BBC Pension Trust
Portfolio level – Portfolio decarbonisation reference target
Baseline date: 31 December 2020
Baseline performance: 232,673 tCO2e
Target year: 2025, 2030
- -36% CO2e by 2025
- -c.60% CO2e by 2030
GHG scopes included: Scope 1 and 2 for all sectors. The Trustee will seek to expand its target to scope 3 emissions as data coverage improves.
Asset classes in scope: Listed equity and corporate bonds. It is expected that data coverage will continue to improve and other asset classes will be included in future as data quality renders inclusion appropriate.
Methodology/net zero scenarios: Targets are aligned with the European Policy decarbonisation pathway, with the objective of achieving c.60% (and at least 55%) emissions reduction by 2030 and net zero emissions by 2050. These targets are compatible with the Intergovernmental Panel on Climate Change (IPCC) 1.5°C scenario and in line with the Net Zero Investment Framework.
Emissions metrics: An intensity target has not been set; however, the carbon footprint of listed equity and corporate bonds is disclosed (baseline 41.3 tCO2e/$m invested at 31 December 2020). The Trustee continues to monitor and develop a range of climate metrics in order to assess the overall exposure to climate risks and opportunities across the portfolio.
Portfolio level – Investment in climate solutions target
Qualitative goal: The Trustee recognises the investment opportunities which will arise from the transition to a low carbon economy, in areas such as renewable energy and infrastructure. Seeking to capture these opportunities, the Scheme has previously made investments in wind and solar farms, renewable heating and low carbon greenhouses, electric vehicles and charging infrastructure.
The Scheme continues to make additional investments in renewable energy assets where these are compatible with the Scheme’s financial objectives. At 31 December 2021, these investments comprised around 4% of Scheme assets.
Further analysis of the portfolio will be carried out in 2023 to support disclosures in line with the Net Zero Investment Framework (NZIF).
Asset level – Portfolio coverage target
Baseline date: 31 December 2021
Baseline performance: The Trustee is seeking to measure the alignment of the portfolio with achieving net zero by 2050. Analysis of listed equities and corporate bonds at 31 December 2021 found that 15% of companies invested have targets which have been approved by the Science-Based Targets Initiative (SBTi).
Target: The Trustee has not yet set a target, however as data coverage improves and methodologies develop the Trustee will consider setting targets for net zero alignment of assets across the portfolio
Approach: Over 70% of the Scheme’s assets are managed by signatories to the Net Zero Asset Managers Initiative. We are working with our managers and advisers to improve the data that they provide, in line with NZIF. As industry standards develop, the Trustee aims to incorporate further portfolio alignment metrics into future disclosures.
Asset level – Engagement threshold target
Approach: EOS at Federated Hermes manages voting and engagement across the majority (c.70%) of the Scheme’s listed equity investments. EOS has developed a rolling three year Engagement Plan which includes climate change as a key engagement priority, and participates in the Climate Action 100+ investor initiative on the Scheme’s behalf along with several of the Scheme’s largest investment managers.
Further analysis of the portfolio will be carried out in 2023 to support disclosures in line with NZIF.
Methodology: The interim target for reduction in absolute emissions associated with the portfolio is aligned with the European Policy decarbonisation pathway, with the objective of achieving c.60% (and at least 55%) emissions reduction by 2030, and compatible with the IPCC 1.5°C scenario. Currently this target applies to public assets (listed equities and corporate bonds) only, where the available data is sufficiently robust.
At 31 December 2021 the Scheme had over half of its investments in sovereign bonds, with the majority in UK index-linked gilts. The UK Government has set a legally binding target to achieve net zero greenhouse gas emissions by 2050.
Emissions data coverage for other asset classes is currently very limited. The Trustee will seek to expand its target over other asset classes and scope 3 emissions as data coverage improves.
Operational emissions: The BBC is committed to reducing greenhouse gas emissions in its direct operations by 46% by 2030, and those in its value chain by 28%. These targets are approved by the SBTi. Further details are available on the BBC website: https://www.bbc.co.uk/sustainability/our-plan/
The Trustee aims to achieve its decarbonisation target by prioritising stewardship and engagement to drive alignment of the portfolio with net zero. All climate-related disclosures are incorporated into the Scheme’s TCFD report.