Climate and the environment - a focus area

AP4 has chosen two focus areas in our work on generating the best possible return over time for our seniors: climate change and corporate governance. These areas were selected because they have major financial impact on all AP4's investment.

Global threat  

One important part within sustainability is the climate change. Climate change is about how climate affects the earth, its nature and its inhabitants and thus the profitability of all AP4’s investments. According to AP4’s analysis, climate change is the imminent global threat to future performance and safe pension. Climate changes expected effects are noticed in several reports as well as assessments of how the earth is affected at various expected temperature increases.

Safeguard assets and the future

AP4 has chosen Climate and environment as a focus area to safeguard AP4’s assets and returns from an expected revaluation of carbon emissions and fossil fuel reserves, and contribute to the transition to a climate-neutral society. The administration is constantly working to, among other things, develop and invest in different strategies and contribute with their knowledge about low-carbon strategies and green bonds.

Strategies for lower risk and high return

So far, AP4’s strategy for low carbon investments have produced a positive contribution to results, with returns in line with set targets. But it is still too early to assess such a long-term strategy.

AP4 believes that sooner or later, there will be a global price on carbon. When this happens, the worst companies will suffer a double shock from both lower valuations and lower profitability. With our low-carbon investments, AP4 has received a “free option” on the basis that carbon dioxide is incorrectly priced.

Several strategies used together, having the same goal, is typically more successful than simply betting on a single strategy - this is how AP4 works with sustainability.