BTPS sets emissions reduction target of 25% by 2025
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The BT Pension Scheme has published its five-year targets to reduce the scope 1 and 2 carbon intensity of its equity and credit portfolio by at least 25% and real estate by at least 33% by 2025. It aims to reduce scope 1-3 greenhouse gas emissions to net zero by 2035 across its £57bn portfolio.
BTPS has previously said its path to net zero will involve five-year interim targets, noting that the targets it has announced on Monday are consistent with the Net Zero Asset Owner Alliance and Institutional Investors Group on Climate Change net zero frameworks. It is also playing a lead role in the Assessing Sovereign Climate-related Opportunities and Risks Project, which is developing a tool to assess the climate risk of sovereign bonds.
BTPS Management’s chief executive, Morten Nilsson, said setting realistic five-year decarbonisation goals was essential on the path to achieving the 2035 goal, adding: “We’re under no illusion that reaching our goal will be linear either for us or the wider economy.”
Nilsson said BTPS would remain pragmatic in its approach, learning and adapting on the way. “There are different credible routes to a net zero future, but every route requires strong commitments, trade-offs and increased policy action from governments and regulatory bodies worldwide,” he said. “We are fully committed to playing our part, supporting companies that have credible transition plans and providing funding to those that are helping to create a greener future.”
The scheme’s sponsor, BT Group, said last September that it plans to curb carbon emissions sooner than planned by bringing forward its net zero target from 2045 to 2030 for operational emissions and 2040 for supply chain and customer emissions.
How will BTPS get to net zero?
In the utilities, oil and gas, transport, and steel sectors, which have been recognised by the NZAOA as the hardest to abate sectors, the Scheme is targeting higher reductions. It said it would seek to achieve these targets through a combination of:
- Portfolio construction - the natural evolution of the investment portfolio as the scheme derisks and increased use of emissions data and reporting in scenario analysis and stress testing.
- Fund manager mandates - ensuring mandate objectives are aligned with the scheme’s decarbonisation goals and selecting and retaining managers who have a commitment to helping the Scheme achieve net zero.
- Engagement - actively engaging with the highest emitting companies in the portfolio to ensure they have clear plans to reduce emissions to net zero and requiring managers to follow a clear climate voting policy. Failure to engage or make sufficient efforts to curb emissions after a period of engagement is likely to result in divestment.
- Advocacy - co-operating and engaging with other asset owners, policy makers, industry bodies, data providers, and regulators.
BTPS set its net zero goal in October 2020, saying that climate change has an impact already, being now “a clear and present risk to the scheme meeting its long-term financial commitments, not a future risk”.
It plans to achieve its net zero goal by both reducing portfolio emissions and investing in assets that will support the transition towards a low carbon economy, expecting that these will deliver more sustainable returns so the scheme can meet its liabilities.
