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In the latest ESG Leaders video interview with leading asset owners, BTPS CEO Morten Nilsson speaks with Responsible Investor’s Daniel Brooksbank about how the fund is responding to the threat of climate change and the impact it will have on its investments – and its relationships with its asset managers.
This month the BT Pension Scheme set out an ambitious net zero goal for its entire £55bn (€60.6bn) portfolio.
The move will see all its investment mandates aligned with the net zero goal over time with the scheme saying it “select and retain” managers that it believes can achieve this.
“When I look at the scenarios, it’s either negative or extremely negative… for instance the icecap is melding faster than scientists expected,” Nilsson says. “So it’s only prudent for us to regard this as a significant risk and take appropriate action.”
The move is taking place as beneficiaries retire, a process which will see BTPS re-invest a large majority of its assets over the next 15 years. “If we waste this opportunity, we won't get this opportunity again,” Nilsson says.
“We’re not following benchmarks. We are looking at an outcome-based approach which does give us more freedom” – BTPS CEO Morten Nilsson
And the scheme is “more than happy to be part of transitioning towards a low carbon business model” and will support high emitting companies with credible transition plans.
One feature of the BTPS announcement is that it does not talk about climate ‘tilting’ or underweighting large emitters. As Nilsson says: “We’re not following benchmarks. We are looking at an outcome-based approach which does give us more freedom.”
And its roster of asset managers: “ They have been very supportive” and see that this is an opportunity for them as well to act upon climate change. “That was quite an eye-opener for us.” And the scheme will be re-drafting its contracts with its managers to “make the goals very clear”.