Andra AP-fonden (AP2), the Swedish state buffer fund with SEK264.7bn (€28.8bn) in assets under management, has said it plans to divest a total of 20 fossil fuel energy firms with a total value of around SEK840m (€91.5m) in a further sign of the momentum behind the fossil fuel debate.
AP2 said it was “reducing its financial risk in fossil-fuel based energy” and that it would no longer have investments in 12 coal and eight oil-and-gas production companies. It follows a “comprehensive risk analysis” of all the fund’s holdings.
“Our starting point for this analysis has been to determine the financial risks associated with the energy sector. By not investing in a number of companies, we are reducing our exposure to risk constituted by fossil-fuel based energy. This decision will help to protect the fund’s long-term return on investment,” said AP2’s Chief Executive Eva Halvarsson.
The majority of the turnover generated by the coal-production companies identified derives from the sale of thermal coal, the fund said in a statement.
It went on: “These companies face considerable climate-related financial risk, due to the negative environmental and health impacts of coal, which affect demand. Furthermore, coal-powered electricity production issubject to competition from gas and renewable energy.”
In the case of oil-and-gas companies, AP2 says it has identified a number of companies featuring “substantial exposure” in high-cost projects, such as oil-extraction from oil sands: “The fund believes these companies face serious climate-related financial risks and that it is highly likely that these projects may either be stranded or unprofitable.” A spokeswoman declined to name the companies involved.
“This will help to protect the long-term return on investment”
The decision is the latest signal that major institutional investors are taking the fossil fuel divestment debate seriously.
Fellow state fund Fjärde AP-fonden (AP4) is three years into a ‘decarbonisation’ strategy of reducing its exposure to heavy carbon polluters.
Then there’s the Montreal Carbon Pledge unveiled at the PRI in Person event in Montreal recently, whose signatories include major players such as PGGM Investments, CalPERS, and the Fonds de Réserve pour les Retraites (FRR). AP2 statement.