Nordic Pension Funds Can Promote Sustainable Development

The capital managed by Nordic pension funds can play a significant role in driving a sustainable transition – both through the concrete effects of their investments and by sending signals to other investors. Yet, even as efforts are made to move in a more sustainable direction, pension capital continues to support unsustainable activities.

How are environmental and climate impacts considered in pension fund investments? How do pension funds respond to external demands – for example from environmental organisations or pension savers – to divest from fossil fuels? And how do sustainability officers and fund managers work with sustainability issues, and with what consequences for the future that pension capital is meant to help build? These are the questions examined by researchers in the project Fossil Free Futures – Divestment Across the Nordic Countries.

The research project is being carried out in Sweden, Denmark, and Norway, and the questions addressed intersect three major and complex areas: pension systems, climate change, and the global financial market. When global issues such as finance and climate meet national pension systems, both similarities and differences across the Nordic countries become visible – not least in how the issues are framed as political, ethical, or strictly economic.

– We have focused in particular on identifying the actors that draw attention to the issue of fossil fuels in pension capital, and studying how those who decide on or manage pension funds respond, says project leader and professor of sociology Linda Soneryd from Stockholm University.

To understand the forces driving change towards sustainability, we need to understand both who is pushing for change and what obstacles remain.

In Denmark, member-based pension funds have enabled the divestment issue to be driven forward by the members themselves – the pension savers. In Sweden, the issue has been pushed forward by pension managers, discussed in parliament, and scrutinized by environmental organisations.

This can be understood as the framework of shared knowledge: how much is left to financial actors to decide, what role experts play, who has access to information, and what democratic forums are available.

– It is also about the behaviour of financial actors in relation to broader climate policy. Norway has made large contributions to rainforest conservation, but in 2025 the Norwegian Oil Fund went against the advice of its own ethics council and invested in mining operations that threaten the Amazon rainforest. Such conflicts undermine public trust in decision-makers, says Soneryd.

Research on the ethical governance of the Oil Fund shows that an ethical framework can serve several functions. This is how Bård Lahn and Sebastian Svenberg, who belong to the Norwegian team in the project, explain it:

– The ethical framework has made it possible to engage actively with social and environmental issues, and it has also opened up space for criticism from the Norwegian public, who can now expect decision-makers to act in ways that are perceived as morally right.

More information:

Linda Soneryd
Stockholm University
linda.soneryd@score.su.se