Stockholm (NordSIP) – The Swedish Riksdag (parliament) has pushed through the government’s proposal to ease regulation on the investment processes of Swedish pension buffer funds AP1-4, which includes a new sustainability requirement and improving the possibilities of spreading investment risk.
The law will come into force on January 1st, 2019. The stipulation that at least 30% of AP funds should be invested in low risk interest-rate securities has been reduced to 20% to increase the potential for returns and spread risk on the assessment that such investments yield poor returns and that the concentration of risk may cause funds to take greater risks with other assets to achieve return targets.
In addition, the requirement that 10% of AP funds’ capital be managed externally has been scrapped, and a new sustainability target has been introduced requiring the funds to engage more in responsible ownership and investments to contribute more to sustainable development.
“Particular attention will be paid to how sustainable development can be promoted without compromising the overall objective of investment activities,” the government’s proposal states.
The Riksdag voted the bill through following a final recommendation from the Finance Committee, with the only dissent coming from Vänsterpartiet (the Left party), believing tougher requirements on ethics and the environment to be necessary.
“Unfortunately, the bill is a compromise,” Greenpeace climate and energy campaigner Rolf Lindahl said last month. “The funds are left to decide what ‘responsible and exemplary’ management means,” he told online magazine Etc. “The Finance Committee must emphasise that the new rules imply a ban on investment in the fossil fuel industry and tighten the proposal.”
This has not come to pass in the current bill.
Image: Brett Sayles – Pexels