Sweden’s Minister of Finance, Max Elger, has praised the first to the fourth AP funds’ work on sustainability at an open hearing on sustainability with the CEOs of the funds.

Rounding up the committee hearing, Elger, said: “Today, the first to the fourth AP funds manage almost SEK 2,000bn. Since 2001, the funds' returns have contributed to the value of buffer capital increasing by almost SEK 1,400bn. I regard their mission with great humility and am impressed that the funds have taken such great strides forward in their sustainability work.”

Since 1 January 2019, the AP funds have had a new goal for investment activities: The capital in the funds must be managed in an exemplary manner through responsible investments and responsible ownership. Particular emphasis is placed on how sustainable development can be promoted without sacrificing the overall goal of high returns and low risk.

The hearing saw each CEO present work on how the funds are living up to this goal. AP1 CEO, Kristin Magnusson Bernard, said: “The sustainability mission is an integral part of everything we do. We have moved forward in the area of sustainability and I am proud of the results, but we have not sacrificed good returns or sound risk management.”

She described that sometimes the divestment of various industries is part of AP1's strategy to limit environmental, social and governance (ESG) risks and to be able to prioritise the impact resources.

“This is, for example, the reason why we divested from fossil fuels. But influence and non-investment should not be seen as opposites without complementarity. If you invest, you reduce the opportunity to influence but limit your risk and can influence elsewhere,” Magnusson Bernard explained.

“When it comes to responsible ownership and corporate governance, it is something that has been high on the agenda since the fund started. If you want to be a responsible owner, working actively with corporate governance is a given tool for influencing the companies you invest in,” AP2 CEO, Eva Halvarsson, said.

AP3 CEO, Kerstin Hessius, emphasised that AP3 also does not see a conflict between return and sustainability.

“Long-term sustainable investments become profitable over time, that is our investment conviction. We do not have the opportunity to save the world, but we have the opportunity to contribute to a better world by working with sustainability risks and opportunities.”

Hessius agreed that sustainability issues are often driven by emotions, while the AP funds strive to be research- and fact-based. This means that the funds have to withstand criticism from time to time.

“For effective sustainability work, it is important that we get companies on our side and not against us, we believe in dialogue and cooperation. Sometimes it can be perceived that we are not critical enough externally, but we prioritise achieving results over perception.”

AP4 CEO, NIklas Ekvall, described AP4's five strategies within their sustainability work. From transparent measurement, through to having sustainability in all investment processes, checking sustainability risks in their investments and investing in sustainability trends to influence as an owner as a fifth point.

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