Sweden’s six buffer funds for the state-run pension system (AP1, AP2, AP3, AP4, AP6 and AP7), have agreed to coordinate the way they calculate and report their respective carbon footprints.
In a statement, the schemes said: “The carbon footprint of an investment portfolio describes the amount of greenhouse gas emissions that companies the AP funds invest in emit. Due to differing investment strategies and allocations, the carbon footprints generated by the AP funds vary in size.”
The funds said that starting on December 31, and at the end of each year after then, three standard indicators would be used to calculate and report their footprints. The first is the percentage of total emissions of carbon dioxide (CO2) equivalent to the scheme’s holding in a company, whether listed or unlisted. Of the six schemes, AP6 specialises in private equity investments so will focus on its unlisted holdings.The second indicator is carbon intensity, where the carbon footprint is related to the scheme’s equity interest in the company’s market value. The third also pertains to carbon intensity, though this is where the footprint is related to the fund’s equity interest in the company’s revenue. The AP funds also said they would include information on the proportion of capital assets assessed, as well as the amounts based on reported and estimated CO2 emissions data.
The AP funds’ decision to cooperate on carbon footprint reporting comes just a week before the international climate summit in Paris (COP21), where a major deal to reduce worldwide CO2 emissions is expected.
On Monday, the Financial Times also reported that the Swedish asset management industry association (Fondbolagen) would have its members disclose the climate impact of their investments. The measure would be part of several sustainability disclosures to be included in a voluntary new code of conduct for Swedish asset managers, the FT said.