Swedish pension fund AP7 has unveiled an updated climate action plan centred on active ownership, transition investing and long-term net-zero ambitions, warning that climate change remains a material financial risk for pension savers.

The AP7 Climate Action Plan 2026 outlined how the SEK 1.5trn pension fund intends to support portfolio companies in reducing emissions and adapting to a low-carbon economy, while also expanding investments in businesses contributing to the climate transition.

AP7 said its strategy would continue to focus on active ownership, with dialogue and voting identified as its primary tools for influencing companies and asset managers.

As part of this approach, AP7 has strengthened its transition portfolio, which includes both high-emitting companies judged capable of transitioning and businesses providing climate solutions.

The fund confirmed that the transition portfolio would account for 10 per cent of its equity fund by 2027, while also setting a target for all companies in the portfolio to conduct “credible transition work” by 2030.

In the report, AP7 chief executive officer, Pål Bergström, said investors needed to balance company-level engagement with wider policy influence.

“In our dialogue with individual companies, for example, within our transition portfolio, we set expectations and focus on how they adapt and transition given prevailing regulations and incentives," Bergström continued.

“At the same time, the fundamental rules of the climate transition, such as carbon pricing, energy regulation, and building standards, are shaped by policymakers and standard-setters rather than by companies themselves, and therefore require engagement at the system level.”

The report also warned that the risk of a “disorderly transition” was increasing, as progress on climate policy had fallen short of expectations following the Paris Agreement.

AP7 stressed that climate change represented a systemic risk for long-term investors, arguing that diversification alone could not shield pension savers from the effects of rising temperatures and transition disruption.

Alongside its equity strategy, AP7 outlined expanded climate objectives across fixed income, private equity and real estate investments.

In fixed income, the fund said it was broadening its focus beyond green bonds to include sustainability-linked financing supporting emissions reductions and climate adaptation in the real economy.

Meanwhile, AP7 said all companies in its corporate bond portfolio would need to reach at least “aligning to a net-zero pathway” status by 2030 under the Net Zero Investment Framework model.

The fund also highlighted the importance of active ownership and investor collaboration, noting that it continued to participate in initiatives including Climate Action 100+, the Institutional Investors Group on Climate Change (IIGCC), the Net Zero Engagement Initiative and the Taskforce on Nature-related Financial Disclosures (TNFD).

Bergström acknowledged that the political prominence of climate issues had weakened in recent years but stressed that AP7 remained committed to its long-term climate objectives.

“The path ahead will be marked by uncertainty and tradeoffs. But through clear expectations, consistent priorities, and a long-term perspective, AP7 can continue to contribute to a transition that is both financially and socioeconomically necessary,” he concluded.

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