BT’s £55bn pension scheme commits to net-zero emissions by 2035

The BT Pension Scheme has joined the UN-convened Net-Zero Asset Owner Alliance

The BT Pension Scheme will aim to achieve net-zero emissions across all three scopes by 2035, which will cover all of its £55bn portfolio that it invests on behalf of the 300,000 current and ex-members of the BT Group. The commitment will be met by reducing emissions in the Pension Scheme’s existing portfolio and investing in low-carbon assets.

Additionally, the BT Pension Scheme has joined the UN-convened Net-Zero Asset Owner Alliance. The Alliance was set up in September 2019 by investors collectively responsible for investments worth $2.4trn at the time, committing to ensure that their respective portfolios are carbon-neutral by 2050. The Pension Scheme is the 30^th members of the Alliance, which now has $5trn in assets under management aligned to net-zero.

BT Pension Scheme’s chief executive Morten Nilsson 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 through setting targets to tackle climate change. But we cannot achieve this goal alone. Working in collaboration with other asset owners through the Net-Zero Asset Owner Alliance will not only be invaluable in supporting our goal, but we hope that working with others will also help the industry achieve the goals set out in the Paris Agreement.”

In joining the alliance, insurers, re-insurers and fund managers are required to ensure that companies backed by their portfolios are operating in line with the Paris Agreement’s more ambitious 1.5C trajectory. As per the Intergovernmental Panel on Climate Change’s (IPCC) advice, reaching 1.5C will require global carbon emissions to reach net-zero by mid-century.

The Alliance is focusing on getting members to advance the measurement and public reporting of climate-related data, engaging with portfolio companies on setting net-zero targets and reaching out to policymakers on net-zero legislation and ambitions.

In related news, members of the South Yorkshire Pensions Authority (SYPA) have agreed on a motion to set up an action plan for the pension portfolio to become carbon neutral by 2030. Authority officers will have six months to develop the decarbonisation action plan.

The Authority’s Chair Councillor Mick Stowe said: “We have acknowledged for some time that climate change is the biggest risk facing the value of our scheme members’ pension savings, this is the next step along the road to effectively managing that risk.

“We cannot do this on our own and we will be looking to bring our colleagues within the Border to Coast Pensions Partnership on this journey with us”.

The SYPA was one of the first local government pension scheme authorities to adopt a climate change policy and to adopt the reporting requirements of the Task Force on Climate Related Financial Disclosure (TCFD).

The announcement comes after BT joined the likes of Ikea and Ericsson in supporting the 1.5C Business Playbook, calling for renewed efforts from corporates and policymakers to halve emissions by 2030 as part of a “race to zero”.

BT had set itself on the path to help limit global warming to 1.5C through a science-based target to reduce emissions by 87% by 2030 against a 2016/17 baseline, which was set back in September 2017. However, the company raised its ambitions again in 2018, when it committed to becoming a net-zero-carbon business by 2045.

The company is also adhering to the Playbook by launching services to help accelerate green innovation in the UK and drive the adoption of electric vehicle (EV) fleets.

Insurance failures

NGOs claim that insurance executives failed to proactively protect finance against the emergence of the coronavirus. A letter sent to insurers claimed that leading financial institutions identified the threat of a “new, highly infectious and fatal pandemic” in a survey as early as 2013, but failed to make meaningful investment decisions. In 2019, the same survey of insurers listed climate change as the world’s greatest threat.

Insurers are being called upon to place climate mitigation at the centre of efforts to boost the economy. Asia’s economy is down 20% for the first three months of the year, the FTSE 100 has suffered its worst quarterly performance since 1987 and the UN projects that foreign direct investment flows could fall between 5% and 15%.

Matt Mace