Swedish government employees’ pension fund Kåpan Pensioner announced a series of environmental, social and governance (ESG) initiatives it has taken so far this year to up its game in sustainable investment, and said it plans to extend the scope of its fossil-fuel strategy.
The SEK100bn (€9.8bn) fund also said it was increasing its mandate for green bonds, with its holdings of the environmental debt having grown in 2020, and had taken action to cut sustainability risk in its global fixed income portfolio.
Kåpan said in a statement: “We have taken further steps in our sustainability work during 2020, both at an overall level and within most of our asset classes.”
Progress this year included signing the UN-supported Principles for Responsible Investment (UNPRI), the pension fund said.
It said green bonds now accounted for 6% of its fixed income portfolio, which compares to the 4% allocation the pension fund declared this time last year.
“Next year, we will increase the rate of investment in green bonds,” Kåpan said.
In global fixed income management, the fund said it would review its holdings in government securities in emerging and frontier markets in order to reduce its sustainability risks.
“We sold a fund earlier this year against the background of dubious holdings in some countries’ government bonds,” it said, without naming the fund.
From an ownership perspective, Kåpan said it had conducted “impact dialogues” with 100 companies in 2020, together with other investors - up from the 48 such conversations it reported in 2019.
The Sundsvall-based pension fund said it had not generally participated in the annual general meetings (AGMs) of firms where its ownership was small this year, because of its limited holdings and requirement for efficient management.
“But in 2020, we have taken greater ownership responsibility and voted at the AGMs for 70% of our listed direct Swedish companies,” the fund said.
Regarding fossil fuels and equities, the pension fund said it had already axed energy firms using coal from its portfolio when it switched to managing most of its global shares directly in 2018, but had now begun to exclude any firms that extracted oil – as well as those without plans to change their business models to aid the green transition.
“We will shortly set a strategy for other fossil holdings, including fossil reserves, gas extraction and the distribution of fossil energy,” Kåpan added.