Sweden’s Pension Funds Face Eye-Watering Losses After Investing Heavily in Net Zero Projects

Written by Will Jones on November 17, 2025. Posted in Current News

Sweden’s pension funds are facing eye-watering losses after they invested heavily in Net Zero projects that are now going bust, leaving the retirement savings of millions at risk. The Telegraph has the story.

Eighty kilometres from the Arctic Circle, Europe’s decarbonisation dream is falling apart.

Icy towns in Sweden’s far north have found themselves at the centre of a ‘green rush’ fuelled by promises of a new industrial frontier grounded in the clean energy revolution.

The Swedish Government has channelled billions in pension fund savings into start-ups in the region – including the first steel mill to be built on the continent for half a century.

But after years of grandiose rhetoric, those promises appear to be disintegrating.

Two of the country’s flagship green manufacturers have run into serious financial difficulties, sparking a row over potentially eye-watering pension fund losses.

The challenges in Sweden serve as a stark warning to Rachel Reeves, the UK’s Chancellor, who is considering forcing large pension funds to invest in national assets in a bid to boost Britain’s struggling economy.

Industry leaders have warned that the move would put the Government’s objectives of the day ahead of the retirement prospects of millions of savers.

Sweden helped pioneer the strategy of mobilising deep capital markets and pension funds to help finance government development goals. Unlike in Britain, a portion of Swedish workers’ state pension contributions are invested in government-controlled funds.

In the run up to the Paris Agreement, Stefan Löfven – the former Social Democrat prime minister who led a coalition government with the Greens – promised a “new green industrial revolution” that would be “as transformative as the one 250 years ago”.

His speech was followed by the country’s state pension funds spearheading early commitments by institutional investors to finance low carbon projects in a ‘high risk, high reward’ approach.

But that strategy is running out of steam.

Sweden’s electric vehicle battery maker, Northvolt – having risen to become the symbol of Europe’s green ambitions – filed for Chapter 11 bankruptcy last November.

Now the country’s much treasured ‘green steel’ company, Stegra, is teetering too. The manufacturer is facing a €975 million (£858 million) funding crunch and Harald Mix, the billionaire Swedish financier who co-founded both of the start-ups, has stepped down as its board chairman.

Andra AP Fonden, one of Sweden’s state-owned pensions – commonly known as AP2 – had around 1.46 billion Swedish kronor (£117.7 million) invested in Northvolt before it went bankrupt.

The pension fund had 580 million kronor invested in Stegra, a spokesman confirmed to the Telegraph. It is also exposed to the start-up through a 193 million kronor investment in former US vice-president Al Gore’s Just Climate fund.

Other funds are also exposed – such as AMF Pension, an occupational pensions company owned by the Confederation of Swedish Enterprise and the Swedish Trade Union Confederation, which has 1.9 billion kronor at risk according to Bloomberg.

The losses have left the Nordic country, now under a centre-Right Government, reconsidering the role of pension funds in supporting development goals.

Worth reading in full.

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