Sweden’s AP7 excludes electric utility firm for violating Paris climate accord

Swedish buffer fund Sjunde AP-fonden (AP7) has excluded US electric utility firm Evergy for violating the Paris climate agreement through its lobbying activities.

It is one of seven exclusions announced by the €46bn pension pot in its latest list, which is published twice a year.

South Korean steel firm Posco, which reportedly issued its first ESG bond worth $500m this month, was also among the excluded firms along with its subsidiary Posco International Corp for “violations of workers’ rights in Turkey”.

AP7’s exclusion of Kansas City, Missouri-based Evergy for “acting in violation of the Paris Agreement by counteracting US climate legislation” is not the first time the Swedish fund has excluded citing the Paris climate accord.

In 2017, AP7 became the first investor to use compliance with the 2015 climate agreement as a basis for norms based exclusions.

“By incorporating the Paris Agreement in our norm screening, we are involved in defining what is unacceptable corporate conduct on the climate issue,” the fund said in a 2017 report announcing the new strategy.

“The aim is to define an ultimate limit, and to exert pressure on companies that exceed this
limit to change their conduct.”Companies that fell afoul of AP7’s climate screen that year included US oil giant Exxon for climate lobbying and Russian oil firm Gazprom for its Arctic drilling.

Also excluded were pipeline provider TransCanda Corp (now TC Energy) and US energy firms Entergy, Southern Corp and Westar – though Westar no longer appears on the exclusion list.

US coal giant Peabody was added in December 2018 also for opposing US climate legislation.

Corporate lobbying against climate action is an issue that AP7 has been particularly focused on. It heads up a $2trn investor coalition with the Church of England Pension Board tackling the issue in Europe. See RI’s recent interview with AP7’s Sustainability Strategist Charlotta Dawidowski Sydstrand.

Canadian cannabis firms Aurora Cannabis and Canopy Growth were also among the seven companies revealed to have been excluded in last month’s list.

This follows Sweden’s Council on Ethics of the AP Funds’ 2018 recommendation that the country’s six AP funds exclude companies involved in selling the drug for recreational or religious purposes.

Canada’s Brookfield Asset Management and Russia’s Rosneft Oil were the final two exclusions, dropped for involvement in nuclear weapons and poor environmental standards, respectively.