The Council on Ethics of the AP Funds sums up a year of active engagement in a new organisation

Magdalena Håkansson, Chair of the Council on Ethics during 2023, notes that the rapid development in the field of sustainability places ever greater demands on the AP Funds’ sustainability work. During 2023, the work of the Council on Ethics has largely consisted of developing its activities in line with the new strategy and governance model adopted in 2022.

“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.” says Magdalena Håkansson. “We have also decided on five new focus areas for our proactive work.”

During 2023, the Council on Ethics decided on five focus areas for proactive engagement; Antimicrobial resistance, Child labour and forced labour, Climate, Big tech and human rights, and Water. The 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 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,” explains Jenny Gustafsson, the new Head of the Council on Ethics since June 2023. “In March 2023, the Council launched a partnership with some 30 institutional investors with over EUR 7,000 billion 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 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, the 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,” explains Jenny Gustafsson. “We have also been able to remove the exclusion recommendation for a company which has improved its management of labour rights.”

The full Annual Report 2023, English version, will be available in April.