Swedish pension system

State pension funds invest in blacklisted companies

4:33 min

State-run pension funds in Sweden have nearly $2 billion dollars invested in companies that have been blacklisted for human rights infringements, environmental abuses, and anti-union activity.

In April, the Left party asked the Parliament's Investigational Service to examine the investment holdings of five of Sweden's AP pension funds to determine if any of the companies they invested in had been black listed.

The investigation found 15 such companies that are black listed by another Swedish AP fund, the AP7 fund. Fifteen more companies landed on a blacklist produced by Danwatch, a Danish organization that looks into corporations' impact on humans and the environment.

Employers in Sweden pay pension fees for each of their employees. Those fees go to a total of five national pension funds,  AP1,2,3,4 and 6. These funds are like normal mutual funds. They invest in stocks and manage people's retirement pension. But there is one major difference - people have no choice over how the money that is saved is invested.

Ulla Andersson, a Left party member of Parliament, says the AP funds were not completely forthright in the information they provided to Parliament. “No one knows how many companies they really invest in,” she says. “The consultant working for the AP funds has all the papers and we can’t get access to them.”

One company that the First, Third, and Fourth AP funds invest in is Walmart, a retailer that has been blacklisted for anti-union behaviour. And the First and Third AP funds invest in Chinese oil company CNOOC, which has been accused of human rights abuses in Burma.

Exit or voice?

Nadine Viel Lamare, the 2011 Chairwoman of the joint Ethical Council of Sweden's First, Second, Third and Fourth AP funds, says selling shares in these companies will have little impact on the companies.

"We've found another solution because we want the companies to act properly,” she says. “By only selling the shares, their behaviour will not change.”

But Johan Florén, who is the head of communications at Sweden's AP7 fund, disagrees. "We go stronger towards exit and they go more towards voice," he says.

Left Party politician Ulla Andersson says the pension funds need to take a harder line. "Some companies aren't so easy to speak to," she says. "Some companies you need to take your money out of."

The Left party is now calling for Parliament to write new rules for pension funds that would put more strict controls on their investments.

Parliament is said to be looking into launching a commission to investigate the AP funds.

By: Gabriel Stein