AP Funds revamp ethics council management after audit

Sweden’s big-four national pension buffer funds have announced changes to the Council on Ethics – a collaborative body run by the funds – following a review of its performance, including the appointment of an executive director and the extension of ethical screening to corporate bonds as well as listed foreign equities.

AP1, AP2, AP3 and AP4 – which collectively managed nearly SEK2tn (€182bn) at the end of 2021 – said in a statement that the council, which they said had built up a strong position both nationally and internationally, was now expanding in response to the audit which they announced in the autumn of last year.

The chief executive officers of the four funds – respectively Kristin Magnusson Bernard, Eva Halvarsson, Staffan Hansén and Niklas Ekvall – said: “Developments within and views regarding sustainability have rapidly evolved in recent years, placing increasing demands on our own sustainability work.”

They said it was therefore important for them to be proactive and further develop the council so that the “good work” being done could continue to make progress.

The funds said the council had now clarified its purpose and set long-term objectives, and that it would “work to ensure that the AP Funds continue to serve as global role models on sustainability issues”.

“The Council on Ethics will also support the AP Funds in complex and material sustainability issues in order to achieve the objectives that the AP Funds set for themselves,” they said.

The council’s screening of the AP Funds’ holdings in listed foreign equities, which had previously been carried out twice a year, would now be extended to cover corporate bonds, the funds said.

“The purpose of the screening is to discover whether the holdings can be associated with violations of international conventions ratified by the Riksdag (the Swedish parliament),” they said.

In order to implement the new strategy, the buffer funds said the council’s organisation had also been reviewed, and would now consist of a board of directors with one member from each fund appointed by the respective CEO.

“The Council on Ethics administrative office will be strengthened with the addition of three new positions: An executive director for the AP Funds’ Council on Ethics and two sustainability analysts,” the funds said.

In October 2021, it was announced that John Howchin, secretary general of the Council on Ethics since 2009, was leaving, with the AP funds saying they would jointly conduct a strategic review of the collective body.

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