AP1 Divests From Fossil Fuels


Stockholm (NordSIP) – AP1 has announced it will divest from fossil fuels to minimise its contribution to climate-related financial risks in the economy, and in the fund’s investment portfolio.

According to the analysis conducted by the fund, the transition towards a low-carbon economy that is less dependent on fossil fuels creates “substantial uncertainty” for companies involved in coal, oil and natural gas activities. According to the AP1’s assessment, continued investments related to these activities can increase the financial risk exposure of the fund.

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To manage its climate risk exposure, AP1 has also decided to develop measurable targets and a roadmap towards achieving a carbon-neutral portfolio by 2050. These two decisions are the logical next step in a process started at the end of 2018 when AP1 took the step to no longer invest in companies involved in thermal coal and oil sands.

” Our assignment is to manage the fund’s assets in an exemplary way through responsible investments and achieve high returns for the long term, while supporting sustainable developments without compromising the fund’s targeted investment returns,” Urban Hansson Brusewitz, Chairman of AP1, comments. “An integral part of this ambition is to manage our climate-related financial risk exposure and align it with the overall risk level of the fund. Divesting from fossil fuels is an efficient way for the fund to manage the financial risk associated with a transition in line with the Paris agreement. Further, we have decided to develop a roadmap and measurable targets towards reaching a carbon-neutral portfolio by 2050.”

According to AP1, the fund has been working to identify and assess the impact of climate change and of the transition to a low-carbon economy on the fund’s investment portfolio. AP1’s assessment concludes that the transition to a low-carbon economy in line with the Paris agreement, less dependent on fossil fuels, represents a substantial uncertainty for companies engaged in coal, oil and natural gas.

“The shift was a natural step in aligning the climate-related financial risk to the overall risk level of the fund. In parallel, the fund will promote investments in companies that are actively contributing to the transition and will be part of a profitable and sustainable economy over the long-term,” AP1 stated in its press release.

” We will, of course, continue our important work as an active owner influencing companies. As a responsible investor, an important contribution in the climate issue is to make clear requirements on portfolio companies and our investment managers to accelerate their agenda for managing the climate risk exposure,” Brusewitz concludes.

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The coronavirus epidemic has further accelerated the rise of ESG into the investment mainstream. As deficits skyrocket, bond investors have an opportunity to engage with governments on climate change, argues Thomas Dillon, Senior Macro ESG Analyst at Aviva Investors.

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