• Asset owner
  • Sweden
  • AUM: SEK381.3 billion

AP2 assessed the human rights outcomes of its internally managed, quantitative, global listed equities portfolio, to identify which of its companies to engage with further. The diversity of the portfolio’s holdings represents a driver and a challenge for establishing a clear idea of the outcomes across the asset class. This follows Part 1 (Identify outcomes) of the PRI’s five-part framework, as highlighted in the report Investing with SDG outcomes – a five-part framework.

Why we consider human rights outcomes

AP2 is a government agency, whose operations are regulated in accordance with the Swedish National Pension Funds Act (2000:192). According to the legislation, the AP-Funds are required to manage their assets in an exemplary manner through responsible investment and ownership, with an emphasis on promoting sustainable development and human rights. AP2’s asset management should also benefit the state income pension system as much as possible.

To fulfil its legal requirements and following our conviction that a sustainability perspective can contribute to better investment decisions, AP2 has constructed a portfolio whose return characteristics meet the needs of the pension system and where sustainability is integrated into its management. The fund invests in many portfolio companies that are active across the globe in different sectors, exposing it to numerous negative human rights outcomes which AP2 actively tries to manage.

How we consider human rights outcomes

When assessing the potential human rights risks within our global equity portfolio, we limited our analysis to focus only on negative human rights outcomes. The analysis sought to identify common risks for negative human rights outcomes in sectors in which our portfolio companies operate. For example, risks in an industry with wide-ranging problems such as the use of slave labour would be assessed as severe.

We also focused on whether portfolio companies operated in a context or region considered highly susceptible to human rights abuses, and whether the companies had instituted policies and processes for managing these risks.

In determining the severity of potential human rights outcomes, special attention was paid to the scale, scope and irremediable character of the risks. Activities where vulnerable groups such as women, children, minorities or indigenous peoples might be adversely affected were also deemed severe. We followed the UN Guiding Principles, meaning our assessment focused on the risks to people rather than the risks to businesses.

Example: Human rights outcomes assessment

Prioritising risks

AP2 used the UNEPFI Human Rights Guidance Tool for the financial sector to screen risks within different sectors. AP2 identified approximately 40 sub-sectors with severe potential for negative human rights outcomes. Selecting one sub-sector, AP2 consulted with human rights experts to retrieve information regarding specific regions where there might be a higher probability of human rights abuses. AP2 then screened for portfolio companies in that sub-sector which were particularly exposed to high-risk regions.

When screening companies, we used internal company-specific information, such as data on incidents and controversies, as well as information available from internet sources. We then initiated a dialogue with the impacted companies, to obtain more information on their processes for human rights risk management.

AP2 encountered several challenges when performing its human rights risk assessment.

Prioritising the negative human rights outcomes that we identified in different sectors was challenging. This was resolved by having a solid risk identification and prioritisation process, to ensure that the most severe impacts that were most likely to occur were addressed first. AP2 believes that building internal skills and working in collaboration with other external stakeholders is one way forward in making more thorough assessments.


Another challenge AP2 faced was a lack of adequate data, which made the assessment process inefficient. Obtaining geographic data on portfolio companies’ operations was difficult, making it challenging to identify those operating in high-risk locations. Assessing companies’ value chains was also difficult due to the lack of data, as companies were reluctant to report information regarding their supply chains or customers.

Moreover, finding company-specific data that was aligned with the UN Guiding Principles (i.e. data focusing on risks to people) proved difficult. AP2 found that company-specific human rights outcomes data was often reactive, as it was frequently based on incidents and controversies, making it difficult to identify risks proactively.

Using the results of our analysis

From the results of the analysis, AP2 aims to develop an in-house quantitative data model that can provide a more adequate and complete picture of negative human rights outcomes. AP2 will then use this data to assess which outcomes to prioritise and which companies to engage with. The model will systematically analyse and monitor specific issues, such as how the risk of child labour is changing in different sectors and countries over time.