RegulationDecember 3, 2024

Sweden’s AP7 Blacklists 2 Oil Producers

The pension fund added MEG Energy from Canada and EOG Resources from the U.S. to its banned ledger of 110 companies.

Reported by Matt Toledo

AP7, the second-largest pension fund in Sweden, announced last week the addition of two companies to its blacklist over concerns that the companies are not in line with the Paris Agreement on climate change because they lack climate transition plans.

EOG Resources Inc., a Houston-based oil and gas exploration company, and MEG Energy Corp., a Canadian oil producer and exploration company, were added to the fund’s blacklist and excluded from its investment universe.

“The companies are blacklisted because they do not act in line with the Paris Agreement due to large-scale oil operations without transition plans,” AP7 stated.

EOG Resources and MEG Energy did not respond to requests for comment.

AP7 invests in companies “that in an acceptable way adhere to the international norms and conventions signed by Sweden,” the fund stated earlier this year. The fund also follows blacklisting standards set out by the Paris Agreement, standards expanded in 2022 to include companies without climate transition plans and companies involved in large scale coal operations and oil sands extraction.

Including these two additions, AP7 has blacklisted 53 fossil-fuel companies based on these standards, with another 10 excluded based on other criteria. In total, the fund has blacklisted 110 companies, including companies involved in the development and production of nuclear weapons and companies that violate the UN Global Compact’s 10 principles.

The fund removed two companies, Hitachi Zosen Corp. and SGL Carbon S.E., from the blacklist “based on the lack of verified information about ongoing violations by the companies.”

In June, the fund added Saudi Aramco to the blacklist, as well as six other oil producers due to alleged violations of the Paris Agreement. In December 2023, AP7 added two Chinese coal producers to the blacklist, while removing AECOM, Tata Power Co. and Hanwha Corp. from the list.

In a press release, AP7 stated that it uses blacklisting as an engagement tool, along with other tools such as company dialogues and voting at company general meetings.

In total, AP7 manages 1.1 trillion Swedish kroner ($100 billion) in assets. The fund counts more than 5 million Swedes—roughly half the population of Sweden—as members and beneficiaries. Year-to-date, the fund has returned 21.8%, and it has returned 84.6% and 245.8% over the past five and 10 years, respectively.