The BT Pension Scheme – the UK’s largest company pension – will aim for its portfolio to be net zero, in terms of greenhouse gas emissions, by 2035.
The new climate change policy aligns BTPS with the Paris Agreement goals to keep global temperature rises within 1.5°C above pre-industrial levels by 2050.
In order to achieve this goal, the schemes assets will be reinvested over the next 15 years, boosting the funds going into companies with lower emissions and supporting companies that are transitioning towards a low carbon economy.
BT says this this goal has been set to limit the risk that climate change poses to the scheme meeting its long-term commitments.
The net zero policy will build on BTPS’s progress in this area where its listed equity portfolio and its corporate bond portfolio are respectively 40 per cent and 60 per cent less carbon intense than for comparable indices.
Over time, all investment mandates will be aligned with the net zero goal. The scheme will select and retain managers that it believes can achieve these guidelines and will require managers to report against a net zero climate scorecard.
Managers will engage with investments to set net zero emissions objectives, however insufficient efforts to curb emissions after a period of engagement may result in divestment.
This change follows a survey of members, which includes both current and former employees of the BT Group. A total of 74 per cent of members said they expect the scheme to continue taking into consideration the environmental and social impact of the investments it makes, while 65 per cent said they expect BTPS to use its investments to make a positive impact on the environment and society.
BTPS Chair Otto Thoresen said: “Climate change poses a clear and present threat to the scheme’s ability to meet its long-term commitments. Setting a net zero goal of 2035 is ambitious but, it’s important to take steps now to safeguard the future of the portfolio and the planet.”
CEO, BTPS Management Morten Nilsson says: “As the global economy looks for ways to recover from the impact of the pandemic, we have an opportunity to do things differently. Over the next 15 years, the scheme will be re-investing the majority of its assets and, as we look to deliver the best returns, we must not waste this opportunity to support a cleaner and greener future.
“Asset owners are uniquely placed to use their influence to drive decarbonisation and influence who has access to capital by setting targets to tackle climate change. But we cannot achieve this goal alone.
“Data on emissions needs to improve and companies, governments and consumers must act. Standing by and doing nothing is no longer an option.”
Minister for Pensions and Financial Inclusion, Guy Opperman adds :
“The UK was the first G7 country to legislate for net zero and I warmly welcome the BT Pension Scheme’s commitment to achieving their own net zero target by 2035. This is an encouraging sign of how government, industry and investors can work collaboratively to build an appropriate regulatory framework and promote sustainable investment opportunities as we build back better, and greener.”
BTPS sponsor, BT Group, has been a corporate leader on climate change for over 25 years. It was among the first companies to adopt science-based targets on emissions reduction and in 2018 set a net zero target of its own by 2045.
Last month, BT Group ranked second in EcoAct’s annual sustainability ratings of the FTSE 100, DOW 30, IBEX 35 and CAC 40.