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AP7 widens Paris Agreement criteria in its portfolio screening

For more than three years, AP7 has been blacklisting companies if they conduct activities that counteract the Paris Agreement. The fund has now developed methods for a wider application of the climate agreement in its screening, by starting to blacklist companies that make new major investments in coal production and coal power. After the first screening, ten coal companies have been blacklisted, and their equity sold with immediate effect.

In 2016, AP7 decided to incorporate the Paris Agreement in its corporate governance norms, and six months later started blacklisting companies when they conduct activities that conflict with the agreement. The aim of blacklisting is to exert pressure on companies to change unacceptable conduct. Since then, the fund has worked with both corporate governance and blacklisting as a way to exert influence on companies that are actively opposing climate regulations or are making large-scale investments in fossil-fuel extraction projects.

The blacklisting methods have now been broadened to exert influence on companies that continue to expand their fossil-fuel activities in coal production and coal power, thereby counteracting the goals in the Paris Agreement. The focus on coal companies is because research shows that the single most important method for mitigating climate change is to stop using coal as a source of energy.

The ten coal companies blacklisted according to the new method distinguish themselves through their negative impact on the climate because they engage in large-scale coal production, and also continue to invest in expansion of fossil energy.

The ten coal companies are:

  • China Resources Power Holdings Co Ltd
  • Coal India Ltd
  • Exxaro Resources Ltd
  • Inner Mongolia Yitai Coal Co Ltd
  • Korea Electric Power Corporation (KEPCO)
  • PT Adaro Energy Tbk
  • SDIC Power Holding Co Ltd
  • Shaanxi Coal Industry Co Ltd
  • Washington H. Soul Pattinson (New Hope Group)
  • Yanzhou Coal Mining Co Ltd

As of 10 December 2020, a total of 84 companies have been blacklisted and excluded from the fund’s investment universe.

After the last six-monthly norm-based screening, Booz Allen Hamilton Holdings has also been blacklisted on account of its involvement in nuclear weapons.

China Railway Group Ltd has been removed from the blacklist after five years, since there is no longer information about current violations of norms.

In addition to blacklisting on the basis of the Paris Agreement, AP7 blacklists companies that do not reach a minimum compliance with the requirements of the international conventions that Sweden has signed, and that are enshrined in the UN Global Compact’s ten principles. These describe corporate responsibilities regarding human rights, labour rights, the environment, and corruption. Furthermore, AP7 does not invest in companies that participate in the development and production of nuclear weapons.

The AP7 blacklist is revised twice a year, in June and in December. The aim of blacklisting is to exert pressure on companies whose activities are irresponsible to change their conduct. Blacklisting is thereby an engagement tool, alongside other tools such as company dialogues and voting at general meetings.

This is the AP7 blacklist as of 10 December 2020.