Sweden's central bank has sold off bonds from parts of Australia and the oil-rich Canadian province of Alberta because it felt that greenhouse gas emissions in both countries were too high.
Riksbank Deputy Governor Martin Floden said on Wednesday the bank would no longer invest in assets from issuers with a large climate footprint, even if the yields were high.
"Australia and Canada are countries that are not known for good climate work," Mr Floden said in a speech at Orebro University in Sweden.
"Greenhouse gas emissions per capita are among the highest in the world."
"As a result of the new investment policy, we sold our holdings of bonds issued by Alberta in the spring.
"For the same reason, we have recently sold our holdings in bonds issued by the Australian states of Queensland and Western Australia."
Alberta's government on Wednesday insisted that the province "has the highest environmental standards in the world," and said the energy industry is continually improving its environmental footprint.
"If the Swedish central bank is really concerned with making a difference on climate change they need to be investing more in ethical producers such as Alberta which have shown dramatic gains in reducing emissions," said Christine Myatt, spokeswoman for Alberta Premier Jason Kenney.
The governments of Queensland and Western Australia could not immediately be reached.
Floden, who did not give details, said Sweden had invested around 8.0 per cent of its foreign exchange reserves in various kinds of Australian and Canadian bonds.
Bank of England Governor Mark Carney said in September that the financial sector had to transform its management of climate risk, warning that global warming would prompt reassessments of the value of every single financial asset.
"Central bankers aren't your typical tree huggers, so Canadian politicians should take note when they start blacklisting government bonds over climate concerns," Keith Stewart, senior energy strategist with Greenpeace Canada, said in an email on Wednesday.
The Bank of Canada said in May that climate change continues to pose risks to both the economy and financial systems.
Analysts say the valuations of fossil fuel companies could be at risk if governments move to spur stronger action.
This could pose more problems for Alberta, which is already hurting from five years of low crude prices and pipeline constraints. A number of major firms have sold their Canadian assets or scaled back investments.
Alberta's reserves exist in the form of tar-like bitumen, which must be heated with steam before oil can be extracted. The process is highly energy-intensive.
There are already widening splits between Alberta and Ottawa over climate change.
Liberal Prime Minister Justin Trudeau has pushed through tougher environmental policies since winning power in 2015, saying the energy sector needs to do more.
But the Alberta premier complains the new measures are so harsh that it is impossible to build energy projects.