Sweden’s largest buffer fund, Sjunde AP-fonden – known as AP7 – has pumped another SEK500m (€48.5m) into a ‘green impact’ strategy with Impax Asset Management, bringing the total mandate to SEK1.4bn (€135.8m).
The €60bn scheme, which sits within the ‘premium’ part of the state pension system – in which savers can choose their provider – first awarded Impax’s Leaders Strategy the mandate in 2018.
In 2017, AP7 divested some €300m worth of stocks in companies it claimed were “in direct violation of the Paris Agreement”, including Exxon and Gazprom. Speaking to RI last year, AP7’s Head of ESG, Johan Floren, explained: “Then we decided to take the same amount of money and invest it in green impact equity.” That translated into two mandates – one for water, run by KBI, and one for climate change, run by Impax.
Impax describes the strategy as one based on “identifying mispriced companies that address several long-term macroeconomic themes”. These include growing populations, rising living standards, increasing urbanisation, rising consumption and the depletion of limited natural resources. Companies must generate at least 20% of their revenues from products or services linked to energy efficiency, renewables, water, waste or sustainable food and agriculture.
Impax, which runs around £18bn (€20bn) in third-party assets across listed companies and real estate, works with BNP Paribas Asset Management to distribute the fund.
Hans Löfgreen, a Senior Portfolio Manager at AP7, said the work with Impax so far had involved “develop[ing] metrics and methodologies that measure the real-world impact of our investments”.
In his interview with RI last year, Floren explained the thinking behind this part of the partnership with Impax, saying: “There’s a lot of measuring output going on, and some attention given to outcome. But what’s the actual impact?”