Swedish pensions provider SPP and its Norwegian parent Storebrand have excluded another 21 companies from their investment universe on the grounds of sustainability.

The latest moves bring the total number of businesses blacklisted by the Norwegian financial services group to 176, 40 of which are climate-related, Storebrand said.

Christine Meisingset, head of sustainable investment at Storebrand, said: “To ensure a good, long-term return for customers, we have to increase investments in those companies that have a smart and sustainable business and avoid the companies we do not believe in.”

SPP said climate change was the greatest risk factor in sustainable development and posed a high risk to the financial stability of the company’s investments.

Eleven companies have been excluded following a thematic analysis of the palm oil industry.

At around the same time, 10 companies were struck off the list of potential investments after an analysis of the power industry.

These power companies were removed because they had the highest percentage of electricity generation from coal.

“We can not sell off entire industries at once,” Meisingset said, adding that this would be too risky for customers in the short term.

But Storebrand could exclude these companies to secure a long-term return, she said.

“We will continue to have some exposure to coal, but we have removed those companies with the greatest exposure in the two main sectors,” she said.

SPP and Storebrand said they would continue to reduce fossil exposure gradually, but in an orderly and manageable way.

Storebrand said it has a policy of not revealing the names of excluded companies.

Explaining the exclusions resulting from the palm oil sector analysis, the firm said palm oil plantations were seen as the main factor behind the destruction of tropical forests, with the devastated areas accounting for 15-20% of global greenhouse gas emissions.

In addition to this, the plantations have a negative impact on the climate, and palm oil production areas include biodiversity hotspots, Meisingset said.

Palm oil plantations have also been the subject of many conflicts related to human rights, she said.

However, she said there were hopes that signs of stronger regulation in the sector would make the industry more sustainable.

The next sector to be analysed by the financial services group will be the mining industry, Storebrand said.