British Telecom’s £34bn pension scheme looks set to make more foreign investments, following comments from its trustee board director Donald MacDonald.
Speaking on a panel in China about sustainable stock exchanges, Mr MacDonald was full of praise for the measures taken by the Shanghai and Malaysian stock exchanges.
He said: “As a pension scheme we have to remember what we are about. We have the fiduciary responsibility that our pensions are paid on time. We have to be responsible investors and take account of all risks.
“We have to be confident in the markets we invest in, and we have seen strong and positive actions taken by the Shanghai exchange.”
He added that he had been similarly impressed by measures taken by the Malaysian exchange.
Mr MacDonald’s comments came in a discussion where he was joined by the chairman of the Shanghai Stock Exchange, Geng Liang, and the chief regulatory officer of Bursa Malaysia, Selvarany Rasiah. Michel Maquil, president and CEO of the Luxembourg Stock Exchange, was also present.
Both Mr Liang and Ms Rasiah expressed their concern for ensuring that their exchanges operated and adhered to environmental, social, governance (ESG) principles. While there was no clear agreement on which principles should be binding and which should be optional, both said ESG was very important to their organisations and to attracting foreign investors.
In June, BT revealed that it had gained 12% on its global investments over the past 12 months. In its report the fund declared that it had gradually reduced its allocation to equities over the past few years as a way to minimise its risks.
However, with stock markets around Asia booming and opening up to foreign investors, BT could be looking for ways to make more out of its equities and diversify its holdings into foreign markets. The majority of its holdings are in developed markets, predominantly in Europe.
Part of its motivation to invest abroad could be its multi-billion pound deficit, which was reduced from £9bn to £7.6bn thanks to the positive returns of the past year, but remains a major issue for the fund and its nervous members. BT still runs a highly remunerative defined benefit plan, which, while generous to its members, has proved difficult to maintain.