Sweden to Review its Pension Fund Investments in Brazil Because of the Amazon

RIO DE JANEIRO, BRAZIL – The Swedish government is to investigate investments of its public pension funds in Brazil and throughout South America as a result of the fires in the Amazon, Swedish Finance Minister Per Bolund told local newspaper Dagens Nyheter on Tuesday, August 27th.

The so-called AP funds manage assets of approximately R$650 billion and are in charge of managing the retirement funds for the whole population of the Nordic country.

Erna Solberg, Prime Minister of Norway, member of the European Free Trade Association (EFTA), which includes countries outside the European Union (EU), lamented on Tuesday the “terrible moment” of the trade agreement signed this week with Mercosur, which establishes commitments to the environment, proper labor conditions, and the fight against corruption.

According to the article, Swedish public pension funds have adopted new allocation rules since January forcing them to consider sustainability in their investment decisions. Now, according to the minister, the government wants to know if investments in South America fit these criteria.

“The fires spreading throughout the Amazon are raising concerns about investments in that region. Now that we are going to assess the operations of the AP funds, we want to see if they meet the criteria in practice and if they are related to investments that may contribute to the forest,” Per Bolund told the newspaper.

“We are critical of the fact that Bolsonaro and the Brazilian government are not taking responsibility for meeting the Paris Agreement. That is why it is important to know what impact Swedish investments may have.”

Per Bolund was unable to estimate the volume of AP fund investments that may be negatively impacting the Amazon.

The minister also conditioned the free trade agreement with Mercosur to Brazil’s compliance with the Paris Agreement. Bolund mentioned the risk pointed out by researchers that the deforestation of the Amazon is approaching the so-called point of no return, after which the situation would deteriorate irreversibly.

“The government’s stance is that agreements such as Mercosur should only be signed with countries ratifying the Paris Agreement. Donald Tusk, president of the European Council, has already said that he finds it difficult for the agreement (with Mercosur) to be ratified if Brazil allows the rainforest to be destroyed. I think he is right. We hope that this will not happen should Brazil not act with the strength and earnestness that the situation demands”, said Per Bolund.

Norway calls on companies for enlightenment

Norway, on the other hand, has summoned representatives of three large companies in the country, of which the government is a major shareholder and which operate in Brazil, to provide clarifications to the Minister of Climate and Environment, Ola Elvestuen. The meeting aimed to discuss the development of the fires in the Amazon.

The meeting was attended by executives from oil company Equinor, fertilizer company Yara, and aluminum producer Norsk Hydro.

“They need to be aware of their supply chain and be sure that they are not contributing to deforestation,” said Elvestuen after the meeting.

The KLP pension fund, the largest in the country, and NGOs also attended the meeting. KLP, which manages more than US$80 billion in assets, said it is contacting companies in the agricultural sector in which it has invested and which have business with Brazil to demand “specific actions”.

The fund mentioned the producers of agricultural pesticides Bunge, Cargill, and ADM, in which it holds US$50.5 million in shares and bonds.

As they manage massive amounts of long-term resources, pension funds often set investment trends. In May, Brazil had already been criticized by this type of investor for the Brumadinho (MG) incident. That month, KLP announced that it would exclude Vale’s shares from its investment portfolio due to the dam’s collapse in January.

KLP stated that the incident “is an unacceptable risk,” which adds to “serious violations of human rights and severe environmental damage.” The fund, which generates a total of R$294 billion, sold the equivalent to R$43.9 million in securities of the company that it was holding in its portfolio.

“The fact that the company has been involved in two equally serious events only a few years apart aggravates matters,” added Jeanett Bergan, head of the KLP responsible investment, referring to the Mariana dam (MG) collapse, which killed nineteen people in 2015.