SWEDEN – Swedwatch, a charitable organisation focusing on improving the social and environmental impact of Swedish companies operating in developing countries, has criticised AP2 for its investments in Brazilian farmland.
In a report entitled ‘Investment without transparency’, Swedwatch claims AP2 has refused to disclose the location of farmland it owns there due to competition concerns and a desire to increase its investment while the land is still cheap.
The report claims there are no regular checks on conditions at these farms, and that pesticides and poor working conditions pose a number of risks for workers and the environment.
It also accuses two of AP2’s business partners of violating indigenous people’s rights and labour laws.
AP2 said it had taken Swedwatch’s observations on board and was working to increase transparency within its farmland investments in Brazil.
It made its investments through the TIAA-CREF Global Agriculture fund. The scheme said it had already disclosed the four areas in which the fund invested, and provided information on the tenant farmers connected to the areas in question.
AP2 is also planning a trip for a number of NGOs to the farmlands.
The pension fund said it worked with other institutional investors to create responsible investment principles for farmland investing and implemented these in 2011.
These principles include reducing environmental impact and promoting good labour practices, human rights, land rights and business ethics.
In other news, investment returns at the AP funds, Sweden’s national buffer funds, have been generally too poor to cover the deficit that will exist once the large generation born in the 1940s retires, the government has warned.
It acknowledged that the AP funds had covered any deficits to date, but it argued that, as baby-boomers retired, payments into the system would be lower than the payments out of it for the period between 2012 and 2017.
The government said incoming assets in the old-age pension system amounted to SEK8bn (€937m) over 2012, but it also warned that, even by the end of this year, this surplus will become a deficit of SEK14bn.
The deficit means AP fund assets will have to be sold to cover the shortfall, which is expected to continue until 2017.
Meanwhile, AP6, Sweden’s private equity buffer fund, has finalised a deal to buy Aibel, a Norwegian offshore service company, together with Ratos, a Swedish private equity conglomerate and Ferd, a Norwegian financial company.
AP6 now owns 18% of Aibel, worth SEK1.8bn, with Ratos owning 32% and Ferd the other 50%.
At the same time, AP6 sold Ekonord Invest, an investment company, as it no longer fit with the strategy of investing in more mature companies.
The buyer was Inlandsinnovation, a government-owned firm focusing on investing in companies based in the inland region of Northern Sweden.