Climate and the environment - a focus area

Awareness that our planet’s resources are finite is increasing steadily. The climate and environment serve as the foundation for life as we know it today. It concerns essential and often global resources such as clean air and water, which all too often are taken for granted and are seldom priced correctly. The climate and environment are considered to have a material impact on the financial value of all of AP4’s assets.

For AP4 as a long-term investor, Climate & Environment is a natural choice as a priority focus area, and is also the foundation for being able to achieve all of the UN’s Global Sustainable Development Goals.

In the international investor community AP4 was early to con-clude that environmental and climate challenges will have a major long-term impact on investments’ return potential and risk. As early as 2012 we began developing and investing in accordance with low-carbon strategies. AP4 also became a significant investor in green bonds at an early stage and has thereafter actively supported development of this market.

Although AP4 is a comparatively large institutional investor, we represent only a very small part of the total investor community. To make a greater impact than what would be warranted by only our own assets under management, we are making a concerted effort to activate capital also from other investors for sustainable investments. For example, AP4 is a co-founder of the Portfolio Decarbonization Coalition (PDC), which to date has mobilised more than USD 800 billion for low-carbon investments. As another example, AP4 has participated in designing indexes and has been the first investor in newly started funds that other investors have also been able to invest in.

Developments in sustainability are unfolding at lightning speed in the investor community — in the corporate sector as well as in the political system.

Carbon footprint reporting

AP4 and other AP Funds measure and report the carbon footprint of their investments yearly as part of their broader work on addressing climate change. While measuring carbon footprint provides important knowledge, it also has limitations as a metric. The AP Funds have a council for cooperation composed of representatives from each of the AP Funds to coordinate and monitor developments surrounding climate reporting.

Carbon dioxid indicators 2018 2017 2016 2015 2014 2013

Absolute carbon footprint, corresponding to owned share of companies’ total emissions (million tCO2e)¹

2.42

2.35

2.60   

2.45  

2.80

3.28

Carbon dioxide intensity, where owned share of absolute carbon footprint is measured in relation to ownership share of companies’ market caps,2 (tCO2e/SEK m)1

13.3

11.5

14.5  

14.0  

16.2

23.1

Carbon dioxide intensity, where absolute carbon footprint is measured in relation to companies’ revenues, harmonious average, (tCO2e/SEK m)1

15.9

13.5 

17.6

22.2

   

Carbon dioxide intensity, where average carbon footprint is measured in relation to companies’ revenues, mathematical average, (tC02e/SEK m)1

14.3

15.3

       

Identified market value as share of total fund capital, %1

50.0

56.5 

55.7

56.4

   

Identified market value as share of total equities, %1

95.4

 97.2

95.5

99.8

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