Sweden’s big AP buffer funds say their Council on Ethics (Etikrådet) made major headway in remedying the global problem of child labour in cocoa farming last year, and has also started an initiative to get tech companies to tackle disinformation.

Releasing the Council’s 2022 report this morning, the big-four buffer funds behind Sweden’s pay-as-you-go income pension system also said the jointly-run panel would extend its reactive work – where it identifies norm violations by companies – to cover more asset classes.

The Council is run by AP1, AP2, AP3 and AP4, which collectively managed SEK1.8tn (€159bn) at the end of 2022.

Pia Axelsson, AP4s manager of corporate governance and information, who chaired the Council in 2022, said: “Through a proactive project on child labour in the cocoa sector, the Council has for several years been engaged in successful dialogue with seven of the world’s largest cocoa and chocolate suppliers.”

She said: “Significant progress has been made towards the goal of reducing child labour in cocoa farming, and eventually eliminating it altogether.”

The project had focused on making sure children in cocoa-growing communities received education, that there were systems for identifying and remedying child labour, and also worked to enable cocoa farmers to earn an adequate living, Axelsson said.

The Council said it started preparing an international collaborative project last year on the big tech companies and privacy-related issues, involving other international institutional investors.

“The aim is via dialogue to exert influence aimed at improving the management of sustainability challenges such as disinformation, extremism and election manipulation,” Axelsson said.

She also said the organisation would extend its reactive work this year to cover more asset classes, with Swedish listed shares and credit investments being drawn into the work as well.

“Both directly-owned and indirectly-owned holdings through fund investments will be screened, with the objective of identifying companies deemed to violate international conventions to which Sweden is a signatory,” Axelsson said.

In October 2021, the four AP funds announced a fundamental rethink of their Council on Ethics, saying ESG and responsible investment practices had become increasingly integrated into their asset management strategies and objectives.

In connection with the strategic review, the Council’s long-term secretary general, John Howchin, said he would leave.

The Council said today that after last year’s work towards assessing and refining its mission, goals, working processes and organisation, its work was “still regarded as highly important to the administrations of all four AP funds and the funds agreed to increase the Council’s resources and establish a three-person office.”

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