Swedish pension funds urged to divest from fossil fuels

The Swedish Centre party has called for pension funds to ‘climate proof’ investment by ditching holdings in the fossil fuel industry.

AP funds – Sweden’s national pension fund – should divest from financially risky fossil fuel firms, the chief economist at the Centre party Martin Ådahl has said.

According to the Financial Times, the party has called for divestment after the publication of a report by British economist Lord Stern and Carbon Tracker, where it was warned that to keep global warming under 2C, large part of reserves of fossil fuel companies were “unburnable”, making the decision of investing in fossil fuels ‘risky’

The Centre Party has therefore urged AP funds to make its investment safe and to ‘climate-proof’ them. The four main funds (AP4) – accounting for SKr971 billion (£93.7 billion) assets under management – have some major holdings in oil and gas companies, which is making them financially unstable, according to Ådahl. He added that his party will, “bring the issue to public debate” and “encourage the AP funds to take action”. Sweden – the leading nation in renewable energy and clean technologies according to US President Barack Obama – was recently named the ‘world’s most sustainable country.’

The head of corporate governance at AP4 commented that excluding all fossil fuel companies would be “too great a risk”.

In July, Norwegian pension fund Storebrand divested from 19 fossil coal and oil firms to ensure long-term returns as those stock would be “worthless financially” in the future.

Quoted in a press release, Storebrand head of sustainable investment Christine Tørklep Meisingset said the firm had gone down the divestment route “to reduce fossil fuel and CO2 exposure and ensure long-term stable returns.”

She added, “[As] the stated climate goals become reality, these resources are worthless financially, but it is also true that they do not contribute to sustainable development in the extent and the pace we want.

“Exposure to fossil fuels is one of the industry’s main challenges, and for us it is essential to work purposefully to take our share of responsibility

Further reading:

Norwegian pension fund divests from ‘financially worthless’ fossil fuel firms

Report says investing in fossil fuels is a ‘very risky decision’

Sweden named world’s ‘most sustainable’ country after ESG analysis

The Scandinavian nations setting the green energy pace

Fossil fuel firms are failing to address the low-carbon imperative