The AP Funds work together in the Council on Ethics in reactive and pro-active dialogues and projecets with companies to address and prevent incidents.
The Council on Ethics’ aim is to influence companies to address environmental and social issues through active dialogue with management, often together with other investors. Improved sustainability in companies’ business will give better returns in the long-term. The Council’s experience to date shows that dialogue is an effective tool that produces results. Part of the AP Funds assets are invested globally in diversified equity portfolios comprising of up to 3 500 companies. To focus dialogues, both reactive and proactive, on the companies where they will have the greatest benefit, the Council applies a systematic working process. This process also helps ensure an even spread across various sectors, geographies and sustainability issues.
The Council on Ethics’ working process manages a steady flow of dialogues, which evolves in different directions over time.
Review of the AP Funds’ holdings: The Council’s working process includes approximately 3 500 companies. Among the sources are media, investors, interest groups, stakeholders, trade organisations, public authorities, judiciary, UN bodies and many other sources to monitor corporate incidents. Some incidents are inevitably overlooked. The Council incorporates all information that it receives about such incidents into its systematic working process.
In depth examination: Within each of its four focus areas – climate, environment, human rights and business ethics - the Council reviews and analyses companies, industries, problem areas and investor initiatives. Between 100 and 300 company incidents each year are examined more closely for possible implication in violation of international conventions. The Council, other investors and various service providers are all involved in the examination.
Choosing companies and setting objectives: The choice of proactive focus areas as well as dialogues does not represent a statement that one is more important than another but is simply a deliberate strategy to earmark the resources of the Council in ways that are most likely to yield the greatest benefits. The Council carries on direct dialogues with 40–60 selected companies whose
violations of international conventions are palpable and well documented. The Council also collaborate with various investors and service providers to dialogue with companies in response to alleged
How a dialogue proceeds: In-depth corporate analyses and possible comparisons with minimum requirements and best practice for the industry in question. Collaboration with other investors, submission of proposals and voting at general meetings, and other forms of pressure.
Objective achieved: The dialogue is concluded.
Objective not achieved: Dialogue is continued if deemd constructive. A dialogue, where a violation of a convention is verified, should, should last a maximum of four years unless the dialogue is constructive or achieves its objectives. If not, the Council recommends the AP Funds to exclude the company. Each AP Fund makes its own exclusion decision. Companies that the Council has recommended the AP Funds to exclude. The Council investigates annually whether the situation has changed, and the company has begun to comply with international conventions. For more information www.etikradet.se.