Swedish pensions and insurance group Folksam announced it is blacklisting gambling firms, saying the sector can cause addiction, which increases profits for these companies.

The firm said its supervisory board made the decision to exclude the industry at the end of last year, selling off all holdings in early 2020, and adding gambling to tobacco and controversial weapons on the company’s list of sin sectors.

Emilie Westholm, Folksam’s head of responsible ownership, said: “The operations in these companies are in themselves a breeding ground for developing gambling addiction and it is also impossible to avoid problem gamblers becoming contributors to increased profitability for the companies.”

Folksam said it is divesting in all firms generating more than 5% of their turnover from gambling. A spokeswoman for the company said it had decided not to disclose the value of these divestments.

Despite the advances that the gambling industry had made in recent years, such as services where players themselves can restrict their own access to the platforms and limit gambling amounts, Folksam said the fundamental problem remained.

“We cannot claim that investments in these types of businesses follow our vision. On top of this, the measures necessary would require too much work for us as owners, and we are not even sure measures could guarantee improvement of the problems,” said Westholm.

Folksam said its responsible investment work follows the United Nations Global Compact and the Organisation for Economic Co-operation and Development’s (OECD) guidelines and aims to contribute to the United Nation’s Sustainable Development Goals (SGDs).

Elsewhere in the Swedish pensions sector, the Swedish Pensions Agency (Pensionsmyndigheten) recently completed a three-year divestment of socially and environmentally damaging sectors in the assets behind the traditional savings portion of the country’s premium pension system (PPM) of which gambling was one.