BT Pension Scheme (BTPS) announced today a new goal to reach net zero GHG emissions across its entire investment portfolio by 2035, including Scope 1-3 emissions. At £55 billion in assets, BTPS is the largest company pension scheme in the UK.
Otto Thoresen, Chair, BTPS said:
“Climate change poses a clear and present threat to the Scheme’s ability to meet its long-term commitments.
“Continued increases in global warming will amplify existing risks and create new risks with potentially irreversible and catastrophic impacts on markets, society and the environment.
“Setting a net zero goal of 2035 is ambitious but we believe the time to act is now and we hope that others will join us in setting their own net zero goals.”
According to BTPS, the majority of the Scheme’s assets will be reinvested over the next 15 years, creating a unique opportunity to invest in companies that have lower emissions and increase investment in transition solutions. Opportunities are expected to include financial products, services and investments that support companies, sovereigns and individuals to align with the goals laid out in the Paris Agreement. The initiative will involve both reducing emissions from the Scheme’s portfolio and investing in assets that will support the transition towards a low carbon economy.
BTPS stated that its efforts will be focused on four areas, including portfolio construction, mandate design and manager selection, stewardship, and advocacy. As almost all of the scheme’s members will be retired by 2035, BTPS will need to adjust its investment strategy towards products that provide safe, predictable income, presenting an opportunity to make investments in companies that have lower emissions and increase investment in transition solutions, without incurring additional transaction costs. The company will select and retain managers that it believes can deliver the investment performance required and achieve its climate change targets and will require managers to report against a net zero climate scorecard, and will implement a revised voting policy reflecting its net zero objectives and divest from companies that fail to curb emissions after engagement. Additionally, BTPS will use its influence and join others in advocating for action to achieve net zero aligned policy from policymakers, regulators, governments, the investment industry and other stakeholders.
Morten Nilsson, CEO, BTPS Management said:
“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, said:
“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.”