Four of Sweden’s state pension funds are to pool their research
resources to assess the social and environmental performance of
overseas companies in which they have holdings.
The Scandinavian consultancy GES Investment Services has won the tender
to monitor the funds’ foreign investment portfolios ‘with regard to
violation of international conventions’, and in some instances will
approach portfolio companies on the funds’ behalf in an effort to
prompt policy changes.
Such norms-based screens of companies are becoming more widely used by
institutional investors. They are already applied to €61bn (£41bn,
$80bn) of equities in Europe outside Scandinavia, according to Eurosif.
The task of assessing and interviewing Swedish companies will fall to
the funds themselves. GES’s work will be overseen by a newly created
Ethical Council, consisting of the funds’ representatives. The
chairmanship will alternate among the funds.
The so-called ‘buffer’ funds, which collectively manage assets of
800billion kroner ($114bn, £58bn), are intended to back up Sweden’s
main national pension funds when they face unusual pressure, such as
from baby boom generations.
About 3500 companies are expected to be reviewed and about 20 of these
identified as candidates for engagement on the environment, human
rights and labour rights.
The funds have adopted an SRI approach for several years, but largely
in isolation from one another. One of the funds, known as AP1, recently
succeeded with other investors in persuading the US-based Marriott
hotel chain to revise its human rights policies so that it placed more
emphasis on combating child sex tourism.
Nadine Viel Lamare, who will be the Ethical Council’s first chair, said
that the four funds hope to ‘avoid redundant efforts and concentrate
resources on the most urgent areas for improvement’. She added that
they will also have ‘greater scope to influence individual companies
than if each fund were to act independently’.
Decisions to exclude companies from an investment portfolio will still be made by the individual funds.
