Plan for human rights
AP2’s Human rights plan describes the Fund’s objective that from 2025 onwards its activities shall be conducted in line with the UN Guiding Principles on Business and Human Rights, and that from 2030 onwards human rights shall permeate all parts of the Fund’s activities.

Goals
From 2025 onwards, the Fund’s activities will be conducted in line with the UN Guiding Principles on Business and Human Rights
In short, this means that the Fund shall avoid violating human rights and deal with negative impacts on human rights in activities with which the Fund has a direct connection. For AP2, this means regularly identifying, reducing and dealing with potential and actual human rights violations related to the Fund. AP2 will also have a human rights policy, and work to ensure that remediation is available for the individuals who have been directly or indirectly affected by AP2’s operations.
From 2030 onwards, human rights will permeate all parts of the Fund’s activities
In practice, this means that AP2 will strengthen its compliance with the UN Guiding Principles. All of the Fund’s activities shall be conducted in accordance with the principles and in all parts, there shall be a satisfactory process for remediation. Through the AP Funds’ regulations, the AP Funds have been tasked with managing the fund assets in an exemplary manner. Particular attention should be paid to the promotion of sustainable development, of which human rights are a central element. The Fund’s work is thus also intended to make a positive contribution to the development of human rights in order to promote sustainable development. This can be done, for example, through targeted sustainability investments, within the framework of the Fund’s ongoing work with the UN Guiding Principles, as well as engagement work of various kinds, for example through company dialogues or investor collaborations.
Analysis and materiality
A central part of the UN Guiding Principles on Business and Human Rights is that companies should be aware of their risks, i.e. identify the risks, and prioritize which risks companies should act on first. It is of the utmost importance that prioritization is based on a severity assessment with the perspective of risk to people. The risks that are deemed to have the most serious consequences on human rights must be addressed first. The Fund’s work is thus focused on the Fund’s most serious risks, which is why the work of implementing the UN Guiding Principles is concentrated on risks in the Fund’s portfolio companies. Within the framework of the Fund’s 2030 goal, the Fund will concentrate its work on a few of the UN’s Sustainable Development Goals that are deemed relevant and measurable for human rights.
Given that the concept of “human rights” is very broad and complex, the Fund needs to set priorities in its work. Through risk analysis of the Fund’s assets, AP2 can systematically identify and monitor the Fund’s risks. Results from these analyses form the basis for investment decisions, prioritization of continued work and engagement work. The risk analyses are carried out twice a year. However, the Fund’s choice of focus companies for engagement will be updated less frequently because a long-term perspective is required to achieve results.
While the Fund needs to be responsive to change, it is equally important to develop processes that make the Fund’s work on these issues sustainable, as long-term commitment is required to achieve results. Another important, and challenging, factor in the development of processes is that the development and results of the work should be able to track over time.
When analysing the Fund’s risk exposure, account is taken of the Fund’s other focus areas, climate and biodiversity, and of the Fund’s holdings and ability to influence.
Based on analysis of the Fund’s current portfolio, companies with direct exposure to India, Indonesia and Brazil as well as indirect exposure to China in the agriculture, mining, textile, renewable energy and semiconductor sectors have been flagged as high risk of human rights violations.
In addition to risk identification at company level, AP2 has a process for identifying countries where there are financial, operational or sustainability reasons not to invest. The process follows an internally developed framework that is based, among other things, on the UN Guiding Principles on Business and Human Rights and the Fund’s Human rights policy.
Companies with confirmed human rights violations are identified through the AP Funds’ Council on Ethics. The AP Funds’ listed portfolios of equities and corporate credits are reviewed twice a year, and the Council on Ethics conducts dialogue with the companies identified in this review. If a company does not handle the situation, compensate those affected and act to prevent future incidents, or is unwilling to engage in dialogue, the Council on Ethics may recommend that the company should be excluded from the AP Funds’ investment universe.
Integration
Invest in solutions
In addition to being a proactive owner with regard to human rights issues, the Fund invests in, among other things, social bonds, where the money is earmarked for investments in activities that have a clear and measurable positive impact on social issues.
Supporting change
AP2 works as an active owner to support a positive development of human rights work within its holdings in various asset classes. This work is based on analysis and engagement in dialogue with companies and decision-makers.
AP2’s approach to shortcomings among our portfolio companies is to use its influence as an owner and, through dialogue and influence, steer the companies’ operations in a more sustainable direction. Selling is seen as a last resort, if the dialogue does not lead to progress or the company is unwilling to change.
Divest from unwanted exposure
AP2 does not invest in companies, sectors and countries where the risk of human rights violations is considered serious, systematic and uncontrollable in the foreseeable future, and where continued investment risks legitimise the company’s or the country’s behaviour. In the event of a very high risk of human rights violations, and in cases where the Fund believes that the possibility of influence is minimal, the Fund may choose to divest from individual companies or entire countries.
The path to governance in line with the UN Guiding Principles
AP2 strives to have a human rights due diligence process in place across all its asset classes. Such a process includes risk identification, risk management, follow-up and reporting of the Fund’s human rights risks. The human rights due diligence process differs slightly between AP2’s asset classes, but the overall structure is the same regardless of whether the investment is made in global equities or investments in unlisted asset classes. Read more about AP2’s integration of the due diligence process in the Fund’s Human Rights Report.
Equity
Global equity
Risk identification (according to the process described above), followed by proactive dialogues with companies identified as having a high risk of human rights violations. AP2 also collaborates in investor collaborations on important issues or in high-risk sectors.
Swedish equity
Ongoing dialogue and training of managers who are responsible for primary contact with the portfolio companies. The Fund has a long-term plan for how the work will be conducted and has identified risks in the portfolio companies’ supply chains. However, when analysing the portfolio companies’ risk exposure, the risk is considered relatively low compared to companies found among global equities and private equity.
