The Fourth Swedish National Pension Fund is to invest in a new emerging markets fund with companies that have both lower carbon emissions and less fossil fuel reserves.
AP4 believes that current company valuations fail to reflect the rising costs of fossil fuels. The investment is a step to position AP4's global equity portfolio to benefit from the transition to a low carbon economy. The equity fund has been created in partnership with Northern Trust, a leading global asset manager, and will be available to other investors.
The equity fund excludes both companies with high greenhouse gas emissions and companies with extensive reserves of fossil fuels based on a new index. Companies with high volumes of potential carbon emissions will therefore be removed from this index.
- With few exceptions, carbon dioxide is now widely recognized to have a negative impact on the climate. We believe that these companies will be valued differently in the future and that greenhouse gas emissions will be associated with higher costs in the long term. Hopefully, this will also increase the pressure on companies to lower their carbon dioxide emissions, says Mats Andersson, CEO at AP4.
- We are continuing to see demand from sophisticated institutional investors for funds that offer the attractive potential returns generated by emerging market exposure whilst enabling them the ability to tailor their exposure to incorporate ESG criteria, said John Krieg, Managing Director of Northern Trust’s asset management arm in Europe, the Middle East and Africa.
- We are pleased to work in partnership with AP4 on this solution, which is a significant step towards lowering long-term risks in their global equity portfolio.
The initial investment in the equity fund will be made in 2013 and will replace a large share of AP4's current exposure to this region. The investment will complement AP4's previous carbon-efficient investment in the U.S. stock portfolio.
Stockholm, October 7, 2013
For more information, please contact:
Pia Axelsson, Manager Corporate Governance, phone +46(0)8 787 7572
Björn Kvarnskog, Head of Global Equities, phone: +46 (0)8 787 7565
Mats Andersson, CEO AP4, phone +46 (0)8 787 7551