SWEDEN - Four AP-funds have agreed to divest from companies involved in the manufacture and sale of cluster munitions following a recommendation by the Ethical Council of the Swedish National Pension Funds.

In a joint statement the first, second, third and fourth AP funds (AP1-4) confirmed they have excluded nine defence contractors from future investment, and will sell any existing holdings in the firms.

The nine companies excluded from investments by the four AP funds are:

Alliant Techsystems (USA) GenCorp (USA) General Dynamics (USA) Hanwha Corporation (South Korea) L-3 Communications (USA) Lockheed Martin (USA) Poongsan (South Korea) Raytheon  (USA) Textron (USA)

AP1, AP2, AP3 and AP4 are four of the five buffer funds designed to ensure there is enough money to fund future pensions for the state system, and in 2007 the four organisations joined together to establish the Joint Ethical Council to "monitor environmental and ethical compliance in the foreign companies where the funds have holdings".

The Council's first annual report was published in April which revealed the four pension funds were in dialogue with 13 companies on various issues ranging from human rights to the environment, corruption and special weapons.

The report revealed the only company excluded from the investment universe in 207 was Singapore Technologies Engineering, which is involved in the manufacture of anti-personnel landmines. (See earlier IPE article: AP Funds in dialogue with 13 firms over 'ethical breaches')

However, none of the nine companies excluded by the funds today were included in the list of firms the ethical council was in active dialogue with at that time over potential ethical issues, and it previously noted ongoing discussions with some firms were not disclosed in order to encourage trust in the process. 

That said, in March the ethical council and the AP-funds confirmed investment in cluster munitions had increased in the second half of 2007, as Sweden had not signed an international treaty so there was no rules requiring the fund to disinvest. (See earlier IPE article: 'Lacking conventions' limits Swedish SRI practice)

The joint statement from the four AP-funds today said the holdings in the nine companies "are being sold on the advice of the Ethical Council of the Swedish National Pension Funds, which has studied the convention banning cluster munitions, a convention endorsed by Sweden in May 2008".

The Convention on Cluster Munitions (CCM), which is scheduled to open for signatories in Oslo in December 2008, was the result of the Dublin Diplomatic Conference on Cluster Munitions in May, in which over 100 states participated in three days of discussions.

Following the adoption of the CCM, the Ethical Council said it had conducted an "exhaustive analysis" of a large number of defence contractors, in which it determined the "business operations of these companies contravene the convention".

Carl Rosén, chair of the Ethical Council for 2008, said: "The Council has concluded that these companies should be excluded as objects for investment by the First to Fourth Swedish National Pension Funds. The issue concerns inhumane weapons that often injure innocent civilians, an issue that demands action, which now has the support of a convention that bans such weapons."

The adoption of the CCM has also led the Irish government to produce new legislation that will prevent the National Pension Reserve Fund (NPRF) from investing in cluster munitions, with the plan to introduce the Bill when Parliament reconvenes in an effort to "give legislative effect to Ireland's commitments".  (See earlier IPE article: Irish Bill to stop pensions investment in cluster bombs)

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