SWEDEN - AP7, the Swedish pension fund buffer, is selling its equity stake in 10 companies producing cluster bombs and nuclear weapons, as part of its environmental, social and governance (ESG) negative screening policy.
Richard Grottheim, executive vice president, told IPE the firm has made an active decision to follow international treaties concerning issues such as human rights and the use of weapons, so is moving ahead of the recent Dublin agreement to ban the use of cluster bombs.
The pension fund's move will see AP7 sell its investments in 10 companies including Lockheed Martin, ERDS and General Dynamics as soon as practically possible, though its decision to do so will have only a "negligible market impact" said Grottheim.
"We are no longer investing in companies both producing cluster bombs and nuclear weapons. We have a framework that requires us to be objective as possible. We are trying to get the Swedish position in every issue and the Dublin meeting showed we are closer and closer to a convention on this issue," said Grottheim.
Pensions funds in several European companies have announced their intention to withdraw from investing in cluster bombs over the last year, after the issue was sparked in the Netherlands by a documentary revealing the major Dutch pension funds were investing in such assets.
The Swedish buffer funds now have an ESG framework encouraging active engagement in ESG matters, but officials have pointed out until now they were unable to divest from assets such as companies producing cluster bombs because the policy is to divest only where there are international treaties in place discouraging or banning activities such as human rights abuses or the production of certain products.
That process has now been assisted last Friday after 111 countries adopted a draft treaty at a meeting in Dublin, Ireland, to ban the use of cluster bombs within eight years.
AP7 has so far excluded more than 25 companies as investments under its ESG framework, and will continue to adopt negative screening, added Grottheim.
But the fund is stepping up its ‘greening' credentials, said Grottheim, as AP7 is due to complete its review of a tender for what he describes as "the green tech space".