Major European Asset Owners Intensify Net Zero Support

From ambitious goals to divestments, investors are taking firm actions for a greener economy.

In a major push towards the transition to net zero emissions, BT Pension Scheme (BTPS) has announced plans to reinvest its entire £55 billion portfolio to achieve net zero carbon emissions by 2035.

The UK’s largest company pension scheme anticipates major change in its investment activities over the coming years, and plans to use this opportunity to invest in companies with lower emissions as well as invest in transition (to low carbon) solutions that align with the goals of the 2015 Paris Agreement.

BTPS Chair Otto Thoresen believes the goal is “ambitious” but one that needs to be achieved. “Climate change poses a clear and present threat to the scheme’s ability to meet its long-term commitments. It’s important to take steps now to safeguard the future of the portfolio and the planet,” he said in a statement.

To further its commitment, BTPS has also announced that it will join the Net Zero Asset Owner Alliance to work with other investors in order to attain the Paris climate goals.

The scheme plans to achieve its goals by alignment of investment mandates and requiring asset managers to report against a net zero climate scorecard. Managers will be expected to work with the management of firms in which they invest on BTPS’s behalf to pursue net zero emissions targets. If the efforts fall short, the scheme reserves the right to take action by selling its stakes in poorly performing companies.

When BTPS surveyed its members in February 2020. 74% said they expect the scheme to continue taking into consideration the environmental and social impact of its investments.

Separately, the Church of England Pensions Board sold all its shares of Exxon Mobil Corporation, as the US oil major failed on its emission goals.

The proceeds went to an index aligned with the climate objectives of the Paris Agreement, a spokesperson told Bloomberg. The decision follows the failure of Exxon to set targets to reduce Scope 3 emissions, details of which the oil giant does not disclose. Scope 3 emissions refers to all the indirect greenhouse gas emissions occurring in a company’s value chain.

In Norway, the world’s biggest sovereign wealth fund, Norges Bank Investment Management (NBIM), said it would sell out of companies that are poorly performing on ESG issues.

Nicolai Tangen, chief executive of NBIM, told the Financial Times that the US$1 trillion sovereign wealth fund should “use risk in a more clever way” and boost returns, by divesting from companies doing badly on ESG issues.

Last year, the fund sold out of 42 companies that scored low on ESG values. Tangen said he wanted that number to rise as the fund hires staff to deal with ESG issues.

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