Swedish pension provider, Alecta, has said it is taking a stand against investments in tobacco and commercial gambling companies.

Alecta is one of Sweden's largest investors with a managed capital of approximately SEK 900bn. The money comes from occupational pension provisions for approximately 2.6 million Swedes and 35,000 companies.

The provider said it is publishing three additional positions explaining its investment decisions on commercial gaming, tobacco and its view of human rights. Previously, the company has reported its views on coal, weapons, compensation in listed companies and government bonds.

Commenting, Alecta’s asset management sustainability manager, Peter Lööw, said: “The positions should be seen as a compass on how we look at responsible investments, and clearly show what we do not want to invest in. We are now taking a stand against investing in games or tobacco, something we have not invested in for many years, and which we clearly wants to confirm that we will also not do in the future.”

As a long-term investor, Alecta said its investments need to be focused on companies that are well-managed and have a business model with a long sustainability date. However, it said that there is also a “moral” reason for its decisions.

“We do not see, for example, coal being a sustainable investment. Coal as an energy source has passed the best date due to its large climate footprint and the large emissions of carbon dioxide. Commercial games are something we choose not to invest in for other reasons.

“We have considered that business models that involve increased risk of gambling addiction are not compatible with a broader view of long-term value creation due to high risks of costly losses for both individuals and society. There are also regulatory risks in the business model itself,” Lööw added.

Alecta's philosophy when investing in equities is to invest in a few carefully selected, preferably publicly listed, companies. The equity portfolio comprises of just over 100 listed shareholdings, all reported on alecta.se.

“The companies should have a business model that we understand and that we believe contributes to our customers' pension capital growing. We have no index management, which means that we make direct decisions about what is included in our portfolio,” the provider noted.

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