Home ListingAugust 13, 2015

Liquid Investments: AP4 Hunts for Sustainable Water Manager

One of Europe’s most innovative pension funds is expanding its environmental focus.

Reported by Featured Author

Swedish government pension fund AP4 has launched a search for a manager specialising in environmentally-friendly water companies.

AP4’s chief executive Mats Andersson has been a vocal proponent of climate change-friendly investment and the fund has put its name to a series of global ventures aiming to reduce carbon output and take a more responsible approach to asset management.

“In the short term, it is chance that determines whether the sustainable investment is good or bad, but long term I am convinced that they will lead to higher returns.” —Mats Andersson, AP4In an announcement on its website, the $36.5 billion fund said sustainable investments were essential for a long-term strategy.

“AP4 is constantly working to manage risks and opportunities in management, including those related to sustainability,” the fund said. “That conviction is reflected in the governance structure, business philosophy, and strategies and our management works continuously to develop and invest in different strategies when they meet AP4’s criteria for sustainability and profitability.”

The mandate is focused on companies seeking to address the global shortage of water, AP4 said. The active, long-only mandate is up for tender until August 20.

Andersson emphasised that the investment was not being made “out of charity”, but with confidence that it would achieve “better long-term returns for retirees”.

“In the short term, it is chance that determines whether the sustainable investment is good or bad, but long term I am convinced that they will lead to higher returns,” Andersson said.

AP4 already dedicates a significant proportion of its portfolio to environment-focused investments. In 2014 it invested roughly $350 million in green bonds, and is a founder member of the Portfolio Decarbonization Coalition, which aims to get $100 billion invested in carbon-reducing strategies by the end of this year.

Speaking to CIO last year, James Holley, senior manager at consultancy firm KPMG, said it was important for investors to embrace opportunities to make money from new technologies aiming to solve environmental problems.

“There are new technologies and services that are the products of innovation happening all over the world, and rather than policymakers, it is industry and investors who should be the driving force behind them,” he said.