The Swedish governments Seventh Public Pension Fund has excluded the fertiliser company Agrium from its portfolio due to its involvement in phosphate mining in the disputed Western Sahara.
The company has been excluded because of its violation of human rights by imports of phosphate from the occupied Western Sahara, according to a statement published on 15 December.
The Western Sahara is claimed by both the government of Morocco and the Algeria-backed indigenous Saharawi group, the Polisario Front.
While most of the region is controlled by Morocco, neither entitys sovereignty is recognised by the UN.
Over recent months, tensions have become heightened in the region due to plans to drill for oil.
US-based Kosmos Energy and Scottish Cairn energy are expected to start drilling their first well in the region before the end of the year.