The AP funds are all signatories of the UN Principles for Responsible Investment (PRI), through the Ethical Council. Set up at the beginning of last year, the council met eight times in 2007 to screen the funds' 3,500 holdings and selected 14 companies for their violation of ESG standards.

Once the council becomes aware of an infringement, it intensifies its scrutiny and starts engaging with the company, filing suggestions and voting at AGMs. If these measures do not lead to the desired result each fund decides whether to sell the holding in question.

The 2007 vetting process has resulted in the exclusion of Singapore Technology Engineering, although the council said it will keep in touch with the company once a year. The AP funds want the company to stop manufacturing anti-personnel mines.

Sharolyn Choy, spokeswoman for the Singaporean company said its primary client is the Singapore defence force. 'Beyond Singapore, we not only observe all UN sanctions, but also abide by any treaty obligations to which Singapore is a signatory,' she said.

The council said it has removed from its watch list energy company Halliburton Corporation after the company, once run by US vice president Dick Cheney, sold Kellogg, Brown and Root, a subsidiary at the centre of a bribery investigation in Iraq and Algeria.

Energy company Chevron is still on the watch list for allegations of human rights violations in Nigeria and environment degradation in Ecuador. The council is waiting for the company's report on its voluntary framework on security and human rights and is lobbying for an environmental conscious extraction in the South American country.

On Grupo Ferrovial, which includes airport operator BAA, the joint Ethical Council has requested the company preserve a protected area as part of a road construction project in Poland and strengthen its risk analysis for the assessment of environmental risks on similar projects.

PetroChina, which the Dutch pension scheme for healthcare Pensioenfonds Zorg en Welzij excluded from its investments earlier this year, is also on the watch list for pollution through discharges of chemicals in the river Songhua.

To tackle workers' rights issues at retailer Wal-Mart, the council presented a resolution at the company's 2007 annual general meeting to request a comparison of Wal-Mart's guidelines with international standards.

The resolution was supported by 4 percent of the votes, qualifying for presentation at the next general meeting.

AP2 on its own has already attempted a lengthy engagement with Wal-Mart before exasperation prompted it to sell down its entire stake in September 2006. The fund's Head of Corporate Governance Carl Rosen said at the time that the volume of accusations against the company had led him to believe it was 'impossible to say that there have been no systemic abuses'.

AP1, AP3 and AP4 still hold Wal-Mart stock.

For companies on the watch list, disinvestment is considered to be a last resort, when discussion has failed.

In 2007, the council also said it had visited China to address workers rights and pollution issues more broadly. 'It is quite clear that foreign customers and investors play an important role in accelerating China's development in these areas,' it said.