Alecta, Sweden’s largest pension provider, has set out its interim climate goals for 2025, including a plan to conduct focused talks with 20 companies in its investment portfolio about their own climate strategies.
The SEK1.1trn (€108bn) pension fund unveiled the 2025 targets – part of its duties as a member of the Net-Zero Asset Owner Alliance (AOA) – in its second climate report in accordance with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.
Regarding engagement with companies, Alecta said it had set itself a target for 2025 of “focused climate related dialogues with 20 companies in accordance with the AOA’s engagement strategy.”
Peter Lööw, head of responsible investment at Alecta, said: “We have very concentrated portfolios, mainly based on our own fundamental analysis.”
For example, he said, Alecta’s equity portfolio consists of only around 120 companies.
“This means that we know what we invest in, and can use our ownership to engage, follow-up and support the companies we invest in to transition to a low-carbon economy,” Lööw said.
Alecta is one of the AOA’s founding members said it had also been part of developing the Target Setting Protocol.
In the first phase of protocol, the pension fund said AOA members are to adopt reduction targets for 2025 covering listed equity, corporate bonds and directly-owned real estate.
Lööw said 77% of the companies Alecta invested in reported Scope 1 and 2 emissions, and 17% of firms had approved science-based targets – and a further 11% had committed to setting such a goal.
“However, there is room for improvement,” he said, adding the pension firm’s aim was to support its holdings in their transition.
“Leading up to 2025, this involves having dialogues with those companies in our portfolio that have not yet set climate targets, to follow up with those who do have targets, and an overall focus on enhancing the quality of data and reporting from all companies,” he said.
As for the rest of Alecta’s interim targets, the emission reduction targets it has set are, for listed equity and corporate bonds, 25% in terms of tons of Scope 1 and 2 CO2 per SEK1m in revenue, and for directly-owned real estate, 50% in terms of kilos of scope 1 and 2 CO2 per square metre.
Alecta also has two 2025 goals for financing the transition. The first is to achieve transparency regarding the pension provider’s green investments, and the second is to participate in four roundtables and initiate dialogue with two Development Finance Institutions, according to the report.