We believe that addressing climate risks within portfolios is critical to managing risk.
Using our experience of setting a 2035 net zero ambition for BTPS, we can support clients in setting objectives to reduce emissions, including net zero goals where appropriate.
Managing climate risk in investment
At Brightwell, we understand the challenges that pension schemes face in assessing the potential impact of climate change on investment returns and integrating sustainable investment into their investment processes.
Investments may potentially be exposed to the physical risks of climate change and to the risk that the transition to a low carbon economy will make certain businesses unviable.
Potential to generate higher returns by investing in companies with robust transition plans
Making investments that will aid the low-carbon transition can deliver potentially higher and more sustainable returns. We also see the potential for generating higher returns by investing in companies which have robust plans to transition to materially-lower or zero emissions over time.
In some cases, pension schemes are dependent on ongoing pension contributions from their scheme sponsor. If the sponsor is negatively exposed to, or impacted by climate change, this could threaten its ability to contribute to the scheme’s funding. This places more pressure on funding activities.
Helping clients on climate change
We can help clients set objectives for reducing emissions in their portfolios through undertaking carbon footprint assessments and setting short, medium and long-term goals in line with their investment and funding objectives.
By considering climate risk as part of an integrated investment process, we seek to understand each fund manager’s approach and capability in assessing climate change; this is typically the main vehicle through which clients will achieve any net zero ambition.
Helping clients embed sustainable thinking
Through our work with BTPS, we have supported the Scheme in amending its core investment principle from “finance first” to “sustainable long-term value creation” and set an ambitious 2035 net zero goal for its portfolio.
Over the years we have helped BTPS achieve top quartile PRI Survey scores, achieve the new UK Stewardship Code Signatory status twice and represented the organisation in numerous industry initiatives.
2035 net zero ambition
Over time, BTPS will aim to decarbonise its portfolio and investment value chain and make investments that will reduce or remove carbon emissions from the atmosphere.
Watch BTPS Chair Otto Thoresen discuss the Scheme’s approach to sustainable investment, or read more on the approach here.
“We believe investing sustainably supports long-term value, reduces risk and contributes towards better outcomes for our members.”
Otto Thoresen | Chair, BTPS
Read more about the work Brightwell has done for BTPS in the Scheme’s sustainable investment and stewardship report which can be found below.
BTPS Annual Report and Accounts 1.3 MB
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