Year ended 31 March
2024
Every year, the Trustee produces a formal report which highlights how climate change might affect the Scheme and what is being done to manage those effects. This report is also known as the Taskforce on Climate-Related Financial Disclosures (TCFD) Statement. It’s structured around four pillars: Governance, Strategy, Risk Management, and Metrics and Targets.
The money that will one day pay your pension is currently being invested, and this report covers the climate-related risks and opportunities that go along with that. For example, how is the Scheme doing against its targets for carbon emissions? What might happen to the Scheme’s investments if global temperatures continue to rise? And what training is the Trustee Board undertaking in order to understand these issues?
This is just a one-page summary of the TCFD Statement. You can read the full TCFD report to find out more.
Governance
The Trustee Board has overall responsibility for the management of climate-related risks and opportunities. To help the Trustee Board with this, certain areas are delegated to particular groups.
Trustee Board
Overall responsibility, including setting objectives
Investment and Funding Committee
Reviews and recommendations
Vodafone
In-House
Pension Team
Implementation of changes
External advisers
Advice and analysis
The Trustee completed the following areas of training over the reporting year:
May 23
Stewardship challenges
June 23
Stewardship themes
Sep 23
Climate scenarios and funding strategies
Strategy
The Trustee considers engagement with investment managers to be the key tool in addressing climate risks and capitalising on opportunities.
This entails the following actions:
Meeting
The Trustee meets with investment managers throughout the year. During the year under review, the most notable meeting in this respect was with Insight.
Selection
The Trustee incorporates climate-related risks and opportunities into the manager selection process. During the year under review, this applied to the selection of the Vodafone Section’s Multi Class Credit manager.
Delegation
The Trustee delegates engagement with the underlying companies in which the Scheme is invested to the Scheme’s investment managers.
Research and monitoring
The Scheme’s investment consultant provides the Trustee with manager research and monitoring.
The Trustee has looked at three different scenarios around the Paris Agreement’s goal of keeping global temperatures less than two degrees warmer than pre-industrial levels.
Here’s what this analysis suggested would happen to the Scheme’s funding level in each scenario:
Fast transition
Reaching the Paris goal in three years
Vodafone section
-10.9%
CWW section
-9.0%
Slow transition
Reaching the Paris goal by 2050
Vodafone section
-11.4%
CWW section
-9.5%
No transition
Not reaching the Paris goal, with global temperatures rising to four degrees warmer than pre-industrial levels by 2100.
Vodafone section
-0.6%
CWW section
-0.2%
The main reason why reaching the Paris goal could have a negative effect on the Scheme’s funding position is that it’s likely to mean people live longer, which is good news in general, but more expensive for pension schemes like ours.
Risk Management
Climate risks are integrated with the Trustee’s wider risk management framework.
The Trustee has the following safeguards in place:
Policies
The Trustee has a Statement of Investment Principles, an Implementation Statement and a Responsible Investment policy.
Regulations
The Trustee complies with relevant regulations, including the publication of this report.
Monitoring
The Trustee regularly meets with the Scheme’s investment managers and monitors their activity with respect to climate risks.
Investment manager selection
The Trustee assesses the climate credentials of the Scheme’s investment managers when appointing them.
Metrics and Targets
The Trustee monitors four metrics and has two main goals for the Scheme:
Here’s how the metrics changed compared with last year’s report:
Total greenhouse gas emissions
Vodafone section
Increased
CWW section
Increased
Carbon footprint
Vodafone section
Increased
CWW section
Increased
Data Quality Score
*New for 2024
Vodafone section
Increased
CWW section
Increased
Science-based Target initiative alignment
Vodafone section
Increased
CWW section
Increased
The increase to carbon emissions was driven by a rebalance to the investment strategy that took place during the year and was broadly in line with expectations. This rebalance was necessary to ensure that the Scheme meets its long-term funding objective for members while still being on track to achieve its climate goals. The Data Quality Score enables us to monitor the accuracy and completeness of the information we have regarding the Scheme’s climate impact. The Science-based Target initiative (SBTi) is a widely-used benchmark to ensure our targets are aligned with the latest climate science.
Here are our targets for carbon emissions, which are unchanged since our previous TCFD Statement:
The world is changing, and our ability to reach net zero by 2050 depends in part on governments remaining committed to previously agreed climate goals. At the moment we're on track to achieve our targets but we will keep this under review.