The four Swedish national buffer funds (AP1-AP4) have decided to divest their holdings in US retail giant Walmart Stores and three other companies for breach of international conventions.
In addition to Walmart, the AP funds are to sell their stakes in Freeport McMoRan Copper & Gold, the mining company, and Incitec Pivot and Potash Corp, both chemical producers, as several years of talks between the Ethical Council and the companies failed to deliver the desired results.
The AP funds made their decision on the advice of the Ethical Council, in which the four funds cooperate on corporate-governance issues.
The Council was founded in 2007, and several of the AP funds were already in dialogue with Walmart before then. AP2 excluded Walmart from its portfolio in 2006.
Christina Kusoffsky Hillesöy, chair of the Ethical Council, said that, after detailed analysis and years of dialogue, it concluded that further engagement with the companies would not be “fruitful”.
She pointed out that AP funds prefer engagement as a primary tool in dealing with companies, trying to encourage them to behave in a more responsible and ethical way.
Divestment is a last resort.
Kusoffsky Hillesöy conceded that having to sell the share was a setback, as the AP funds failed to secure lasting improvements despite years of engagement.
Walmart has been excluded due to its US business being linked the abuse of workers’ rights, in contravention of the ILO core convention on working rights.
The company also denies employees their right to form and join trade unions.
Freeport McMoRan has been excluded because of its mining operations in Indonesia, in violation of the UN convention on Biological Diversity.
The recommendation to exclude Incitec Pivot and Potash was a result of both companies buying phosphate from a Moroccan company mining phosphate in Western Sahara.
Western Sahara has been occupied by Morocco since 1975 and is on the UN list of non-self-governing territories to be decolonised.
In 2002, the UN stated that mining for natural resources in the Western Sahara against local consent was a violation of the UN Covenant on Civil and Political Rights, as well as the Covenant on Economic, Social and Cultural rights.