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STOCKHOLM—Nordea Asset Management, part of Nordea Bank AB and the Nordic region's largest asset manager, has blacklisted stocks and bonds in Volkswagen AG, highlighting the trust issues afflicting the German auto maker since it was shaken to its core by a widening diesel-pollution scandal.

Stockholm-based Nordea, which manages around €2 billion ($2.2 billion) in assets, has banned its fund managers from investing in VW over the next six months, saying the company's alleged actions in the U.S. appear to have violated its own guidelines on environmentally-responsible investments.

Sasja Beslik, head of responsible investments at Nordea, said the decision was also based on the financial loss VW may suffer due to reputational harm and from exposing itself to potential multibillion-dollar fines and lawsuits.

"This is a textbook example of what not to do," Mr. Beslik said, referring to VW's alleged violation of the U.S. Clean Air Act. "By banning investments for six months we're sending a clear signal that purposely cheating authorities is completely unacceptable."

Nordea took similar action in 2010 when it suspended investments in oil giant BP PLC over its perceived failure in managing an oil spill in the Mexican Gulf, described as one of the largest environmental disasters in U.S. history.

VW was already on the asset manager's radar before the emission scandal broke last week, with some fund managers reducing their holdings over concerns about a lack of transparency into its governance, Mr. Beslik said.

VW's crisis threatens to spread as regulators and justice officials in Europe and Asia launch their own investigations and angry investors and customers threaten the company with lawsuits seeking damages.

Volkswagen's Chief Executive Martin Winterkorn resigned on Wednesday and the company pledged it would prosecute those responsible for employing software to manipulate the results of routine pollution tests on some VW and Audi diesel-powered cars in the U.S.

Mr. Beslik said Nordea won't require its fund managers to sell the roughly 2 billion kronor ($237.7 million) worth of VW bonds and stocks the fund has on its books, because as a shareholder it wants to be able to influence the company. Nordea also wants to have the possibility of joining one of several potential class-action lawsuits against VW in the U.S., he said.

Nordea's team plowed through documents disclosed by the U.S. Environmental Protection Agency last Friday, and was particularly concerned that VW executives were warned about emission problems by the California Air Resources Board and the EPA in 2014, but continued to sell manipulated diesel vehicles in the U.S.

VW now needs to quickly put all its cards on the table and disclose who knew what and when, Mr. Beslik said.

"We need to know on what level this decision was made and how the new management is going to prevent it from ever happening again—it's essential for restoring trust," he said.

Write to Anna Molin at anna.molin@wsj.com

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(END) Dow Jones Newswires

September 24, 2015 06:35 ET (10:35 GMT)

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