Sweden’s AP funds’ fossil fuel exposure decreases by SEK 11bn

The first four AP funds in Sweden have reduced their fossil fuel holdings by SEK 11bn over a 2-year period, the Swedish government has revealed.

It follows new investment rules, which were introduced in 2019 following a political agreement between the Social Democrats, the Center Party, the Liberals and the Green Party.

In 2018, the first, second, third, and fourth AP funds had fossil holdings amounting to almost SEK 15bn. Since the new investment rules came into force in 2019, fossil holdings have decreased to SEK 4bn, as of the end of 2020.

In 2020, the total result for the First-Fourth and Sixth AP funds, the buffer funds, amounted to SEK 132bn after costs. This corresponds to a return of 8.5 per cent, which can be compared with 5.2 per cent – the average for a selection of foreign pension funds with similar assignments and size as the AP funds.

Since the current system was introduced in 2001, the AP funds' average annual return has been 6.8 per cent per year, which can be compared with the income index – which has increased by an average of 3 per cent per year. The income index is the basis for the calculation of the debt in the income pension system.

At the end of 2020, the buffer funds' capital amounted to SEK 1,696bn, which is SEK 100bn higher than at the previous year-end. In 2020, the net flow was SEK 33bn from the buffer funds to the income pension system.

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