Cluster-bombs: Swedish AP7 Offload Stakes In Singapore Technologies Engineering

AP7, the
Swedish state pension fund, said it will sell all its holdings in munitions
companies that make cluster-bombs or nuclear weapons, joining a growing trend
among European investment funds to offload stakes in “unethical”
defence firms.
    The move will
affect about 10 companies, including the defence and aerospace groups EADS,
Lockheed Martin and General Dynamics, according to Richard Grottheim, chief
executive of AP7.
    It is the
first Swedish scheme to sell out of such companies, though Norwegian and Dutch
funds have taken similar steps. Though the amounts involved are small,
Grottheim said the fund had “given a signal to the market.”
explained: “Normally our approach is to form a list of companies where we
have problems and then introduce dialogue with them. But we also have a list of
about 30 companies that we exclude, usually on the basis of international
agreements include the Ottawa Treaty banning landmines, now signed by 158
countries (though notably not the US, China or India) and a new accord struck
last week in Dublin by 111 nations that prevents the use of cluster-bombs.
said AP7’s decision pre-dated the treaty, but it lent weight to the Swedish
government’s participation.
    AP7, with
Skr90bn (€9.6bn) of assets, is one of six state pension funds in Sweden, and is
the default fund for the country’s national defined-contribution top-up scheme.
Its fellows are AP6, a small private-equity focused fund, and the four ‘buffer’
funds, AP1 through 4, which exist to provide spare capital if state pensions
payments exceed tax revenues.
    AP1 through
4 have a joint ethical council which engages with companies on behalf of all
four funds. It has only ever excluded one company, the defence manufacturer
Singapore Technologies Engineering, on the grounds that it produces
anti-personnel landmines, though talks continue with the firm.
to the ethical council’s annual report, the funds are also involved in
negotiations with 14 other companies around the world, including the miners BHP
Billiton and Freeport-McMoran on labour and environmental issues, and the US oil group Chevron on human rights in Nigeria.
Norwegian Government Pension Fund, a pool of sovereign wealth capital derived
from oil revenues, sold out of all its holdings in nuclear weapons and
cluster-bombs in In late 2006 and early 2007. The move affected 15 companies,
including BAE Systems, Boeing and Thales, as well as EADS and Lockheed Martin.
    The Dutch
public pension funds ABP and PGGM also sold out of several producers of
landmines and cluster-bombs last year.


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