manage sustainability risks in the AP Funds’ portfolios.

In individual cases, dialogue does not lead to the desired outcome, and the Council on Ethics may then recommend that the AP Funds exclude the company. Three companies have been recommended for exclusion in 2023. An important part of the work is also to ensure that excluded companies can be re-included.

“The goal of the Council’s activities is to influence companies to improve, and we are pleased to see significant progress among the companies we have engaged in dialogue with during the year, five of which have fully achieved their objectives,” Gustafsson explained. “We have also been able to remove the exclusion recommendation for a company which has improved its management of labour rights.”

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