The Swedish government should apply the same legal requirements on sustainability to all of the AP funds, according to the country’s National Audit Office (NAO).

It is one of several suggestions made by the NAO following its review of the AP funds’ work on sustainability, in which it said there is more to be done. At present, the first four AP funds have a statutory sustainability requirement, and for the Seventh AP Fund, work is underway to implement this. However, the Sixth AP Fund is not covered.

NAO auditor general, Helena Lindberg, said that applying the same requirements to all funds would strengthen the efficiency and legitimacy of its sustainability work.

“It also clarifies the responsibility for considering sustainability and creates better conditions for achieving the goals in the area of sustainability,” Lindberg added.

Currently, the NAO said the AP funds conduct “appropriate” sustainability work
in relation to their assignments, but the funds should do more to ensure that pension capital contributes to Sweden's goals of sustainable development.

The funds manage a pension capital of approximately SEK 2,400bn. The overall goal is to create a long-term high return at an appropriate risk level so that pensions can be secured.

In addition, the Riksdag and the government have stated that the funds' activities shall contribute to sustainable development. The NAO found that sustainability is expressed in the funds 'governance documents and has been integrated into the funds' asset management and corporate governance.

However, the NAO review suggests that the AP funds 'goals for social sustainability should be clarified so that they reflect their long-term ambitions in this area. In addition, the reporting of the AP funds' work with corporate governance should be clarified so that it is easier to follow up what results it has yielded.

“The funds also need to ensure that their corporate governance is focused on companies and areas where it has the greatest opportunity to influence and make the greatest benefit,” NAO review project manager, Per Franzén, said.

The government's reporting to the Riksdag on the sustainability of the pension administration should also be developed.

In addition, the funds should develop how the reporting on advocacy work and dialogues can be made clearer, both in terms of scope and, if possible, what results have been achieved. It also suggests the funds prepare common key figures for investments and corporate governance that can make the sustainability report more accessible and result-oriented.

“Whenever possible, the Sixth and Seventh AP Funds should also use the same key figures so that the government can provide as comprehensive a picture as possible in reporting to the Riksdag,” the NAO said, adding that the Sixth AP Fund should report on how the fund has the opportunity to contribute to the UN's sustainability goals.

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