LGIM climate impact pledge imposes standards on investees

Legal & General Investment Management (LGIM) has published a climate impact pledge which could see its funds divest from companies that fall short of its standards.

The pledge extends the company’s analysis to assess over 1,000 companies on climate, as well as how LGIM engages with them to improve the way they address the net zero carbon emissions challenge.

It states that assessed companies that do not meet LGIM’s standards, through lacking a comprehensive disclosure of emissions for example, would be subject to a vote and potential divestment from its master trust and contract-based schemes.

LGIM head of DC, Emma Douglas, said: “This is a significant leap forward and will mean that our defined contribution (DC) investors can be assured that their retirement savings are influencing real and positive change. We have always considered ESG to be a financially material consideration and we know this is echoed by the views of our clients and individual members.”

She added that a recent membership survey had shown that “nearly half of DC savers preferred a policy of engagement in the first instance, before divesting”, adding that the concept of ‘engagement with consequences’ “really resonates with our members”.

Douglas continued: “Our latest climate impact pledge also supports trustees and employers to fulfil two of their most important responsibilities enabling a greater alignment between members’ investments and their values, and helping to meet their increasing regulatory duties or business objectives.”

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