AP2, Gothenburg, Sweden, has divested its 670 million Swedish kronor ($76.6 million) of holdings in power utilities companies whose profits derive primarily from carbon-based electricity generation.
The 293.9 billion Swedish kronor pension fund said in a statement on its website Wednesday that it is reducing its financial risk in power utilities of these kinds, and will not retain holdings in 28 companies as a result.
The decision came as part of the second climate risk assessment that AP2 has conducted, following a 2014 consideration of fossil-fuel companies. As a result of the first assessment, the pension fund divested holdings in 12 coal producers and eight oil and gas companies.
“The decision involved disinvestment from approximately a quarter of all electricity-generating companies, reducing the fund's exposure to financial risk in the power sector,” said CEO Eva Halvarsson in the statement. “Our potential for generating value over the long term is greater if we invest in other companies instead.”
The statement added that these 28 companies “lack a convincing strategy for diminishing their climate impact.”
A spokeswoman for AP2 said the divestments have already taken place, and since these companies have a significant percentage of profits from the carbon-based generation of electricity and lack a convincing strategy for diminishing their climate impact, the pension fund did not engage with the companies beyond verifying data.
AP2 will continue to assess the climate risks that its holdings present, with the next phase assessing the entire portfolio considering several climate scenarios.
The spokeswoman added that the capital freed up has been reinvested in all sectors.