Swedish Pensions Agency makes it easier to choose sustainable funds

Swedish Pensions Agency makes it easier to choose sustainable funds
Written by Sunniva Kolostyak
03/04/2019

The Swedish Pensions Agency is launching several tools and opportunities in the premium pension market to make it easier to choose sustainable options.

The tools are part of a government mission to create a “safer and more sustainable premium pension system”, and allow savers to compare funds before choosing which to invest in. Furthermore, it is possible for savers to opt out of up to 12 different sectors, such as weapons, tobacco or nuclear weapons.

The sustainability of funds is measured using two different indicators of sustainability from Morningstar.

One indicator is the Low CO2 Risk, which is based on two measures – the companies in which the fund invests must have low risk in the transition to a world economy with low carbon emissions and limited exposure to fossil fuel.

The calculation works best for equity funds, the agency said, pointing out that the funds that qualify receive a green leaf mark.

The other Morningstar indicator measures sustainability value. The analysis is based on stock market data and company questionnaires covering business ethics, environmental policy and labour law, within their own company and its suppliers. Funds get a rating from 1 to 100, with 100 being the best.

To be marked as a sustainability fund in the market, funds must correspond to the Ethical Committee for Fund Marketing (ENF) requirements as a sustainability fund, the fund manager must state that sustainability aspects are crucial for the nominee’s choice of securities in the fund and have the Low CO2 Risk mark from Morningstar.

The Swedish Pensions Agency also said that it is possible to filter out the concept of sustainability funds.

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