Will AP1 Exclude Vale?

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Stockholm (NordSIP) – On Wednesday, February 20, the Council on Ethics of the Swedish National Pension Funds (AP Funds) recommended the exclusion of Vale S.A following the accident at the Brumadinho Mine on January 25. Available data suggests that of the first four AP funds, only AP1 has any exposure to Vale, worth SEK 407 million in stocks and bonds.

“The Council, together with other investors, has conducted an extensive dialogue with Vale after the first accident at Mariana in late 2015. The focus has primarily been on ensuring that the company took responsibility for that accident but also that the company carried out a review regarding the safety of its other tailings dams in their operations. Vale has continuously reported a number of measures taken regarding the management of mining waste and increased safety at their tailings dams, including revised emergency plans and third-party reviews of the dams. However, after the latest accident at Corrego do Feijao in January 2019, the Council’s perception is that Vale has not acted sufficiently on the promised measures after the first accident at Mariana,” stated the press release. “It would appear that the company did not act sufficiently quickly on reported deficiencies regarding the safety of the tailings dam in Corrego do Feijao. The consequences of the company’s actions have had devastating and tragic consequences, both for the local population, company employees and the environment around Corrego do Feijao.”

Having lost confidence in Vale the Ethic Council recommends the exclusion of the stock from the holdings of AP1, AP2, AP3 and AP4 citing perceived violations of article 3 of the Universal Declaration of Human Rights, of article 4:2 of the ILO Convention on Occupational Safety and Health Convention,  and International Covenant on Civil and Political Rights.

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Based on available data, this recommendation would disproportionately affect AP1. According to the holdings disclosure of AP1, on June 30, 2018, it owned SEK 147.6 million in Vale Common Stock registered in Brazil and denominated in Brazilian real, SEK 202 million of Vale stocks registered in the USA denominated in US dollar and SEK 57 million in 2036 Vale bonds registered in the Cayman Islands. AP2AP3 and AP4 appear to have no such exposure.

Picture from Pixabay.

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