Swedish pension fund investment in company connected with Myanmar military

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The Swedish state owned pension fund, Första AP-fonden, (AP1) have holdings in the company POSCO, a company with close contacts to the military in Burma / Myanmar, reveals Justice for Myanmar a network of activists, in a new report mapping the military’s assets.
– We do not comment on individual holdings, AP1 responds in a statement.

This article is translated from the original version written in Swedish.

One of the companies the report highlight is POSCO, which is a South Korean steel group, who also have extensive interests in a number of sectors, including building hotels on land owned by the military in Myanmar in a joint venture with the hotel chain LOTTE.

In the report called Mapping the Myanmar Military Cartel’s Global Reach through POSCO, Justice for Myanmar states:

The Myanmar military operates like a massive, institutionalised cartel, using a network of dark money to fund violence and crimes against humanity, without any democratic oversight. As the military tightens its grip on the country following their brutal and illegitimate February 1, 2021 coup, they are relying on international business to bankroll their regime and provide it with legitimacy. In order dismantle the military cartel, its global financial network must be expose.

As early as 2017, The Swedish Daily Svenska Dagbladet drew attention to the Swedish pension fund’s dubious investment in POSCO and wrote (translation from Swedish):

“Among the list of violations, that Swedes would most likely would not accept profiting from, are companies involved in slave labour and child labour. Two companies involved in this type of businesses are Posco and Daewoo International. Here too, AP7 is alone in saying ‘no thank you’.”

Despite this, Första AP-fonden has kept its shares in the company. According to the fund’s own report from December 31, 2020, the investment in POSCO was worth SEK 33,173,381. In addition, the fund has also a minor investment in POSCO Chemicals.

Justice from Myanmar writes the following about the Swedish investment:

Sweden’s Första AP-fonden is one example of national pension fund that invests in POSCO, helping to enrich the military. It manages assets of over US$46 billion & claims to invest responsibly, but their investment in POSCO supports military’s grave crimes.

Jakob König from Fair Finance Guide of Sweden is critical of the investment:

”What this shows is that our Swedish pension funds can be linked to actors who contribute to the repression in Myanmar and if you follow the UN Guidelines on Business and Human Rights, it states that if an investor cannot influence a company, it should withdraw from it. Unfortunately, we see that their shareholder advocacy work is often quite weak because the AP Funds invest in so many companies that they have difficulty following up on what is happening in individual companies. But since issues around POSCO (and human rights) has been highlighted before, it therefore seems to be the case that the company cannot be influenced, and as an investor it is then important that you put your foot down and pull out. In doing this, and pulling out, you increase the pressure on other investors and thus have a greater impact than if you would continue with a fruitless dialogue”, says Jakob König.

The Swedish AP Funds have a joint ethical council, which includes the First AP Fund, which has the aim of coordinating all the funds sustainability and responsibility work. But regardless of what the Ethical Council decides, the rules that they must comply with the conventions to which Sweden has signed, applies to all the funds. The European Parliament recently voted to introduce legal requirements for companies to review their human rights and environmental business relationships.

”These rules should also apply to the financial actors. As an investor, you should not wait for organizations to produce critical reports about your investments, you should review your investments yourself”, says Jakob König.

Before the publication Global Bar Magazine sent the following for the following questions by email to AP1:

  • Is your holding in POSCO in line with the guidelines that apply according to the AP Funds Council of Ethics?
  • Will you revalue / sell your holding?

In a reply, Sara Christensen, Head of Communications at AP1, answers (translation from Swedish):

“We do not comment on individual holdings / companies. We have a process for identifying companies that act in violation of the international conventions that Sweden has signed. In the first stage we prioritize dialogue with the companies over the sale of holdings, where dialogue with foreign companies takes place via the AP Funds’ (AP1-AP4) joint Council of Ethics, often in collaboration with other international investors. If the dialogue with the companies do not lead to good enough results, we can ultimately choose to sell the holding.”

David Isaksson


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