AP4 has defended itself against criticism levelled at it and most of Sweden’s other national pension funds that their policy of engaging with fossil fuel companies was not working.
In a statement published on Friday, AP4 – one of the main buffer funds in Sweden’s income pension system – said: “AP4 will continue the direct dialogue with the energy companies in which we are owners and through international investor collaborations such as Climate Action 100+ and the Transition Pathway Initiative.
“With fewer energy companies in the portfolio, we can further increase the intensity of these dialogues and we have clear internal criteria for our ownership, which we will follow up and discuss with the companies,” the SEK449.4bn (€44.1bn) pension fund said.
AP4 said it was giving its views on issues raised by the Swedish Society for Nature Conservation in a report it presented on the AP funds’ investments and advocacy work with regard to fossil fuel companies.
In that report, the organisation said the AP funds justified their continued investments in fossil companies by saying that they were active owners and could influence the companies in a sustainable direction.
But Karin Lexén, secretary general of the Swedish Society for Nature Conservation, said: “Through its ownership, the AP funds try to influence fossil companies to adjust in line with the Paris Agreement, but our review shows that the companies have not undertaken to do what is required.”
Buffer funds AP1-4 and AP7 – the default provider in the premium pension system – had voted at general meetings to strengthen companies’ climate work, the environmental group said.
But on the other hand, it said, it was difficult to assess whether the funds had used dialogue with the companies, because there was very little transparency in that type of process.
It said the main conclusion of the report was that despite the funds largely voting for climate improvement, not a single company extracting fossil fuels had committed itself to reducing its emissions in accordance with the Paris Agreement’s 1.5°C target.
In its response, AP4 described climate change as one of the greatest challenges of our time, and that it had an impact on societal development and economic growth.
“In order to be politically and socially feasible, the transition must be compatible with economic growth,” the fund said.
“Wise use of conventional oil and gas needs to take place during the conversion period, but coal and non-conventional oil and gas should stay in the ground as much as possible,” it said.
AP4 said it had chosen not to own the energy companies that it believed did not have a role to play in the ongoing transition.
However, the pension fund said it had opted to continue holding energy companies with goals and plans that had the potential for the firm to be in line with the Paris Agreement – and where these firms had plans for extensive and increasing investments in renewable energy.
“The energy companies we own also have no operations in coal or oil sands,” AP4 said.
Last month, Dutch civil service pension scheme ABP came under fire from the local branch of the NGO Fossil Free for not voting in favour of climate resolutions at the shareholder meetings of big oil companies.