The Fourth Swedish National Pension Fund (AP4) is increasing its sustainability ambitions through divesting from nuclear weapons and oil sands.

The government fund with SEK 367bn in assets implemented new investment guidelines at the start of the new year which imply a higher ambition level regarding sustainability, AP4 announced.

The new regulations state that the asset management operations are to be conducted exemplary by responsible investments and responsible ownership.

AP4 CEO Niklas Ekvall said in a statement that the fund welcomes that sustainability is now implemented in the law.

“AP4 is one of the leading pension funds when it comes to sustainable asset management and our ambition is to remain at the forefront. We have now decided to increase our ambitions and divest from companies related to nuclear weapons and oil sand,” Ekvall said.

After an assessment, AP4 found that the Non-Proliferation Treaty supports the decision not to invest in companies involved in nuclear weapons and that the current upgrades and the modernisation of nuclear weapon systems are not aligned with the intention of long-term disarmament as expressed in the treaty.

The fund said it is of the view that it makes economic sense to contribute to a transition to a low-carbon economy and the new guidelines for investments does not allow the fund to invest in companies were oil sand represents more than 20 per cent of turnover.

“Oil sand is a high carbon intensity fossil energy source. For that reason, AP4 assesses that oil sand must be phased out in a global transition to a low carbon economy in line with the UN Climate Convention and the Paris Agreement,” the fund explained in a statement.

The decision is also in line with the fund’s business strategy to reduce the portfolio’s climate risk exposure. AP4 has invested in low-carbon strategies in equities since 2012, reducing exposure to companies with large carbon dioxide emissions and fossil reserves.

AP4 has previously decided not to invest in companies involved in the production of tobacco, mines, cluster weapons, cannabis or companies where 20 per cent or more of the turnover come from thermal coal.

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