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BT Pension Scheme

PRI reporting framework 2020

You are in Indirect – Manager Selection, Appointment and Monitoring » Outputs and outcomes

Outputs and outcomes

SAM 08. Percentage of externally managed assets managed by PRI signatories (Private)


SAM 09. Examples of ESG issues in selection, appointment and monitoring processes

09.1. Provide examples of how ESG issues have been addressed in the manager selection, appointment and/or monitoring process for your organisation during the reporting year.

Topic or issue
          Addressing the lack of a formalised ESG policy by a listed equity manager
        
Conducted by
Asset class
Scope and process

We have engaged with a newly appointed listed equity manager which, despite having a very strong focus on ESG matters, governance in particular, and a strong company engagement approach, lacked a formalised ESG policy and associated reporting. 

Outcomes

The manager formalised its ESG policy which has a strong emphasis on climate change risk, being considered the most material risk to their portfolio. As part of its commitment, the manager set out its expectations for all portfolio companies to report to CDP annually and have a clear low-carbon transition plans in place. In addition, the manager has improved its quarterly reporting on ESG related issues and engagements.

Topic or issue
          Climate change data
        
Conducted by
Asset class
Scope and process

Although integral to their credit selection process, the reporting around the climate change sensitivity at the portfolio level was lacking.

Outcomes

We have worked with the managers and the data provider (MSCI) to obtain carbon intensity scores for our credit portfolios, which are included in the 2019 Report & Accounts for the Scheme

Topic or issue
          PE manager appointment
        
Conducted by
Asset class
Scope and process

Strong focus on ESG integration and stewardship in the manager selection process 

Outcomes

Led to an appointment of a A+/A UN PRI rated private equity manager with long standing responsible investment credentials

Topic or issue
          Review of the composition of the equity portfolio
        
Conducted by
Asset class
Scope and process

The Scheme's listed equity portfolio consists of active strategies, which integrate ESG in their investment approach, and passive strategies which incorporate ESG as part of the strategy methodology and implementation. The Scheme's passive value equity strategy was identified as a significant drag on the overall ESG quality of the listed equity portfolio as well as a meaningful contributor to carbon intensity

Outcomes

Following an extensive analysis, which assessed the ways the portfolio can be evolved, the passive value equity strategy was divested from and proceeds reallocated to active equity managers. This reallocation has had a positive impact on the listed equity portfolio’s overall ESG scores and carbon metrics

09.2. Additional information.


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