Swedish buffer fund AP3 to measure carbon footprint of listed equity portfolio

Markets Minister and ex-pension exec Norman wants investors to disclose carbon footprints.

Tredje AP-fonden (AP3), the SEK272.6bn (€29.7bn) Swedish buffer fund, has decided to conduct a carbon audit of its multi-billion euro listed equity portfolio.

AP3 told Responsible Investor: “In the fall we will do a carbon audit of the listed equities portion of the fund relative to a global benchmark, with a break out of the international component versus an international benchmark, and the domestic holdings versus a Swedish benchmark.” AP3’s equity holdings make up 45% of its total assets.

The scheme did not provide any further detail, including what consultant it had hired for the audit or what CO2 reductions it would seek from the equity portfolio. More will be known early next year, when the scheme publishes the results of the audit in its annual report for 2014.

It comes as Sweden’s Minister for Financial Markets, Peter Norman, has come out in support of institutional investors disclosing their carbon footprints. “I think doing so could lead to an interesting discussion,” he was quoted as saying in an interview in the Financial Times.He told the paper the financial industry has a “great responsibility” but also the tools to “move these issues forward”. Before joining the government, Norman was Chief Executive of AP3’s peer Sjunde AP-fonden (AP7). Norman also said that the five AP funds would “become three”.

AP3, in its new first-half report, said that in the first half of 2014, it invested SEK1bn in “green bonds” lifting the amount of that portfolio to SEK3.3bn. AP3 owns 10% of Arise, a Swedish developer of onshore wind parks that this week floated a SEK350m green bond. It said it made new investments in green bonds via a new commitment to the Generation Climate Solutions Fund II, offered by Generation Investment Management, the UK-based sustainability boutique co-founded by former US Vice President Al Gore. AP3 already had $50m with Generation’s ESG-slanted Global Credit Fund as an anchor investor.

Finally, AP3 said employees not already versed in responsible investing would undergo a basic training programme in the sector. At the end of June 2014, the buffer fund employed 56 people.