Swedish pension investors must increase their focus on climate and ethical investment issues or face new regulation, a governing party’s environment spokesman has said.
Johan Hultberg, MP in prime minister Fredrik Reinfeldt’s conservative Nya Moderaterna party but not a government minister, told IPE that the financial sector had recently shown increasing commitment to issues of sustainability, but that more work was needed.
“I believe that we will see more action from pension funds and other investors as a result of increasing pressure from customers and the public,” he said.
“An increase in voluntary consideration of environmental, climate and ethical aspects is preferred but greater political control can’t be ruled out.”
The MP’s comments come after he co-authored an article in a Swedish national newspaper with financial markets minister Peter Norman, a former head of AP7, which called on the industry and the state’s buffer funds to be more proactive.
The article stressed that there was no contradiction between being a socially responsible investor and building a portfolio aimed at achieving long-term returns.
Hultberg went on to repeat the article’s praise for Sweden’s AP funds, but said that the system, with over SEK1trn (€108bn) in assets, still had large holdings that were “dubious from an environmental or ethical standpoint”.
“I believe that greater transparency of the AP Funds will lead to an increased public pressure to invest sustainably,” he said. “We’ll also need to have a political discussion around the possible need to tighten up the guidelines for the AP funds.”
Arne Lööw, head of corporate governance at AP4 and chair of the buffer fund’s Ethical Council, stressed that considering the sustainability of its portfolio was not new for the buffer fund.
“It is an important question and the different AP funds have been and are working to address it in different ways,” he said.
Lööw pointed to the work undertaken by the various AP funds over the years, such as highlighting the carbon footprint of investments, which AP2 published in its annual report from 2009.
AP4, meanwhile, has sought to contrast the performance of its tailored low-carbon equity portfolio with that of more mainstream benchmarks.
At the end of 2013, the fund had around 7% of its global equity holdings committed to greenhouse gas-efficient investments.