Swedish pension funds face pressure to ditch fossil fuels

The Swedish Centre Party, part of Sweden’s four-party coalition, has urged the country’s pension funds – the AP funds – to ‘climate-proof’ their investments by cutting their fossil fuel holdings, reports the Financial Times.

Martin Ådahl, the Centre Party’s chief economist, told the paper the four main AP funds’ investments in fossil fuels posed a financial risk to the long-term value of the country’s pension reserves. ‘We want to bring the issue to public debate,’ said Ådahl, stressing that the party was not seeking to legislate. ‘We are encouraging the AP funds to take action.’ These funds hold SKr971 bn ($146 bn) in assets under management, with some of their key foreign holdings coming from oil & gas companies.

In November last year, Sweden’s AP4 fund invested SKr1.3 bn in a ‘green’ low-carbon equity portfolio. ‘AP4 believes that, in 10 years’ time, greenhouse gas emissions will be valued and priced differently from today,’ the fund said at the time. ‘Companies with lower emissions than competitors will enjoy a financial advantage and a relatively better-value performance.’

The FT, however, reports that Chevron, Royal Dutch Shell and ExxonMobil continue to make up three of the five largest foreign equity holdings in the SKr241 bn fund. ‘Excluding all fossil fuel companies would be too great a risk,’ Arne Lööw, AP4’s head of corporate governance, told the paper.

The Swedish Centre Party’s calls come only months after Norway’s Storebrand, which has NKr450 bn ($76.1 bn) in assets under management, excluded 19 fossil fuel firms from all its investments. ‘The aim of these exclusions is to reduce Storebrand’s exposure to fossil fuels and secure long-term, stable returns for our clients,’ said Christine Tørklep Meisingset, head of sustainable investments, at the time.