AP2 dumps tobacco and nuclear firms in fresh ESG approach

Sweden’s AP2 has blacklisted around 60 tobacco companies and all firms involved with the modernisation and maintenance of nuclear weapon systems.

The SEK334.8bn (€31.5bn) fund – the second of Sweden’s four main state pension buffer funds – announced the changes to its portfolio as part of a decision re-evaluate its approach to the “underlying purpose” of international conventions.

The fund said in a statement: “AP2’s sustainability work is based on the conviction that it leads to an improved management return, thereby making a positive contribution to the Swedish income pension system and for pensioners.”

The fund said that, in line with the requirements of new investment rules regarding sustainable asset management that came into effect on 1 January, it had analysed the conventions aimed at restricting the use, scope or distribution of certain products or businesses over time.

“The fund has evaluated the need for a changed approach based on the underlying purpose of the international conventions,” it said.

AP2 said its divestment from tobacco companies was in line with the World Health Organisation Framework Convention on Tobacco Control, which targets a sharp reduction in tobacco consumption and the harmful effects of tobacco smoke.

“Divestments from companies that are involved both in the maintenance and modernisation of nuclear weapons systems are aligned with the intention of long-term disarmament of nuclear weapons in all countries as expressed in the Non-Proliferation Treaty (NPT),” the Gothenburg-based pension fund said.

AP2 said it had previously excluded nuclear weapons companies operating in countries that are not allowed to have them, according to the NPT.

According to the new legislation, the buffer funds must manage their assets “in an exemplary way” through responsible investments and responsible ownership.