Swedish pension fund AP1 said it will no longer invest in fossil fuel companies. The SEK365.8 billion ($35.8 billion) fund said the transition to a low-carbon economy represents a significant amount of uncertainty for companies involved in coal, oil, and natural gas activities and that “continued investments related to these activities can increase the financial risk exposure of the fund.”

The fund said the move is a result of its work to identify and analyze climate-related financial risks in the economy and that it came to its decision after conducting an assessment on the issue. AP1 said divesting from fossil fuels is just one way in which it is managing its portfolio’s exposure to climate change risk. It has also decided to develop measurable targets and a roadmap toward reaching a carbon neutral portfolio by 2050. “Our assignment is to manage the fund’s assets in an exemplary way through responsible investments and achieve high returns for the long term, while supporting sustainable development,”

AP1 Chairman Urban Hansson Brusewitz said in a statement. Brusewitz said a key part of this goal is to manage the fund’s climate-related financial risk exposure and align it with the overall risk level of the fund, adding that “divesting from fossil fuels is an efficient way for the fund to manage the financial risk associated with a transition in line with the Paris Agreement.” The fund said it has been working to identify and assess the effects of climate change and the transition to a low-carbon economy on the fund’s investment portfolio. It said a transition in line with the Paris Agreement is expected to result in comprehensive measures to support a shift to an economy that is less dependent on fossil fuels.

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