Ethical Performance
inside intelligence for responsible business


Swedish pension funds present a united research front

March 2007

Four of Sweden’s state pension funds are to pool their research resources to assess the social and environmental performance of overseas companies in which they have holdings.

The Scandinavian consultancy GES Investment Services has won the tender to monitor the funds’ foreign investment portfolios ‘with regard to violation of international conventions’, and in some instances will approach portfolio companies on the funds’ behalf in an effort to prompt policy changes.

Such norms-based screens of companies are becoming more widely used by institutional investors. They are already applied to €61bn (£41bn, $80bn) of equities in Europe outside Scandinavia, according to Eurosif.

The task of assessing and interviewing Swedish companies will fall to the funds themselves. GES’s work will be overseen by a newly created Ethical Council, consisting of the funds’ representatives. The chairmanship will alternate among the funds.

The so-called ‘buffer’ funds, which collectively manage assets of 800billion kroner ($114bn, £58bn), are intended to back up Sweden’s main national pension funds when they face unusual pressure, such as from baby boom generations.

About 3500 companies are expected to be reviewed and about 20 of these identified as candidates for engagement on the environment, human rights and labour rights.

The funds have adopted an SRI approach for several years, but largely in isolation from one another. One of the funds, known as AP1, recently succeeded with other investors in persuading the US-based Marriott hotel chain to revise its human rights policies so that it placed more emphasis on combating child sex tourism.

Nadine Viel Lamare, who will be the Ethical Council’s first chair, said that the four funds hope to ‘avoid redundant efforts and concentrate resources on the most urgent areas for improvement’. She added that they will also have ‘greater scope to influence individual companies than if each fund were to act independently’.

Decisions to exclude companies from an investment portfolio will still be made by the individual funds.

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