AP2 has added “climate work” into its requirements for external private equity managers, and introduced assessments for human rights and deforestation.
The Swedish pension fund revealed in its latest sustainability report, published in English this week, that its carbon footprint decreased across listed equities and sustainable infrastructure in 2025, but grew or remained the same for all other asset classes.
In an attempt to tackle the trend, it embarked on a number of initiatives to strengthen the sustainability of its unlisted investments, which are run by third parties.
“During the year, we had in-depth discussions with several of our external managers, where we highlighted the importance of improved emissions reporting and addressed challenges for managers who do not yet report CO₂ data,” AP2 explained.
For its private equity investments, the fund used portfolio-level carbon footprints to assess exposure to climate transition risk, the credibility of its managers’ climate strategies, and their alignment with the pension fund’s overarching net-zero goal.
“Our due diligence process and side letter agreements now include requirements for climate work for new managers, which further strengthens the management of transition risks in the asset class,” it wrote.
The report also revealed that AP2 has started to evaluate managers’ approach to physical climate risks, covering their “ambition, strategies, action plans, reporting and actual implementation”.
“In December, we convened our external real estate investment managers for a joint discussion on climate issues, with special focus on how physical risks are identified and managed in their portfolios,” it added.
The fund also analysed its exposure to raw materials associated with high deforestation risk, concluding that they represented some 4% of the value of its private equity investments.
“Deforestation risk assessment and management issues are included in the fund’s due diligence for new managers and annual follow-up within private equity, real assets and non-listed credits,” it explained.
While AP2’s focus is on financial materiality for environmental issues, it stressed that, when it came to human rights, its focus was consistently “on risk to people – not financial risk”. It revealed it had developed a new template to assess its external managers on human rights, and has already used it to evaluate its real-assets managers.
The framework applies to all new investment decisions for private equity, and “will be evaluated in dialogue with managers during 2026”, the fund wrote.
