The Fourth Swedish National Pension Fund (AP4) will invest in a new emerging markets fund which comprises only companies that have both lower carbon emissions and less fossil fuel reserves. The fund, created by Northern Trusts asset management arm, is a new sub-fund of an existing Irish UCITS umbrella fund known as Northern Trust Investment Funds plc. and will be made available to other institutional investors in Europe in accordance with the UCITS Directive.
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 in addition to incorporating other environmental, social and governance factors.
With few exceptions, carbon dioxide is now widely recognised to have a negative impact on the climate, said Mats Andersson, CEO at AP4. 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. Hopefully this will also increase the pressure on companies to lower their carbon dioxide emissions.
This latest equity fund from Northern Trust follows the investment or asset managers announcement earlier this year that it had, in collaboration with MSCI ESG Research and Institutional Shareholder Services (ISS), created the first emerging markets custom index to incorporate environmental social and governance screens.
Combining return seeking assets with ESG criteria is a trend that continues to grow as institutional investors realise they can simultaneously incorporate environmental criteria into their portfolios while gaining the desired exposure, said John Krieg managing director for Northern Trusts asset management arm in Europe, Middle East and Africa. We are pleased to work in partnership with AP4 in implementing this low carbon solution.
Northern Trust manages more than US$45 billion in socially screened assets for clients across the globe, and has over 20 years of experience in managing socially responsible portfolios and socially screened assets. A leading global asset manager, it has offices across the globe, and offers the full range of investment solutions and services to Nordic institutional investors directly from its Stockholm office.
To read more about the trend for emerging markets and ESG Investing, read Northern Trusts white paper here.
AP4s brief is to contribute to the stability of the national pension system through managing Fund capital with the aim of generating the best possible return over time. The Fund is one of five buffer funds in the national pension system. More information about AP4 is available at www.ap4.se.
For more information about AP4, please contact:
Pia Axelsson, Manager Corporate Governance, phone +46(0)8 787 7572
Björn Kvarnskog, Head of Global Equities, phone: +46 (0)8 787 7565
Mats Andersson, CEO AP4, phone +46 (0)8 787 7551
About Northern Trust
Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of investment management, asset and fund administration, banking solutions and fiduciary services for corporations, institutions and affluent individuals worldwide. Northern Trust, a financial holding company based in Chicago, has offices in 18 U.S. states and 17 international locations in North America, Europe, the Middle East and the Asia-Pacific region. As of June 30, 2013, Northern Trust had assets under custody of US$5.0 trillion, and assets under investment management of US$803.0 billion. For more than 120 years, Northern Trust has earned distinction as an industry leader in combining exceptional service and expertise with innovative products and technology. For more information, visit www.northerntrust.com or follow us on Twitter @NorthernTrust.
Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Global legal and regulatory information can be found at http://www.northerntrust.com/disclosures