Council on Ethics

Council on Ethics of the Swedish National Pension Funds (Council on Ethics) is a collaboration between the First, Second, Third and Fourth AP Funds. The Council on Ethics works to contribute to the AP Funds' long-term returns by encouraging corporate social responsibility regarding environmental and social issues.

Influence corporate social responsibility standards

The four AP Funds are long-term, responsible and committed owners who want to influence companies to take responsibility. It is the AP Funds' view that well-managed companies will deliver higher returns with lower risk over time. Therefore the collaboration of the Council on Ethics, which has been ongoing since 2007, aims to contribute to long-term returns by influencing companies and industries to realize sustainable value creation.

The Council on Ethics collaborates primarily with companies that are held in the AP Funds’ portfolios of listed equities, predominantly foreign holdings.

Company dialogues fundamental to change

The Council on Ethics most important and powerful tool is dialogue with companies to bring about change and urge companies to act responsibly. The Council on Ethics conducts dialogues globally and they often cover several areas of sustainability where the company needs to improve.

The dialogues may be preventive or reactive in character and will continue as long as the assessment reflects the company is moving in a positive direction.

Many dialogues with companies achieve the objectives the Council on Ethics initially set out and as such the dialogues can conclude. Unfortunately, there are also situations when continuation of a dialogue is not considered meaningful. The company may decline to engage in a meaningful dialogue and not exhibit sufficient effort to improve the situation or their practices and/or policies to prevent incidents in their future activities. In these cases, the Council on Ethics recommends - as a last resort - that the AP Funds divest the holdings. Excluded companies are monitored annually to determine whether the companies have taken corrective action, which could lead to reconsideration of the recommendation. Four exclusion-recommendations have been withdrawn given that the companies improved the situation that led to the exclusion recommendation.

Collaborative projects with global investors

Preventative initiatives have proven to be an effective way to influence a company to a more responsible business. Since its inception in 2007, most initiatives where the Council on Ethics has participated have been collaborative with other global investors; these investors have similar views regarding the impact owners have that could lead to business improvements.

These initiatives have touched on several sustainability issues such as human rights, anti-corruption and climate and environmental issues. Many of the initiatives have also been industry specific, such as the palm oil, mining and cocoa industry, but also in the pharmaceutical, tobacco and textile industries.

Preventative projects


For several years, the Council on Ethics has participated in a project that aims to prevent child labor within cocoa farming. Dialogues with several cocoa buyers and other representatives of the industry have been conducted. It is estimated that hundreds of thousands of children work on cocoa plantations, which in many cases involves hazardous and heavy tasks.

Palm oil

Palm oil is the most commonly used vegetable oil globally. It is an important ingredient in many consumer products such as chocolates, cookies, margarine and other foods. It is also found in cosmetics, soaps, shampoos and biodiesel. These are products that most of us use in everyday life. Palm oil is an important raw material for several of the AP Funds holdings.

Palm oil is an important industry in the countries where it is produced, as it enables the local populations to attain higher incomes and better living standards. However, palm oil production is associated with significant challenges, both with regards to the environment and social aspects.

Over a number of years the Council on Ethics has worked in collaboration with international investors. This collaboration is coordinated by the United Nations Principles for Responsible Investment (PRI) and promotes greater sustainability in palm oil production.

Preventing corruption

Anti-corruption is one of The Council on Ethics focus areas. Corruption threatens the rule of law and democracy. Moreover, it damages the trust in public institutions such as the market economy, distorts competition, harms trade and deters investment. Work against corruption is important for society, companies and individuals.

The Council on Ethics commitment in the fight against corruption will continue in the future with the aim of getting companies to further strengthen their anti-corruption work, where company visits by the Council on Ethics sends a clear signal.

The Council on Ethics' Annual report

The Council on Ethics work is reported in the annual report published during the spring. The annual report is available at The Council of Ethics of the AP Funds web site.