Investing in climate: how strong values create value

Private investments, including private equity, play an important role in the AP2 portfolio to have an investment portfolio that is optimised to create the best benefit for the Swedish Social Security Pension System (for all Swedes).

Financial returns are essential, but they are not our only consideration when we think about securing the future.

Around Europe and the world, we are wrestling with the impact of climate change, urgently requiring us to shift to a greener economy. The climate crisis demands significant investment over the next 40–50 years. Goldman Sachs estimates that approximately $75 trillion will be needed by 2070 to address this monumental challenge. At AP2, we believe private investments play a critical role in this transition. This is a core part of our mission today and increasing numbers of GPs and portfolio companies are united with us in this objective.

Farming to Fusion: AP2’s Climate Day

We recently hosted a climate day in Gothenburg, entitled “Farming to Fusion”. This event brought together 60+ leading managers, global thought leaders (including Vinod Khosla, Mark Wiseman and Rodi Guidero), and groundbreaking companies to explore how private investments can drive meaningful climate solutions. The event featured over 20 presentations showcasing diverse climate-focused innovations.

Participants explored sustainable practices in agriculture, advancements in electric motors, long-duration batteries, methane-reducing food additives for cows, geothermal energy solutions, and the groundbreaking development of the world’s first fusion energy facility.

Ambitious goals

AP2 has challenging but necessary goals when it comes to climate. We want all our asset classes to be in line with the Paris Agreement by 2025; we aim to reduce greenhouse gas emissions by 55% by 2030 (relative to our baseline year of 2019); and we are targeting net zero by 2045. To achieve this, we need to listen to a broad range of voices, consider innovative new solutions, and foster collaboration between ourselves, other investors and the wider industry.

As investors, we can bring the capital needed to invest in and scale the technologies and industries that will decarbonise our planet. But we can – and should – do much more than that. We can lead the debate, help coordinate industry targets, and actively contribute to climate action.

Decarbonisation objectives do not compete with the goal of maximising returns, rather they complement them. Today, there is an increasing body of evidence showing that investing with “values” delivers “value”. Climate-focused companies, assets and technologies will be essential to the transition to a sustainable economy and will ensure the creation of economic and social value that can be shared between investors and managers, as well as workers, pensioners and communities more broadly. The next business champion also needs to be a green champion.

Anders Strömblad
Senior Advisor, Andra AP-fonden (AP2)
Board Member & Member of LP Council, Invest Europe