Reactive dialogues – violation of conventions

The Council on Ethics’ reactive working process is based on a biannual review of the equity portfolios of the AP Funds to detect violations of international conventions. Reported incidents are monitored on a continual basis between the reviews.

The Council on Ethics conducts a dialogue with the companies for which a violation is suspected or has been verified. The purpose of dialogue is to persuade the company to end the violation and to adopt preventive measures to avoid future violations. Dialogue is conducted directly by the Council, as well as by its service providers.

Dialogue for no more than four years

The problems at the companies with which a direct dialogue is carried out are deemed to be substantial, well documented and amenable to the involvement of the Council on Ethics. As long as the dialogue is progressing and the Council on Ethics feels that the company can be positively influenced, time and resources continue to be devoted. Generally speaking, a dialogue is concluded once its objective has been achieved. As of 2014, the Council on Ethics imposes a time limit of four years on dialogues that concern violations of international conventions. Unless the Council on Ethics has achieved its dialogue objectives by that time, it will recommend the AP Funds to divest the company.

Divesting a company rarely solves any problems

The Council regards divestment as a last resort, knowing well that the problem is likely to remain. The violations will probably continue without pressure from active shareholders that demand improvements.