Magnus Billing tells IPE he’s keen to spend his time in green investment, but doesn’t think mainstream capital has all the answers

The former head of Sweden’s biggest pension fund has said he is prioritising sustainable and green finance as he looks for a new role.

Magnus Billing was forced to step down as chief executive officer of Alecta in April, following huge losses at the SEK1.2trn (€105bn) occupational scheme as a result of its high exposure to the US banking sector, including the now-defunct Silicon Valley Bank.

Before joining Alecta in 2016, he spent more than a decade at the Nordic arm of stock exchange giant Nasdaq, including nearly three years as its CEO.

But now he is hoping to pursue his interest in sustainable finance more closely.

“I’d like to take my departure [from Alecta] as an opportunity to get more into the sustainability field, although I’m not sure how yet – I just know I’d like to try if possible,” he told IPE.

Like many of Sweden’s large pension funds, Alecta has been a vocal champion of responsible investment for many years. Under Billing’s leadership, it introduced an internal carbon price and adopted net zero targets for its portfolio.

But, he said, the responsible investment industry has been slow to engage with the idea of finding new solutions to the climate crisis.

“We need big innovations, and I see very little discussion about how mainstream capital can effectively support the kind of technological developments required in key hard-to-abate sectors like cement, steel and shipping.”

He continued: “We’ve talked about mainstream capital for so many years – that’s been the focus of our efforts on the climate transition. But I seriously doubt that mainstream capital has all the answers. I think we need to focus more on all the different parts of the value chain.”

Venture capital and private equity are likely to be more suitable asset classes through which to foster green innovation, Billing suggested, although he noted “real limitations when it comes to other parts of responsible investment, like transparency and governance” in the alternatives space.

While there is appetite in some corners for asset owners to increase their exposure to alternatives in order to make higher returns, growing market volatility is also driving liquidity constraints that will make it difficult to allocate more heavily to these segments over coming years.

“There will be limits to how much of pension and insurance capital will be able to move over to private markets,” said Billing. “But there are so many business opportunities in climate, and that’s an area that interests me a lot.”

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