AP7 excludes BP, Woodside, Chevron and TotalEnergies over Paris alignment concerns
AP7, Sweden’s largest public pension fund, has adopted widespread exclusions of major fossil fuel companies, raising concerns that these firms are no longer aligned with the Paris Agreement
The defined contribution fund, which manages around SEK1,440bn (£115.7bn) on behalf of nearly six million Swedish pension savers, has introduced significant new exclusions of fossil fuel producers, according to its latest exclusions list released in December.
Going forward, the fund will exclude some of the world’s largest oil and gas producers, including BP, TotalEnergies, Woodside and Chevron, as well as Petrobras. AP7 said these companies have expanded their oil and gas output in recent years.
The changes mean AP7 has now adopted an almost complete exclusion of fossil fuel companies, having divested from Shell several years ago over human rights concerns. The fund remains invested in Equinor.
Nevertheless, the exclusions are likely to have a significant impact on AP7’s portfolio. Some 100% of its Såfa default fund for members under 55 is invested in equities.
In practice, the new exclusions, which also include some mining companies and exposure linked to the conflict in Myanmar, amount to a total value of SEK18bn (£1.45bn), Johan Florén, chief communication officer at AP7, told Net Zero Investor.
AP7 uses the Paris Agreement as a key framework for its risk-based exclusions. Acknowledging that engagement with fossil fuel companies has become more challenging, the fund said it has chosen to concentrate its efforts on a smaller number of companies with greater transition potential.
"Our mission to place particular emphasis on promoting sustainable development has not become easier over the past year. Ten years after the Paris Agreement, it is clear that geopolitical tensions and economic realities are pushing the climate transition aside – while climate change continues to
pose a systemic risk to the global economy, and thus to the future returns of our savers" noted AP7 CEO Pål Bergström in his opening remarks to the fund's new climate strategy.
AP7 has launched a Transition Equities fund in 2023, which actively invests in more than 2000 companies. BP currently accounts for 0.11% of the index, Woodside 0.03%, TotalEnergies 0.14% and Chevron 0.26%.
Under the new policy, companies with a “significant climate impact” are defined as those that produce at least 50mn barrels of oil per year or 5mn tonnes of thermal coal annually. The criteria also apply to companies that derive at least 50% of their revenue from the production and or exploration of oil and gas, or at least 25% from thermal coal. Exposure to Arctic oil extraction is also listed as a ground for exclusion.
AP7 has previously been an active voice at AGMs of major energy firms such as TotalEnergies and BP. In 2024, it filed a resolution in collaboration with Swiss Ethos Foundation at the TotalEnergies AGM, calling for a stricter separation between the roles of chair and CEO. It has also repeatedly backed resolutions filed by advocacy group Follow This at BP’s AGM, urging the company to align its business practices with the Paris Agreement.
