AP7 Dumps $1.3B in Tesla Stock Over Workers Rights at 4-Month High

Sweden’s second-largest pension fund has divested all $1.3 billion of its shares in Tesla Inc. after years of engagement regarding allegations the electric vehicle is violating U.S. workers’ rights yielded no change. The Elon Musk-owned company had been the fund’s eighth-largest listed holding, as of the end of 2024.

AP7’s head of environmental, social and governance investing, Charlotta Dawidowski Sydstrand, said the pension fund decided to remove Tesla from its portfolio after five fruitless years of trying to get it to make changes AP7 deemed productive.

“AP7 has blacklisted Tesla due to the company’s failure to take sufficient measures to address the issues of violations of labor rights in the United States despite several years of dialogue, including shareholder proposals in collaboration with other investors,” Sydstrand says via email.

She says the pension fund initiated discussions with Tesla in 2020 following media reports that it was violating trade union rights in the U.S. She said Tesla at first showed “positive signals” that it was open to complying addressing their concerns.

“We were given promises of measures to ensure employees’ right to organize, but the company failed to follow through,” Sydstrand says. “As a result, we gradually escalated the dialogue in collaboration with other investors,” adding that AP7 also submitted shareholder proposals at Tesla’s annual general meetings in 2022 and 2024.

“After five years, we have used all the conventional ownership tools at our disposal, and we have reached the conclusion that further engagement is unlikely to be constructive,” Sydstrand says. “As a last resort, we are therefore blacklisting the company.”

Representatives for Tesla did not respond to a request for comment.

The 3.8 million shares were sold by the end of May, Sydstrand says without providing an exact date. Although she did not disclose why AP7 chose to sell the shares when it did, the transaction came after Tesla shares surged 28% during the month and hit its highest price in four months.

Tesla shares peaked at $365 on May 28, the stock’s highest price since February 7 and a nearly 35% increase from its monthly low of $271 in early May. The price difference between the month’s high and low indicate a difference of more than $300 million, based on AP7’s holding. While the pension fund may not have sold the stock at the monthly high, it would still be close to that at the end of the month.

Tesla was one of five companies AP7 blacklisted in June and was the only one that was not an oil and gas company. The other four—Chord Energy Corp., Coterra Energy Inc., JSW Energy Ltd. and Prio S.A.—were blacklisted for failing to act in line with the Paris Agreement due to “large-scale fossil fuel operations without transition plans.”

Meanwhile, AP7 has removed U.S.-based utility Evergy Inc. from its blacklist after it re-evaluated the provider and deemed it took sufficient transition measures and “therefore no longer meets the criteria for blacklisting.”

AP7 is reviewing its process for climate-related blacklisting, and beginning this fall, it will separate climate exclusions based on the Paris Agreement from other exclusions and blacklists that rely on reported incidents. The fund also announced it will exclude companies that have the potential to influence and drive climate transition and are considered to have been exhausted or are too limited.

“The changes are expected to result in more focused portfolio management and active ownership, with a clear objective of promoting sustainable development without compromising returns for savers,” AP7 stated.

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Tags: AP7, Charlotta Dawidowski Sydstrand, Divestment, environmental social and governance investing, Tesla, workers rights