BT’s pension fund will allocate £100m to a fund aimed at reducing investors’ exposure to carbon and energy risks.
Legal & General Investment Management (LGIM) and analysts Trucost launched LGIM UK Equity Carbon Optimised Index Fund in May.
The fund will invest in carbon-efficient firms listed on the London Stock Exchange. Its holdings will be about 20% less carbon intensive than the FTSE All-Share Index.
Mike Craston, LGIM’s managing director for institutional business, said the fund’s launch reflected “client demand for a carbon efficient tracker fund”.
LGIM has worked closely with BT, but the fund is open to other institutional investors. It offers a way to reduce carbon exposure risk without sacrificing returns.
Helene Winch, director and head of policy at BT Pension Scheme Management, said the fund stemmed from “ongoing analysis of the potential impacts of climate risk on our portfolio of assets”. She added that BT was exploring investments that would out-perform the market during periods when carbon prices are higher.