SWEDEN - Andra AP-fonden (AP2), the Second Swedish National Pension Fund, has confirmed it exercised its voting rights at the annual general meeting (AGMs) of 115 companies in the year to June 2008.

Figures from the Swedish buffer fund's corporate governance report for 2007/08 showed between July 2007 and 30 June 2008 it played an active part in 51 AGMs of Swedish publicly-quoted companies, including two instances where it voted against board proposals.

It said it had voted against plans to discharge the outgoing board of Carnegie from responsibility for their administration, in an attempt to "keep the doors open" on possible future legal action for damages, action also taken by the First Swedish national Pension Fund (AP1). (See earlier IPE article: Carnegie explores legal action against former board)

The report, which outlines AP2's approach to corporate governance, also confirmed it had voted against an incentive system operated by Lundin Petroleum, as it claimed it lacked any performance related requirement and was not treated as a separate item at the AGM.

However, AP2 confirmed it had participated in the AGMs of 64 foreign publicly-quoted companies over the year by proxy electronically, with the decision to exercise its rights in these cases based on:

the size of AP2's holding; connections with the work of the Ethical Council of the Swedish National Pension Funds, and a collaboration with other international investors.

In addition, AP2 said the selection of the 64 AGMs was a result of a focus on companies "in which a number of shortcomings had been detected", so the actions taken by the fund were either to vote against the Boards, or to support proposals submitted by other shareholders.

Examples of its action include voting against a board where the proposed chief executive also chairs the company, and it has collaborated with the American pension fund CalPERS on the right to elect the board based on a majority principle, while the fund also co-operated with other organisations such as TIAA-CREF and CERES on additional issues related to shareholder rights.

Carl Rosén, head of corporate governance at AP2, said: "It is self-evident that we should try to influence our holdings in a manner that we believe will generate better long term returns,".

The report pointed out AP2 currently has holdings in more than 2,200 foreign companies.

Meanwhile, the fund said for the first time in 10 years the proportion of women on corporate boards declined - from 19.3% to 18.6% - while the proportion of women in executive managed positions remained stable at just under 13%.

AP2 confirmed over the autumn it plans to "initiate a dialogue with companies in various industries that feature the lowest proportion of women in their executive management and on their boards".

Looking ahead, Eva Halvarsson, chief executive of AP2, suggested the decisions on climate change agreed in Copenhagen at the follow-up summit to Kyoto in autumn 2009 could impact the pension fund's investment strategy.  

She pointed out the UN Climate Committee wants the emissions of greenhouse gases to be halved by 2050 to prevent global warming, and although the way to resolve this is still unclear, "there is already talk of expanding the system for trading carbon emission rights as a way to reduce pollution".

Halvarsson warned: "The result of the conference could prove decisive in determining the way companies and industries are rated, thereby affecting the composition of AP2's portfolio. It is therefore important that one of the things we learn is how different carbon emission credit systems work and what their impact will be on our portfolio - a process in which we are currently engaged and which we hope to talk more about in future."

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com