Sweden’s seventh national pension fund AP7 has put six energy companies on a watch for potential exclusion from its portfolio on climate change grounds, a spokesman confirmed to IPE.
The six companies are American Energy, Exxon Mobil, Gazprom, Southern Company, Transcanada and Westar Energy.
AP7’s holdings in these companies amount to around €300m, according to the spokesman.
The backdrop to the move is the international agreement on climate change reached at the UN Conference of Parties (COP21) in Paris last year, which the spokesman said was “a game-changer” and would have consequences for several years ahead.
“With our norms-based approach, we thought this is exactly the kind of international, UN-type of agreement we work with,” he said.
The fund decided to screen its global equity portfolio, which comprises holdings in more than 2,500 companies, to try to define the worst performers in terms of their contribution to achieving the global-warming mitigation goal set out in the Paris Agreement on climate change.
The screening exercise was carried out this month.
The six aforementioned companies are the first ones the buffer fund identified that could be said to “work actively” against the Paris Agreement, according to the spokesman.
AP7 has notified the companies that it could blacklist them if the fund does not obtain information “that could contradict our impression”, he said.
The companies will have six months to get back to the pension fund, after which it will make a decision.
Asked for further information about the screening process, the spokesman said it considered whether certain aspects of a company’s business were aligned with the maximum 2-degree warming target in the Paris Agreement, or whether companies could be seen as actively obstructing or inhibiting the implementation of the agreement at national level – via lobbying, for example.
AP7 started blacklisting companies on the grounds of norms violations – for human rights, labour and/or environmental reasons, or corruption – around 16 years ago, and, as at the end of June 2016, 55 companies were on its list, according to the spokesman.
Sweden’s second national pensions buffer fund, AP2, recently said it divested 10 more of the stocks it holds on the grounds of financial climate risk.