Fund manager Northern Trust has picked up a key mandate from a major Swedish pension fund.
The company announced this week that the Fourth Swedish National Pension Fund known as 'AP4' would invest in a new emerging markets fund established by Northern Trust which comprises only companies that have both lower carbon emissions and less fossil fuel reserves.
The product, the Northern Trust Emerging Markets Custom Low Carbon Dioxide Equity Index Fund, has been designed to offer AP4, and other future investors, exposure to the potential growth and diversification benefits of emerging markets whilst potentially lowering long-term portfolio risk by excluding both companies with high greenhouse gas emissions and companies that have extensive reserves of fossil fuels.
Commenting on the pension fund move, AP4 chief executive Mats Andersson said that with few exceptions, carbon dioxide was widely recognised as having a negative impact on the climate.
"We believe that greenhouse gas emissions are associated with higher costs in the long term and that, consequently, companies with higher carbon footprints will be valued differently in the future," he said.
