One of northern Europe’s largest pension funds Andra AP-Fonden (AP2) is withdrawing investment from around 60 tobacco and nuclear weapons companies.
The move is a further step in the Sweden-based fund’s attempt to integrate sustainability into its portfolio management.
In accordance with a recent act regarding sustainable asset management, AP2 has reviewed conventions aimed at “restricting the use, scope or distribution of certain products or businesses over time”.
The new regulations for AP funds, which came into effect at the beginning of 2019, state that assets must be managed in an “exemplary way through responsible investments and responsible ownership”.
Tobacco and nuclear weapons companies no longer fit the fund’s criteria.
“The fund has evaluated the need for a changed approach based on the underlying purpose of the international conventions,” AP2 stated.
Divestment from firms involved in both the “maintenance and modernisation” of nuclear arms systems aligns the fund’s strategy with the Non-Proliferation Treaty (NPT) – the long-term disarmament of nuclear weapons across the globe.
AP2 previously excluded nuclear weapons companies operating in countries forbidden to have them by the NPT, which was negotiated by the UN-sponsored Eighteen Nation Committee on Disarmament based in Geneva.
Taking effect in 1970, the treaty was designed to prevent the spread of nuclear weapons and weapons technology, with the ultimate goal of complete nuclear disarmament. Instead of funding potential destruction, it aims to foster cooperation in the peaceful uses of nuclear energy.
The fund’s decision to divest from tobacco companies aligns the fund with “the intention of the convention on tobacco control: a sharp reduction in tobacco consumption and the harmful effects of tobacco smoke”, AP2 said.
The fact that sustainable investments and divesting from unsustainable companies are “high on the agenda” in the industry is positive, said Ulrika Danielson, head of corporate governance at the fund.
However, “how different investors work with sustainability depends on the assignment you have,” she said.
Although AP2 tries to “integrate sustainability” into everything it does, Danielson added, the team is aware that there is still much to do.
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