AP2, Gothenburg, Sweden, is to divest from coal and oil and gas production companies to reduce its financial risk in fossil-fuel-based energy, said a spokeswoman.
The divestment from 12 coal companies and eight oil and gas firms will represent 840 million Swedish kronor ($116.7 million) of assets.
The 280.3 billion Swedish kronor pension fund will divest in the fourth quarter, said the spokeswoman. The assets are largely managed internally, and the capital released when the pension fund sells its holdings "will be invested in other companies where we believe they are creating better value. We will reallocate the assets across different sectors," she said.
"Our starting point for this analysis has been to determine the financial risks associated with the energy sector," said Eva Halvarsson, CEO at AP2, in a statement on the fund's website. "By not investing in a number of companies, we are reducing our exposure to risk constituted by fossil-fuel-based energy. This decision will help to protect the fund's long-term return on investment."
The fund's analysis of coal production companies showed that the majority of turnover derived from thermal coal sales. The negative environmental and health impacts of coal will affect demand, the fund said in the statement. Some oil and gas companies featured exposure in high-cost projects, and the fund said it believes these companies face serious climate-related financial risks and "that it is highly likely that these projects may either be stranded or unprofitable."