(Credit: LGIM)
Legal & General Investment Management (LGIM), with approximately £1.3 trillion in assets under management (AUM), has announced as part of its Climate Impact Pledge report it will divest its holdings in Industrial and Commercial Bank of China, AIG, PPL Corporation and China Mengniu Dairy for unsatisfactory responses to engagement, or breaches of red lines, around coal involvement, carbon disclosures, and deforestation.
In addition, China Construction Bank, MetLife, Japan Post, KEPCO, ExxonMobil, Rosneft, Sysco, Hormel and Loblaw have all remained on the group’s existing exclusion list, having not yet taken the action required to warrant reinstatement.
Kroger, which was previously on LGIM’s exclusion list, will be reinstated in relevant funds following improvements in its deforestation policies and disclosure, as well as efforts to promote plant-based products which have a lower climate impact.
Under the Climate Impact Pledge, which was launched in 2018, LGIM assesses and scores some of the world’s largest companies, engaging with them to improve their strategies to address climate change. Last year, the group strengthened its approach by expanding its engagement to 1,000 global companies in 15 climate-critical sectors that are responsible for more than half of greenhouse-gas emissions from listed companies. Companies falling short of LGIM’s minimum standards will be subject to voting sanctions, as well as potential divestment from LGIM funds, including funds in the Future World fund range, and all auto-enrolment default funds in L&G Workplace Pensions and the L&G MasterTrust.
Commenting on the plans, LGIM chief executive officer and UK government COP26 Business Leaders Group co-chair, Michelle Scrimgeour, said, “Climate change is one of the most critical sustainability issues we face and we fully support efforts to align the global financial system with a pathway well below 2°C. We have made a strong commitment to push forward this agenda across the different parts of the investment chain, from our engagement with companies and policymakers through to our own investment process and LGIM’s own commitment to net zero.”