A major Swedish pension fund announced that it will "no longer invest in fossil fuels."
Första AP-fonden (AP1), which is one of five pension funds in the country's national income pension system, outlined the reasons for its decision in a statement issued Monday.
The Stockholm-based fund explained that the move toward a low-carbon economy less reliant on fossil fuels represented "a substantial uncertainty for companies involved in coal, oil and natural gas activities."
It added that "continued investments related to these activities can increase the financial risk exposure of the fund" and said its decision was one measure being taken to manage the fund's "climate risk exposure."
As of December 31 2019, AP1 had 366 billion Swedish krona (around $36.82 billion) of assets under management.
On Monday, the fund's chairman, Urban Hansson Brusewitz, described divesting from fossil fuels as "an efficient way for the fund to manage the financial risk associated with a transition in line with the Paris agreement."
He went on to state that AP1 had "decided to develop a roadmap and measurable targets towards reaching a carbon neutral portfolio by 2050." This week's announcement comes after AP1 decided to stop investing in firms involved with oil sands and thermal coal in late 2018. The newly-announced decision to divest from all fossil fuels was taken by the fund's board of directors in December 2019.
The last few years have seen a number of organizations, groups and governments take decisions to move away from fossil fuels.
In January 2020, Germany's federal government and the four German states where lignite — or brown coal — is mined agreed to "a way forward" for the phase out of coal-fired power stations in the country.
In an announcement at the time, the federal government said it would provide 40 billion euros (around $43.87 billion) to the federal states affected by the transition.
Last November, the European Investment Bank announced it would stop financing for fossil fuel energy projects "from the end of 2021." In 2017, a coalition of 40 Catholic institutions announced a decision to pull their money from — or block future investment in — fossil fuels. At the time, the Global Catholic Climate Movement called it the "largest joint announcement of divestment by Catholic organizations to date."