Sweden's national pension funds might drop Volkswagen as an investment option as the emissions scandal that has engulfed Europe's biggest carmaker wipes out returns.
AP3, Stockholm, which managed 304 billion kronor ($36.5 billion) at the end of June, and the Ethical Council it has with the AP1, AP2 and AP4 funds will now evaluate the emissions scandal, Peter Lundkvist, head of corporate governance at AP3, said by phone Tuesday.
While VW “was prior to this definitely a company that belonged in our portfolios,” that might no longer be the case, Mr. Lundkvist said.
The pension fund is now trying to decide whether VW should be blacklisted based on any potential breaches of conventions signed by the Swedish state, Mr. Lundkvist said. Based on what the pension fund has seen so far, “it's unlikely that we would exclude the company because of the emissions scandal,” he said “But we may decide not to hold Volkswagen shares because of our view on future returns.”
AP3, which is one of five so-called buffer funds within the Swedish national pension system, owned 244,100 Volkswagen shares valued at 390 million kronor at the end of June. The pension fund comments on its shareholdings only in its annual and interim reports and cannot disclose how much of VW it currently owns or whether it has divested its stake, Mr. Lundkvist said. The VW holding has been part of an actively managed portfolio, he said. The AP4 fund owned 43,280 shares in VW valued at 83.2 million kronor at the end of June.
The Ethical Council, which sets guidelines for four of the country's six AP funds, will be in contact with VW to get a sense of how the company is dealing with the scandal, Chairman Ossian Ekdahl said in an e-mail Tuesday.
“I don't want to speculate on what the Ethical Council's analysis will result in,” Mr. Ekdahl said. “But firstly, we chose to start a dialogue with the company in question in order to ensure that the incident isn't repeated in the future. Exclusion is only an alternative when we don't reach our goal through dialogue.”
Also on Tuesday, the $184 billion California State Teachers' Retirement System, West Sacramento, chided Volkswagen for rigging some diesel engines to cheat on U.S. emission tests and said it is evaluating its exposure to losses from the scandal.
CalSTRS held 37,580 Volkswagen shares valued at $4.85 million as of Sept. 25 and 284,856 of the company's preferred shares worth $34.2 million.
“CalSTRS is clearly disappointed that a company in our portfolio has managed to simultaneously damage both its shareholder value and the environment that we're pledging to protect,” said Michael Sicilia, a CalSTRS spokesman. “As owners, we actively monitor our holdings and expect our portfolio companies to govern themselves responsibly.”
The $292.2 billion California Public Employees' Retirement System, Sacramento, said it has about $165 million invested in Volkswagen. CalPERS is “examining the situation and (will) continue to monitor,” spokesman Joe DeAnda said.