Core values – engagement, action, and demand for change with the aim of making a difference

The First, Second, Third and Fourth AP Funds have been given the same assignment by the Swedish Parliament; that is, to achieve high returns at a low level of risk. In so doing, the Funds must exercise ethical and environmental consideration without compromising the overall objective of attaining a high return. On the basis of this assignment, the Funds have formulated a set of core values – “to act in accordance with the principles on engagement, action, and change, with the aim of making a difference.”

The AP Funds’ core values, when taking into account environmental issues and ethical dimensions in their work, involve acting according to the principles on commitment, action, and change, with the purpose of making a difference. The Funds make a difference by proactively pursuing sustainable development in areas that promote high yield in the long term, and by getting involved in companies in which problems have been identified that are judged to be significant and well documented. This constitutes a responsible, ethical code of behaviour as owner. If the Funds terminate their ownership, there is no guarantee that the problem will disappear, and the unsatisfactory state of affairs may persist. For this reason, selling the Funds’ holdings is only seen as a measure of last resort, when the possibility of effecting change is deemed futile

As part of the Swedish pension system, the AP Funds rest on the same principles of commitment, action and demand for change as those that form the core values of the Swedish state. Central tenets of these values include democracy, the equal value of all people, the freedom and dignity of the individual, and sustainable development, in accordance with the wording of the Instrument of Government.

The Swedish Government’s core values also find expression in those international conventions that Sweden has signed, which include conventions on the environment, human rights, labour law, corruption and inhumane weapons, as well as through the support given to initiatives such as the United Nations Global Compact and OECD guidelines for multinational companies, in addition to Sweden’s own stance on international public law issues. In tandem with the Swedish Government’s value system, international conventions constitute essential instruments for the Council on Ethics in its efforts to ensure the AP Funds satisfactorily take into account environmental issues and ethical dimensions in their work.

The working process of the Council on Ethics based on these core values comprises two parts

• Reactive efforts that involves identifying companies that can be associated with breaches of a convention. Through dialogue and other means, the Council on Ethics works to influence companies to address the violations and to implement preventive systems and measures to avoid similar breaches in the future.

• Proactive efforts where the Council on Ethics, through various industry and investor initiatives, works to influence companies to be more transparent, act in a more responsible manner and address crucial ESG issues in general.

By basing the work of the Council on Ethics on conventions signed by the state of Sweden our work is grounded in a clear set of values that are increasingly accepted among international investors and companies. Underpinned by these values, the actions taken by the Council on Ethics can have greater impact due to other investors and companies sharing the same views. This generates real power to achieve change.