Article

Climate dialogue: Why has Sweden's largest pension fund invested in Saudi Aramco oil?

When a Climate Review is trending on We Don't Have Time, we always seek to get a response from the recipient and establish a Climate Dialogue. What started as a Climate Warning ⚠️ to state-managed pension fund AP7 for its investment in Saudi Aramco Oil, has now resulted in an in-depth interview with Johan Florén, Chief ESG, at AP7.



AP7 argues, with reference to this study, that it wouldn't make a difference if it sold its shares in fossil fuel companies. Why? Because AP7 is not buying these shares directly from the companies, but on a secondary market, meaning that if AP7 were to sell its shares, another investor would step in to purchase them. The better way, argues AP7, is to be an active owner and use that influence to push for change. 
https://www.youtube.com/watch?v=dXZS6K7p5Cc

This is a short version of the interview. The full 1-hour interview will be published on wedonthavetime.org/play on February 5th.

But AP7 has also blacklisted 36 coal companies for failing to make climate progress. This is confusing to us. If active ownership is the only way to influence companies, then what's the point with blacklisting? And why, then, should a fossil fuel company care if an investor put it on a blacklist?
We Don't Have Time believes that scale is what matters. Action by just a few investors might not make a difference, but if money starts moving on a massive scale, change will happen.
According to a IEA, clean energy investment must reach $4,5 trillion per year by 2030 to keep the heating of our planet within safe limits. But still, too much money is moving the other way. Pension funds and other institutional investors have invested $3 trillion in oil, coal and gas.
$3 trillion is roughly 3 percent of all the money in the world. Does anyone truly believe that it wouldn't affect companies' stockmarket value if pension funds sold their shares in fossil fuels and invest this money in green companies to help them instead?
AP7 has so far put a lot of its resources into influencing coal companies. But as you will hear in the interview, the pension fund will now start zooming in more on oil. That's encourging news, and we hope it will make a difference!
What is your view on AP7:s investment strategy? Give your opinion in the comment section.
  • johnte ndeto

    9 w

    I really enjoyed watching

    1
    • Kriss Kiddo

      9 w

      Plessure to see a great conversation like this.

      2
      • mary Mwihaki

        9 w

        This is great conversation

        1
        • Ted Weber

          10 w

          @Rentzhog Great interview! Mr. Floren was clearly uneasy.

          8
          • We Don't Have Time

            10 w

            Watch the full version of the interview (1 hour): https://www.youtube.com/watch?v=aFSCeYf-xag

            8
            • Erlijn van Genuchten

              10 w

              I love this approach of having a conversation and listening to their side of the story, while still being critical and asking follow-up question. Excellent job! (And I smiled when you casually brought in that "we don't have time"; it suited perfectly!)

              11
            • Ulla Wennermark

              10 w

              I think it is naïve to believe that AP7 may have an important influence by being a shareholder. The most effective way to show position is to sell the shares. Less interest in the shares of the oil company means lower price on the shares and less possibilities for the oil company to borrow money for expansion.

              6
              • Esther Wanjiku

                10 w

                @ulla_wennermark They are being manipulative with the argument they are putting out there

                3
              • Rotich Kim

                10 w

                This need to be invested more in climate related activities

                3
                • Mats Williander

                  10 w

                  To me, AP7 is naive, or they are bullshitting. To hope for "a transition" of a company whos asset is fossil energy is extremely naive. Transit to what? Just leaving a fortune in the ground? That will not happen! Several fossil companies are claiming they will be "carbon neutral by 20XX". In detail their highest ambition is to make the extraction fossil free. But they will still sell oil. "We are not the emitters, our customers are the ones turning fossil oil to CO2!!" AP7 should try to have a moral compass that at least aligns with the Paris agreement.

                  8
                  • Esther Wanjiku

                    10 w

                    @mats_williander They are very naive to say the least or just using that as an excuse to continue finding fossil fuel companies

                    4
                  • Esther Wanjiku

                    10 w

                    This was a very eye opening interview and we can only hope that AP7 push the changes they deem necessary from the inside

                    3
                    • Usha Dahal

                      10 w

                      Attempting to influence an oil company as a shareholder may seem like a good intention, but good intentions alone are insufficient. Is it possible that AP7 is waiting for a green industry as profitable as fossil fuels before making higher investments?

                      11
                      • Patrick Kiash

                        10 w

                        Thank you @rentzhog for your interview with Johan which holds significance in fostering transparency, promoting climate dialogue, and influencing the broader discussion on responsible investing and its role in addressing climate change. It contributes to the ongoing discourse on the strategies employed by institutional investors Like (AP7) to balance financial returns with environmental and social considerations and refrain from fossils companies ,etc. that accelerate effects of climate crisis . But the urgency of redirecting investments towards clean energy to meet global climate goals and Swedish goals for sustainability is highly needed now as we don't have time to wait.

