Socially responsible investments and shareholder engagement in the Swedish pension fund system : A case study on the Swedish AP funds

In recent years, institutional shareholders have more frequently engaged themselves in dialogue with corporations on corporate social and environmental factors (ESG factors) through a new investment strategy often referred to as socially responsible investments. The Swedish public pension funds work with socially responsible investments and shareholder engagement are based on their mandate to serve the Swedish people and to manage their retirement capital in a desirable way. Since 2019, the AP funds are also legally obliged by the AP Funds Act (2000:192) to contribute to sustainable development by their investments. The findings of this thesis suggest that shareholders can positively influence the social and environmental performance of a corporation. It suggests that shareholder engagement dialogue is an effective influence instrument to generate positive social and environmental outcomes, with an open and constructive dialogue between the shareholder and the corporation. In order to build a successful long-term relationship between the shareholder and investee, it is important for the engager to enhance the preparation and try to stay fully informed on the matters being raised to the investee. This can be achieved by the shareholder by letting the engager focus the engagement on a manageable number of corporations and sectors and by having a dialogue with several different stakeholders throughout the network such as local union trade organisations or other NGOs