The Första AP-Fonden, or AP1, is one of the six state-owned pension funds in Sweden. Sweden’s pension system has two tiers: five buffer funds and a premium pension system. The five buffer funds (AP1-4 and AP6) work on a pay-as-you-go system in which current pension contributions pay current income pension benefits. These buffer funds should provide spare capital for when state pension funds payments exceed tax revenues, when an ageing population increases demands on the pension system.[1] At the end of 2018, AP1 held SEK323.7 billion (€30.2) in assets under management.[2]
AP1 works together with AP2, 3 and 4 with the Council on Ethics on environmental and ethical issues.The Council on Ethics makes recommendations for companies to be excluded from the investment universe of the AP funds. The Council recommendations are based on international conventions that Sweden has signed, including the Non-Proliferation Treaty.[3]
On 1 January 2019, new legislation took effect that raises the sustainability standard for the funds. It requires the AP funds to “manage their assets in an exemplary way through responsible investments and responsible ownership”. Whereas the Ethical Council interprets the NPT to legitimize investments in nuclear weapons producers from NPT countries, AP1 has now concluded that it does not “consider the current modernisations and upgrades to existing nuclear weapons to comply with the aim of the Treaty on the Non-Proliferation of Nuclear Weapons, which is for the world to be free of nuclear weapons in the long term”.[4]
The exclusion policy applies to all assets managed by AP1. External asset managers are also required to comply with the policy.[5]
The Ethical Council has a public list with recommendations for exclusion which is followed by the fund. As of January 2019 this list includes the following companies for involvement in prohibited weapons: Hanwha; Larsen & Toubro and Poongsan.[6] However, AP1 uses a more comprehensive exclusion list internally.[7]
We congratulate AP1 with expanding the scope of the policy to cover all nuclear weapon producers and look forward to seeing the implementation of the policy. We recommend that AP1 divest from the nuclear weapon producing companies in which it holds shares and bonds.
Website: https://www.ap1.se/
Linked-In: https://www.linkedin.com/company/f-rsta-ap-fonden/
[1] AP2 “A unique pension systems”, AP2 website (https://www.ap2.se/en/about-ap2/our-mission/a-unique-pension-system/), viewed 9 July 2019.
[2] AP1, “PRI Reporting Framework 2019”, UNPRI website (https://reporting.unpri.org/surveys/PRI-reporting-framework-2019/0DDB2AF3-AF26-4BFF-B1E6-2F5EA667E94E/79894dbc337a40828d895f9402aa63de/html/2/?lang=en&a=1), viewed 25 September 2019.
[3] Etikradet, “Kärnvapen”, Etikradet website (http://etikradet.se/etikradets-arbete/positioner/karnvapen/), viewed 9 September 2019.
[4] AP1, “Changes to the AP Funds Act”, 24 January 2019, AP1 website (https://www.ap1.se/en/news/changes-to-the-ap-funds-act/), viewed 10 July 2019.
[5] AP1-4, written response to PAX dated 18 May 2015.
[6] Council on Ethics, “Companies that have been recommended for exclusion”, 2019, Council on Ethics website (http://etikradet.se/etikradets-arbete/reaktiva-dialoger-vid-krankning/rekommenderade-uteslutningar/?lang=en), viewed 10 July 2019.
[7] AP1, “Första AP-fonden’s exclusion list », 10 June 2019, available at https://wwwap1se.cdn.triggerfish.cloud/uploads/2019/07/frsta-ap-fonden-exclusion-list-june-10-2019.pdf, viewed 10 July 2019; AP4, written response to PAX dated 29 August 2019.