Swedish pension fund again rejects Elon Musk, this time snubbing SpaceX

Sweden's state pension fund, AP7, has once again opted out of investing in Elon Musk's ventures, this time rejecting a stake in SpaceX. The decision, announced alongside the fund's half-year report, stems from a sustainability analysis that identified significant concerns.

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There were two reasons for this: firstly, shortcomings in corporate governance, and above all, a deficient way of handling risks associated with human rights. It specifically concerns the lack of processes and routines to prevent illegal content from being generated and published on the underlying AI companies' platforms.

Lena Fahlén, AP7's head of capital management, explained that two main issues led to the rejection. Firstly, there were perceived deficiencies in corporate governance. More critically, the fund pointed to a lack of robust processes and routines for managing risks associated with human rights, particularly concerning the prevention of illegal content generated and published on platforms linked to SpaceX's AI subsidiaries.

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Illegal content related to the sexualization of children has been found. The company has not denied this, nor has it been able to show that it has taken measures to prevent it from happening again. We find that challenging.

These concerns are amplified by SpaceX's ownership of X (formerly Twitter) and its AI company xAI. X has faced scrutiny, especially regarding its AI service Grok. Earlier this year, the platform was embroiled in a scandal involving the creation of fake nude images of women and children. Fahlén noted that illegal content related to child sexualization was found, and the company had neither denied this nor demonstrated that it had taken measures to prevent recurrence, which AP7 found "challenging."

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One owns X, and we have seen similar incidents there as well, so it is actually linked to AI companies under SpaceX. It is primarily a lack of processes to handle these risks.

Beyond the issues with X and Grok, AP7 also highlighted Elon Musk's dual role as CEO and chairman of SpaceX. This concentration of power limits the influence of minority shareholders, leading AP7 to believe that engaging in dialogue with the company would not be fruitful. AP7 had previously divested from Musk's other major company, Tesla, citing violations of union rights in the United States.

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Elon Musk is both CEO and chairman of the board. There is limited influence for minority shareholders. Here we assess that it will not be successful to conduct a dialogue with the company.