Climate change, if not contained, is considered to constitute a serious systemic risk with a significant impact on the AP Funds’ assets and a negative impact on the living conditions of present and future generations. Based on the climate convention that Sweden has signed, the Council on Ethics and the AP Funds are working for a sustainable transition to a low-carbon society in line with the Paris Agreement, which means that the global temperature increase must be limited to well below 2°C. To achieve this, net carbon dioxide emissions should be zero around 2050.
In today’s society, most industries and companies are exposed to and dependent on fossil energy. Combustion of fossil fuels is the dominant cause of climate change. Exposure is both direct (production and sale of fossil fuels) and indirect (everything that is manufactured and powered by fossil fuels). The risks and opportunities arising from the transition differ between sectors and companies and are affected by how and at what pace the transition occurs.
How is the Council on Ethics working to adress climate change?
The large scope of a topic such as climate change means that the Council on Ethics needs to prioritise and focus its work. The Council on Ethics therefore makes an overall assessment of how and where it should focus its efforts in order to achieve the best possible effect. The Council on Ethics’ climate efforts also aim to complement and strengthen the climate-related work carried out at each AP Fund.
The Council on Ethics has decided to prioritise two areas going forward: the transition of emission-heavy industries and mining for transition. The mining industry has several significant sustainability-related risks and impacts. At the same time, the sector is critical for society and crucial in the necessary transition. Everything from electric car batteries to renewable energy production requires solutions that are mineral-intensive. The Council on Ethics will work to mitigate ESG risks as the mining industry expands to meet this increased demand for the required metals and minerals. An important collaboration for the Council on Ethics is the Global Investor Commission on Mining 2030.
In the area of the transition of emissions-heavy industries, the Council on Ethics has collaborated with various organisations and stakeholders over the years, including Climate Action 100+, the Institutional Investor Group on Climate Change (IIGCC) and the Transition Pathway Initiative (TPI). The Council on Ethics is currently evaluating next steps in the climate transition and the area of the transition of emission-heavy industries.