Sweden’s KPA Pension, part of Folksam Group, has invested just over SEK 1bn in a bond issued by the City of Stockholm, which aims to support the green transition.

KPA Pension’s share is part of an overall SEK 2.5bn investment by Folksam Group.

The bond, which is the first of its kind and has a five-year maturity, aims to invest in the city’s water infrastructure. KPA Pension believes insurance companies have a ‘clear interest’ in investments that support the climate adaptation of water infrastructure, to reduce the risks of customers suffering climate-related damage.

In August last year, Storm Hans hit large parts of Sweden and caused devastation, costing Sweden’s five largest insurance companies an estimated €1bn.
The bond aims to upgrade the city’s wastewater treatment infrastructure to reduce the risk of widening during heavy rainfall, build a new high-tech facility for waste sorting, and upgrade the main pipeline network.

Commenting on the announcement, KPA Pension CEO, Camilla Larsson, said: “Pension capital is well suited to make this type of investment as it has a long-term perspective. Municipal bonds are a good example of how we create returns for KPA Pension's customers and at the same time contribute to sustainable social development.”

Folksam Group investment manager, Marcus Blomberg, added: “Last year's torrential rain and flooding demonstrated the need for investment in water infrastructure, such as sewage facilities, across Sweden.

“The City of Stockholm is conducting proactive climate adaptation work and planned investments are a continuation of important climate adaptation projects already underway.”

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