The Vodafone Group Pension Trustee Limited (the ‘Trustee’) recently published its Taskforce on Climate-Related Financial Disclosures (TCFD) Statement for the Year Ended 31 March 2025. This report details the Scheme’s approach to climate-related risks and opportunities, covering governance, strategy, risk management, and metrics and targets.
Strategic Shift in Climate Scenario Analysis
For the fiscal year ending March 31, 2025, the Trustee transitioned from using climate scenarios developed by the Prudential Regulation Authority (PRA) to those developed by the Network for Greening the Financial System (NGFS). This change reflects recent industry developments and aligns with evolving best practice. The NGFS scenarios, which build on the Intergovernmental Panel on Climate Change’s (IPCC) report on 1.5°C warming, are now used for asset-only scenario analysis. The three scenarios modeled are ‘Orderly Transition’ (2°C), ‘Disorderly Transition’ (2°C), and ‘Hot House World’ (3°C+). (Page 8, 9)
Multi-Class Credit Mandate Appointments
In November 2024, the Vodafone Section reallocated approximately £220 million, split equally between two new Multi-Class Credit (MCC) mandates: the ICG Total Credit Fund and the TwentyFour Dynamic Bond Fund. This allocation was funded through a full disinvestment from the Hermes Unconstrained Credit Fund. The CWW Section also made a strategic rebalance in November 2024, allocating £70 million to the ICG Total Credit Fund, funded from surplus LDI collateral. The rationale for these allocations was to enhance expected return in a governance and capital-efficient manner while improving portfolio diversification. ICG’s Total Credit Fund was a preferred-rated manager by the Trustee’s investment adviser, partly due to its ESG capabilities. (Page 6, 23, 30, 32)
Reduced Exposure to Synthetic Equity
In August 2024, the Vodafone Section implemented a £39 million trim to the Insight Synthetic Equity mandate. This reduction was primarily driven by a desire to lower the Section’s exposure to a strategy with broad market equity exposure, including sectors with relatively higher carbon intensity. (Page 22, 30)
Full Redemption from Aviva Investors Lime Property Fund
Both the Vodafone and CWW Sections completed a full redemption from the Aviva Investors Lime Property Fund during the fiscal year. This action contributed to a modest reduction in the Scope 1 and 2 carbon footprint of the Vodafone Section’s overall portfolio. (Page 23)
New Sovereign Emissions Reporting Introduced
For the first time, the Trustee is reporting on the Scheme’s sovereign emissions as of March 31, 2025. This new metric includes the emissions attributed to sovereigns (i.e., emissions from the Scheme’s LDI holdings). For the Vodafone Section, Absolute Sovereign Carbon Emissions (Scope 1) were 122,333 tCO2e and (Scopes 2 & 3) were 86,077 tCO2e. For the CWW Section, these figures were 55,525 tCO2e (Scope 1) and 39,069 tCO2e (Scopes 2 & 3). This metric was not available in previous years. (Page 16, 19, 21, 23, 31, 33)
Net Zero Target Recalibration Under Consideration
The Trustee has formally set a climate-related ‘net zero’ target for both Sections of the Scheme, aiming for a 50% reduction in total Scope 1 & 2 carbon emissions by 2030 from a March 31, 2022 baseline, and overall net zero carbon emissions (Scopes 1 and 2) from its investments by 2050. While the Scheme is currently on track to meet its 2030 target, the Trustee acknowledges that these targets were set on the assumption of a reasonable pace of low-carbon transition, which is not currently materializing. The Trustee recognizes that these targets may need to be recalibrated in the short-to-medium-term, alongside a more thorough assessment of portfolio resilience to a scenario where global temperatures continue to rise and the transition fails. (Page 3, 18, 24, 37)
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