The Second AP Fund (AP2) is reducing its financial risk in power utilities, whose profits derive primarily from the carbon-based generation of electricity. Consequently, the Fund will not retain holdings in 28 power utilities. These combined holdings have a total market worth of some SEK 670 million.
The Second AP Fund’s climate-risk assessment of the power sector derives from its commitment to address ethical and environmental concerns without compromising the overall target of a high return on invested assets. This assessment is therefore based on a financial perspective, a consequence being that the Fund has decided it will not invest in 28 power utilities, whose profits derive primarily from the carbon-based generation of electricity.
This is the second climate-risk assessment conducted by the Fund. The first such assessment, concerning fossil-fuel companies, was conducted in 2014. This led the Fund to divest holdings in 12 coal producers as well as 8 oil and gas companies.
“The decision involves disinvestment from approximately a quarter of all electricity generating companies, reducing the Fund’s exposure to financial risk in the power sector. Our potential for generating value over the long term is greater if we invest in other companies instead,” states Eva Halvarsson, CEO of the Second AP Fund.
The power utilities identified derive a significant percentage of their profits from the carbon-based generation of electricity and lack a convincing strategy for diminishing their climate impact.
The Fund has holdings amounting to some SEK 670 million in the companies that have been identified.
The process of assessing the climate risks posed by the Fund’s holdings will continue over the coming years. In the next phase, the intention is to conduct an overall assessment of the portfolio, involving a number of different climate scenarios, to increase the understanding of how the Second AP Fund’s investments are affected.
For further details, please contact the Second AP Fund’s CEO, Eva Halvarsson or Ulrika Danielson, Head of Communications, at +46 (0) 31 704 29 00.