Working towards a carbon-neutral portfolio by 2050

Focus on climate

Climate change and the ongoing transition to a less fossil fuel-dependent economy, in line with the Paris Agreement, is one of the greatest challenges of our time and plays a key role in sustainable development and future economic outcomes. Första AP-fonden believes that climate change presents a major risk that impacts opportunities for long-term value creation over generations.

This affects not only the way in which we invest, but also how our investments evolve over time. That is why the Board of Directors has defined climate change as a specific focus area, and our long-term goal is for our portfolio to be carbon-neutral by 2050, in line with the Paris Agreement. Our initial interim target is to halve the Fund’s carbon footprint by 2030.

Our goal will primarily be achieved through the reduction of carbon emissions by the companies in which we invest. The portfolio’s carbon footprint is measured and published annually as part of the Första AP-fonden Annual Report in accordance with the AP Funds’ joint guidelines, and we closely monitor the development of companies’ work on reducing their emissions and report the percentage of emissions aligned with science-based climate targets under the Science Based Targets Initiative.

”We work to ensure that the companies we invest in manage climate risks and adopt credible transition plans”

Climate-related risks

The companies in which Första AP-fonden invests are exposed to climate-related risks, and management of these risks can impact their value growth and returns. That is why we analyse both the transition risks and the physical risks inherent in climate change to which companies are exposed. Transition risks relate to how an investment may be affected by the transition to a fossil-free economy, while physical risks relate to how investments may be affected by climate-related factors such as rising temperatures or extreme weather events. The latter is of particular relevance for less liquid, longer-term investments.

Learn more about the Fund’s work on sustainability risks

The carbon footprint provides a basis for assessing certain climate-related risks and prioritising our stewardship practices. This measure also provides a historical picture and needs to be supplemented with forward-looking analyses of the world around us and how companies’ emissions may alter. That is why we also support initiatives such as the Transition Pathway Initiative, which aims to improve access to climate data and analyses.

As an owner, we engage in voting and advocacy work to ensure that the companies in which we invest understand and address relevant climate risks and adopt credible transition plans and ambitious climate targets. Among other things, the AP Funds Council on Ethics prioritises efforts to promote climate transition in carbon-intensive industries. We are also pleased to work with other investors through initiatives such as Climate Action 100+ and the Net Zero Engagement Initiative.

Learn more about the initiatives and collaborations we engage in

As part of our climate risk management, this may involve selling assets when improvements fail to occur, or when we identify risks that we do not believe we can manage well. For instance, we have gradually reduced the portfolio’s exposure to companies conducting significant fossil fuel-based activities, as we believe that a transition to a less fossil fuel-dependent economy entails greater uncertainty for companies in the coal, oil and gas industry. 

Learn more about the industries that we have chosen not to invest in