AP4 celebrates its 50th anniversary in 2024. Its average annual return has been 13% since inception in 1974 and the initial capital contribution of SEK500m (€36m) had grown to SEK533bn by the end of June 2024.

AP4 integrates climate strategies across all investments in the global equity portfolio, tailoring these strategies to the specific conditions of different sectors and sub-portfolios - to reduce climate risks, contribute to the climate transition and ensure a good return for the Swedish pension system.

Key sectors for the climate transition include energy, power generation, raw materials, and transport. AP4 focuses on these high-emission sectors, selecting companies that are expected to outperform their benchmark indices and contribute to the energy transition. Investments are made in companies with plans and targets that are aligned with the Paris Agreement.

This approach results in a more concentrated portfolio, allowing AP4 to increase its shareholding in selected companies, thereby enhancing its influence over their transition efforts. For other sectors and external fund investments, companies are selected using equity strategies based on quantitative factors. Since 2012, AP4 has been developing and broadening these strategies, with the result that the portfolio’s carbon emissions have been reduced by more than half.

Achieving environmental objectives requires phasing out fossil fuels through taxation. While Sweden and the EU have carbon taxes, many other regions do not. AP4’s equity models assume an increasing carbon price, adjusted by sector and country, to project future margins and reduce holdings in companies with significant negative impacts.

AP4’s carbon footprint is approximately 59% lower than a broad global equity index, thanks to low-carbon strategies and a significant proportion of Swedish equities. In 2023, the portfolio’s CO2e emissions decreased by 11%;since 2010, emissions have been reduced by 65%. AP4 aims to halve emissions again by 2030 and achieve net zero by 2040.