Swedish Pension funds AP1-4

Financial Institutions, Report 2018, Runners-Up

AP1-4 are four 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]

On 1 January 2007, the Ethical Council was established for the National Swedish Pension Funds. This committee monitors and analyses the portfolio holdings of AP1-4 Funds to ensure that portfolio companies are not a party to crimes against international conventions to which Sweden is a signatory.[2] AP1-4 only excludes investments in companies producing nuclear weapons for states that are not signatories to the Non-Proliferation Treaty.[3]

The exclusion policy applies to all assets managed by AP1-4. External asset managers are also required to comply with the policy.[4]

AP1-4 currently does not have a publicly available exclusion list, but the Ethical Council has a public list with recommendations for exclusion which is followed by all four funds. As of January 2018 this list includes the following companies active in “aerospace and defence”: Elbit Systems; L-3 Communications; Orbital[5] and Textron.[6]

AP1- 4 were found to hold shares in several identified nuclear weapon producing companies.

How to improve the policy:

We commend AP1-4 for adopting a public policy on nuclear weapons. We recommend AP1-4 apply its policy to all nuclear weapons producing companies, regardless of their country of origin. We recommend that AP1-4  divest from the nuclear weapon producing companies in which it holds shares and bonds. We look forward to engaging with AP1-4, so a strong and comprehensively applied policy may be listed in the Hall of Fame in a future update of this report.

[1] AP1, “Operating goals and government evaluation”, AP1 website (www.ap1.se/en/About-AP1/Operating-goals), viewed 23 January 2018.

[2] Ethical Council, “Cooperation And Active Engagement, Annual Report 2014”, p.5, available at http://media.etikradet.se/2015/04/150320-Etikr%C3%A5det-ENG-ver2.pdf, viewed 23 January 2018.

[3] Ethical Council, “Nuclear Weapons”, website Ethical Council (http://etikradet.se/etikradets-arbete/positioner/karnvapen/), viewed 23 January 2018.

[4] AP1-4, written response to PAX dated 18 May 2015.

[5] Orbital merged with Alliant Techsystems in 2014. The new company is known as Orbital ATK.

[6] Ethical Council, “Companies that have been recommended for exclusion”, website Ethical Council (http://etikradet.se/etikradets-arbete/reaktiva-dialoger-vid-krankning/rekommenderade-uteslutningar/?lang=en), viewed 30 October 2016.

Last updated March 2018

About Maaike Beenes

Maaike Beenes works for the humanitarian disarmament program for PAX in the Netherlands. She researches investments by financial institutions in producers of controversial weapons, notably nuclear weapons and cluster munitions, and is co-author of the reports ‘Don’t Bank on the Bomb’ and ‘Worldwide Investments in Cluster Munitions’. As part of the Don’t Bank on the Bomb campaign of PAX and ICAN, she works together with campaigners around the world to hold banks and other investors accountable for their investments in nuclear and other controversial weapons. She was involved in the negotiations for the Treaty on the Prohibition on Nuclear Weapons on behalf of PAX and ICAN.