One of the basic ideas for managing assets in the income pension system was to have multiple AP-funds, which together create diversification. Another reason was that earnings would benefit from the positive competition in terms of performance and cost efficiency. Several AP funds also advocated that a single very large National Pension fund would, only by its size, have negative effects on the functioning of the Swedish capital markets.
Ever since the pension system was reorganized in 2001 there has been close cooperation between the AP funds in different areas. The aim of the collaboration is to achieve transparency and cost-efficiency without limiting the opportunities for competition between the AP funds.
During 2016, the CEOs of AP1-AP4 increased focus on cooperation between the funds. The aim is to achieve greater cost efficiency, create synergies and ensure an appropriate exchange of experiences, knowledge and routines between the organizations. Collaboration has already been established in various forums and will be intensified on a project basis.
Cooperation takes place primarily in the following areas:
- environment and ethics
- corporate governance
- accouting and HR
- administration and IT
- business and risk control
The funds work closely with each other predominately through the AP Funds Ethical Council, a collaborative body formed in 2007 by AP1, AP2, AP3 and AP4. The Ethical Council consists of a representative from each AP Fund and a jointly appointed secretary general. The purpose of the Ethical Council is to jointly pursue positive change with regards to sustainability in foreign companies – proactively and reactively. The latter occurs when a company is linked to violations of international environmental and human rights conventions.
Working together, with the combined capital of the AP Funds, increases the possibility of influencing a company compared to individual initiatives. The Ethical Council is also an attractive partner for other international investors with similar environmental and ethical agendas, further increasing possibilities of influence. This cooperation also means that the AP Funds’ work is more efficient and cost-effective, for example through more dialogues with companies, international investor initiatives, and conferences at which the Ethical Council is represented.
Since 2015 the AP Funds have coordinated the reporting of their respective carbon footprint.
To cost-effectively vote at general meetings of global equity holdings, AP4 together with the First, Second and Third AP Funds utilize a shared electronic voting platform. Each AP Fund votes independently on behalf of their respective holdings.
Another example of cooperation between the First, Second, Third and Fourth AP Funds is the jointly prepared document "AP Funds accounting and valuation principles" intended to ensure that the AP Funds apply common accounting principles, and that the financial statements are therefore comparable. The document is updated regularly and is reviewed annually with the AP Funds auditors.