Private equity
Prior to investing in a private equity fund, a due diligence is conducted by the manager, with questions that specifically address the manager’s management of human rights. In the case of new investments, the manager is expected to comply with the UN Guiding Principles. An annual follow-up is conducted via surveys and dialogue with all managers, to both be able to capture any shortcomings, and support change of processes.
Risk identification of AP2’s existing portfolio is done by mapping holdings in countries and sectors with a high risk of human rights violations. An in-depth dialogue with external managers where elevated risk among the portfolio companies has been found is carried out. The dialogues contain a clear set of requirements for how the portfolio companies’ operations are expected to be conducted, with regard to human rights, such as policies and processes for whistleblowing and remediation.
Government bonds and global credits
Government bonds are evaluated in accordance with the above “Divest from unwanted exposure”. Global credits are analysed according to the same principle as for global equities, and in the case of investments in green and social bonds, due diligence is carried out on each specific investment occasion.
Unlisted credits
The process for unlisted credits is adapted to the management model through external managers, and the fact that AP2 does not know exactly which holdings will be included in the finished product at the time of investment.
Prior to investment, a thorough due diligence is therefore carried out, with specific questions about the management of human rights. In addition, AP2 conducts an annual evaluation of its managers and conducts ongoing dialogue with them to support continued development. Since AP2 has limited opportunities to influence the companies after the investment in credit investments, the manager’s process at the time of investment, with a clear specification of requirements based on sustainability parameters, is of particular importance.
Real assets
Real estate
AP2 has a continuous and close dialogue with the Fund’s portfolio companies and sets clear requirements based on how the companies’ operations are conducted with regard to human rights. The Fund engages in dialogue with companies both from a company-specific perspective and from a supply chain perspective.
Timberland and Farmland
The Fund has a close and long-standing collaboration with external managers in the sector. As a long-term owner, the Fund has the opportunity to influence the portfolio companies’ operations based on climate, biodiversity and human rights perspectives. Follow-up takes place on an ongoing basis through dialogue, surveys, and site visits.
Sustainable infrastructure
Thorough due diligence that includes the human rights perspective is carried out prior to investments. Through dialogue and ongoing follow-up, the ability of portfolio companies and external managers to maintain the Fund’s requirements is mapped. Most of the portfolio companies in the sector have supply chains that provide exposure to sectors and companies with a high risk of human rights violations, such as renewable energy inputs originating from China. Extra focus is thus placed on the ability of external managers and portfolio companies to map and follow up on how they work with requirements and processes within the supply chain.
Engagement
As an active and long-term owner, engagement work is an important tool for AP2 to create positive change. Engagement work is therefore central to the management of the Fund’s human rights risks and is integrated into the Fund’s due diligence process. AP2 carries out its engagement work either individually or through the AP Funds’ Council on Ethics and other investor collaborations.
The current situation and goals of the dialogues are defined through analyses of the companies’ work with human rights and what guidelines they have in place, as well as what their due diligence processes look like throughout the supply chain. The dialogue is adapted to each individual situation and progress is evaluated annually. Based on whether the goals have been achieved, are deemed to be achievable or considered unattainable, a decision is made to terminate the dialogue, continue it for another year or terminate the relationship and divest.
The dialogue work requires perseverance as it takes time for the companies to develop, anchor and implement new policies and processes as well as to change behaviours. There is also a delay in the process because the companies’ reporting usually takes place on an annual basis, which is also relevant since the dialogues both aim to improve the companies’ internal processes and that this is reflected in their public reporting.
Expectations of portfolio companies and external managers
The Fund expects portfolio companies and external managers to comply with international norms and rules that protect against human rights violations, which shall be in line with the UN Guiding Principles on Business and Human Rights and the principles of the UN Global Compact. Read more about AP2’s Expectations of portfolio companies.
Voting
The Fund uses its voting rights both proactively and reactively to strengthen the protection of human rights. Reactive voting may include the Fund voting against the current Board of Directors in the event of shortcomings with respect to human rights, and where dialogue or other attempts to contact the company on the matter have not been satisfactorily answered.
Proactive voting can take place through support of shareholder proposals directed at the company, such as requirements for external audits of the company’s operations with regard to the protection of human rights, or improved transparency from companies about their work with human rights.
Collaboration
Human rights issues are often complex and global, which is preferably managed through collaboration with other investors and organizations. AP2 supports and collaborates on several initiatives relating to the human rights risks identified by the Fund. Since 2021, AP2 has been part of the investor collaboration Platform Living Wage Financials (PLWF), which conducts structured engagement work in the textile industry and the agricultural sector with a focus on living wages.
AP2 also collaborates with other investors within the framework of the Investor Alliance for Human Rights, which has a special project group focusing on the textile industry. They have also coordinated specific dialogues with companies with possible exposure to negative impacts on the Uyghur population in China.
Within the PRI Advance initiative, AP2 collaborates with other investors to, among other things, increase understanding and the opportunity to influence human rights aspects in companies’ supply chains globally.
In addition, AP2 also collaborates with the other AP Funds, primarily through the AP Funds’ Council on Ethics, which both identifies and handles confirmed human rights violations, and runs proactive projects in the focus areas of child and forced labour, as well as tech companies and human rights.
Transparency
AP2 reports every second year in accordance with the framework of the UN Guiding Principles. This framework is the world’s first comprehensive guide for reporting on how companies respect human rights. The Fund also publishes an annual Sustainability report.
Links
UN Guiding Principles on Business and Human Rights
Platform Living Wage Financials
PRI Advance
Investor Alliance for Human Rights
AP2’s Human Rights Report 2023
AP2’s Sustainability Report 2023