                        8
                        • Ingmar Rentzhog

                          10 w

                          The financial news site Realtid published this interview. https://www.realtid.se/ap7-darfor-investerar-vi-i-saudi-aramco/

                          9
                          • Adam Wallin

                            10 w

                            The vibes I got from Johan in this interview is certainly that of someone who wants to do the best he can for sustainability, but has his hand tied on some key issues. I could glean some really good intentions in his words but it always seemed like he is constricted by bureaucracy or faulty policies. I hope this discussion and the overall criticism AP7 have gotten will help make some different in the whole management team and make them consider new, more radical strategies.

                            10
                            • Negar Riahi

                              10 w

                              We do not need help from wrong sources!

                              6
                              • Johannes Luiga

                                10 w

                                Very important interview!

                                8
                                  • Negar Riahi

                                    10 w

                                    I was writing to Schweiz 🇨🇭 Straumann Headquarter about the pollution of microplastics that can be banned and We have mobey back from rules to give to pension fund via trials. This action to pollute the World to give pension to people is illegal. Also Microeconomics can give Microeconomics via rules. Composite materials and resins from dental bransch Will give explosion of mobey.

                                    5
                                    • Ian Humble

                                      10 w

                                      The 'its only the secondary market' argument is flawed. Higher demand for existing shares props up the value of the company, allowing it to issue more shares at a higher price and raise more money for investment.

                                      15
                                      • Hakan Larsson

                                        10 w

                                        Better move away the money from AP7

                                        6
                                        • DIPANJANA MAULIK

                                          10 w

                                          This interview is going to be a milestone in the history of combat against Climate Change. Right kind of communication is the key to change the course of decision making. Three trillion US$ is a significant number to propel green economy towards the tipping point and only someone with deep insight in finance can so effortlessly place it before both: the general audience and the smarter investors. This conversation has been done just how it should be to bring the inconvenient truth in the table and to influence all those, who matters either at individual level of at highest decision making level. The power of making a choice empower citizens either to opt for extinction or to opt for love for current and future generations. In any case it should be an informed decision with responsibility. The vision and spirit of a financing company is also to be questioned for greater good. I shall look forward to the one hour conversation. The thirteen minute version is teaching us so many things , and I expect the one hour version shall enable us to act in our own area of action with similar calmness, authority, clarity for change of courses towards a better future.

                                          9
                                          • Ingmar Rentzhog

                                            10 w

                                            @dipanjana_maulik Thank you so much for your comment. It encourages me to do much more of those interviews. 💚

                                            7
                                          • Travis Zly

                                            10 w

                                            Good interview. Unfortunately, it is likely that the shares in the tracker fund that AP7 buys, will veer even more into fossil fuels, because Europe has been forced by its Russian sanctions policy to pull back from renewables and invest more in fossil fuels, to make up the shortfall from Russia. Sweden is also in a recession. The government expects to borrow heavily to stimulate the economy. As a result, the Swedish government needs to make as much profit from its AP7 state pension fund as possible, to pay back the increased debt. It is unlikely to divest from oil until the economy recovers.

                                            6
                                            • Anthony Baxter

                                              10 w

                                              Interesting interview

                                              7
                                              • Kaj Embren

                                                10 w

                                                Maybe the Chief ESG think it is to much work to select alternative investment and to convince the CEO will also be a hard work. It is all about leadership....🤹‍♀️

                                                9
                                                • Mario

                                                  10 w

                                                  Investing into oil companies, like what AP7 is doing, doesn't match up with the need to fight climate change. Trying to change these companies from the inside hasn't worked as well as just taking the money out and saying no to oil. Even if AP7's investment seems small, if many investors pull their money out of oil and put it into clean energy, it can really make a difference. We need to stop supporting the oil business and start helping companies that are good for the planet.

                                                  10
                                                  • Esther Wanjiku

                                                    10 w

                                                    @mario Absolutely true ,AP7 should hold their ground and exit while they can

                                                    2
                                                  • Ingmar Rentzhog

                                                    10 w

                                                    Personally, I think active ownership in big oil companies is very challenging. A recent example is ExxonMobil, which took legal action against a green shareholder group. This led to the withdrawal of a climate resolution, demonstrating the diminishing power of shareholders to influence corporate accountability. I hope AP7 pays close attention to this development, especially as they plan to focus more on oil. Learn more about how ExxonMobil sued their investors, who advocated for reduced oil extraction, and won! https://www.ft.com/content/016389b9-8463-4f96-b1a8-0bb811e61e8a

                                                    8
                                                    • Esther Wanjiku

                                                      10 w

                                                      @Rentzhog This is an interesting article ,it goes to show the extent fossil fuel companies are willing to go to defend their investments

                                                      2
                                                      • Ted Weber

                                                        10 w

                                                        @Rentzhog Exxon is climate criminal #1

                                                        2
                                                      • Munene Mugambi

                                                        10 w

                                                        They're doing it because they feel untouchable. This will plummet the trust people have in them and Thier share capital

                                                        14
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