AP1, one of Sweden’s four main national pension buffer funds, has divested from a number of controversial industries following the introduction of new investment guidelines.
The SEK338bn (€32.9bn) fund has exited the nuclear weapons, tobacco, coal and oil sands industries since the start of this year.
Its sister fund, AP4, announced earlier this week that it had sold off nuclear weapons and oil sands investments before the end of 2018.
Both pension funds cited one of the changes in their governing law, which took effect on 1 January 2019, as a reason behind the divestment decisions.
The funds’ investment guidelines now demand that they should contribute to sustainable development by managing the funds in an “exemplary” manner.
AP1 said this required responsible investment and ownership, but added that this goal must be achieved without renouncing the overall target of long-term high returns.
Before the change, AP1 said the four funds had worked together on how to achieve the objective of exemplary management.
“Collaboration has included the development of a foundation for the management of the fund resources, guidelines for reporting on how the sustainability target has been achieved, and guidelines for which assets funds should not be invested in,” it said.
International conventions and agreements backed by Sweden had to be taken into account, it said. This ruled out nuclear weapons and tobacco.
Explaining the exclusion of nuclear weapons, the fund said it did not believe that the modernisation and upgrading of existing nuclear weapons matched the purpose of the UN Non-Proliferation Treaty, of which Sweden is a signatory.
On tobacco, AP1 said it did not believe investments in tobacco production were consistent with the spirit of the World Health Organisation’s Convention on Tobacco Control, which aimed to significantly reduce tobacco consumption and the harmful effects of smoking.
Meanwhile, the use of coal and oil sands, which had the worst impact on the climate, made it difficult to achieve the goals of the Paris Agreement, AP1 said.